Malta is expected to exit the recession later than other EU Member States, thus leading to a potential drag of the recession across the whole of 2010. Speaking in an extensive interview with Business Today (see pages 4 and 5), senior economist Gordon Cordina stressed: “While other countries have started coming out of the recession, we may still be round half-way through.
“This means that potentially, it will take more for Malta to come out of the recession, around six to nine months later, if we were to go by historical trends,” Gordon Cordina said.
From a shorter term perspective, the latest GDP data showed that the Malta’s growth rate continued to be more negative in the third quarter of 2009, while the latest Eurostat area data on GDP shows that the Eurozone is now officially out of a recession.
Both Prime Minister Lawrence Gonzi and Finance Minister Tonio Fenech have indicated that Malta’s economic recession would start to subside by the first half of 2010.
Asked about his position on COLA and whether he agreed with the employers’ position that COLA should only be given minimum-wage earners, Cordina told Business Today: “Last year COLA had to be granted, and I think this was accepted widely by the social partners because of the high inflation rate that pervaded Malta in 2009, especially to protect those workers and pensioners who are low-wage earners and are not covered by a collective agreement.
“On the other hand, I believe that we should not live in an economy when we are constantly worried about COLA,” the senior economist told BT “Ideally, we should have businesses that are productive and competitive enough that are able to pay not only COLA but also grant other increases,” Cordina insisted.
Therefore the main issue here was “not so much the granting of COLA but the lack of productivity and efficiency of those sectors that are not able to afford COLA – those that are too labour-intensive and depend on low value-added,” the senior economist told BT.