Photo left: Still from a video of the empty streets of Valletta filmed by Jeremy Debattista
Opposition MP Claudio Grech warned that the government’s stimulus package to businesses to help them deal with the coronavirus crisis is completely illogical and will inevitably result in mass unemployment.
Interviewed on Xtra last night, Grech said that the government’s statement that it is handing businesses €1.81 billion is nothing but PR as the vast chunk of this money has been dedicated to bank guarantees (€900 million) and tax deferrals (€700 million).
Meanwhile, businesses who have been forced to temporarily shut down will only benefit from a two days per week government payment based on a salary cap of €800 per month, or three days per week if they employ people.
Grech warned that this ultimately means the government will only give employers a maximum of €320 a month per employee, even though the average national salary is around €2,000.
He said that €320 a month is basically the same amount of money the government would have to fork out anyway on unemployment benefits if workers end up losing their jobs.
“How can you incentivise employers to keep the employees if the only aid you’re giving them is the money you would have had to pay the employees in unemployment benefits anyway?” he asked.
“The government has been boasting about how pro-business it is and how much wealth there is for the past seven years but that’s all gone now. He’s basically telling employers to shoulder the large part of the burden but ultimately that means that employees will burden it.”
“I assure you that no employer is asking for generosity or charity from the government but they are warning that their work has completely stopped. Do you think any employer enjoys firing their staff?”
Grech urged the government to revise its stimulus package and agree to pay half the salaries of workers in the private sector, capped at a level which would be agreed upon following consultation with employers’ associations.
Moreover, Grech warned that the three-month moratorium on loan payments is useless as businesses are unlikely to take out loans if they know they will have to start repaying them by July and have no peace of mind that the coronavirus-induced crisis would have ended by then.
“If businesses aren’t going to make any money in the next three months, how can they be expected to pay loans in three months’ time? It’s completely illogical, you don’t even need to be an expert in business to understand this.”
Instead, he proposed a six-month moratorium on loan payments, effective from the day the crisis ends.
As for the tax deferrals, Grech warned that this promise is a mere publicity stunt.
“How can you defer tax for work that isn’t even going to take place? How can you tell a retailer that you are helping him out by deferring VAT on the sale of goods when he isn’t even selling goods in the first place? Shops are closed and work has completely stopped.”
Grech urged the government to invite the Opposition and stakeholders to the table to try and reach a consensus on the way forward.
“We must believe that we can get out of this situation but, with the government’s proposals, the truth is that businesses will fail and workers will get fired even if the crisis is temporary. Let’s find a solution to unite the country and get out of this crisis. We must work together to return Malta to a state of normality where workers get to keep their jobs. We’ll all hurt a bit but we’d still have the energy to rebuild the country.”