MCESD Council Discusses the EU Semester 2023: Country Report for Malta

The social partners considered and detailed the European Semester 2023: Country Report for Malta during a meeting of the MCESD Council, which also included specific recommendations. Mr Lorenzo Vella, the recently appointed Head of the European Commission Representation in Malta, attended the meeting and highlighted the appreciation of Malta’s EU Representation of social partners and social dialogue, recognising their knowledge, valuable support, and the significant contributions they bring to the table.

The meeting was driven by a presentation by EU Semester Officer Mr Martins Zemitis on the country report. Mr Zemitis emphasised that Malta’s economy had experienced a robust rebound, surpassing the EU average growth rate. However, concerns were raised regarding the projected impact of inflation on household incomes and consumption in the years 2023–2024.

The report acknowledged the government’s interventions in curbing inflation, although it remained at an elevated level. It also highlighted the budget deficits resulting from energy support measures, reaching -5.8% in 2022, -5.1% in 2023, and -4.5% in 2024.

To address the challenges posed by higher energy prices, Malta has implemented measures aimed at mitigating their impact. These measures, which involve reductions in fuel taxes, subsidies for energy costs, and targeted income support for low-income households, are projected to account for 2.5% of GDP in 2022, 1.7% of GDP in 2023, and 1.5% of GDP in 2024.

Due to its heavy reliance on fossil fuels and imports, Mr. Zemitis stated that Malta should prioritise promoting the green transition, despite the fact that it consumes less renewable energy than the EU. Additionally, addressing traffic congestion, reducing emissions, and enhancing energy efficiency were identified as ongoing challenges.

Fiscal sustainability and taxation were key concerns discussed during the meeting. The reliance on corporate income taxes and low tax revenues were highlighted as areas requiring attention.

The social partners actively engaged in a stimulating conversation, offering valuable recommendations and support to address matters raised by the European Commission representation in Malta.

As government representatives, Hon. Clyde Caruana, Minister of Finance and Employment, and Hon. Andy Ellul, Parliamentary Secretary for Social Dialogue, shared their perspectives on this important report and indicated a course of action for the government.

The MCESD reiterated its commitment to engaging in national and EU-level discussions on matters of national interest, highlighting the strength and importance of active social dialogue.

The presentation can be accessed here.