Level playing field in social policy

It is becoming increasingly evident that the government’s economic and social policies are not being well studied and thought out. We only hear Cabinet members at best parroting what they hear in the EU Council (of Ministers) meetings or else come out with important decisions “on the fly”. The last issue to catch my attention is the government’s position on the European Parliament’s proposed parental leave extension.

Some weeks ago, the National Council of Women came out censoring the government for having voted against this extension in Council. A quick correction from Castille noted that Malta did not vote but only expressed an opinion. In a recent interview with the Minister for Employment, Social Policy and Education, Dolores Cristina appearing on MaltaToday, the issue was given a new twist. The minsiter is quoted as saying that the government “is not opposing the controversial European Parliament proposal to increase maternity leave to between 18 and 20 weeks. Arguing that this was misunderstood, she underlines the government’s position that the extension is acceptable as long as EU states have a level playing field.

Now, as a selling point for a country that acutely relies on its export competitiveness for its economic survival, one cannot agree more with this convincing policy statement. On this issue, the government seems to have a point… until one starts digging deeper into the subject at hand, that is. In fact, there are four points that definitely stand out and await a satisfactory reply from the government.

First point. Is the government really in favour of an extension to our existing skewed parental leave system, the only one in the EU whereby the full burden falls on the employer of female employees? Not to mention the obvious discriminatory bias it implies against the employment of females. One would like to hear from the government whether it intends to reform the existing scheme as has been suggested in a study authored by the undersigned on behalf of the Labour Party, or else leave it as is. One thing is for sure: the government is so much in the dark because no statistics are compiled to find out how many mothers and fathers take parental leave following the birth or adoption of children, how many return to their job or else decide to quit in order to cope better with their family needs or how many are perhaps discouraged by their employer from returning to work. We just do not know. This was confirmed by the Minister of Finance in response to a parliamentary question tabled by the Leader of the Opposition.

And now we come to question the validity of the “level playing field” argument itself. To be blunt, one has reasons to ask whether this is a well-studied position or is it just being thrown about to serve as a red herring?

The best interpretation one can give to “a level playing field” in the fiscal or social policy field is “harmonisation”. This means that all member states would have the same tax base or tax rates or, in this case, the same social policy. Now for anyone familiar with the government’s voting behaviour in Council one ought to note that Malta comes a close second to the UK and Ireland in being dead set against fiscal harmonisation. We do not want the EU to poke its nose in our tax rates. We contend this on economic grounds of maintaining our competitiveness. No level playing field here.

Since when have we then changed the tune and made a case for an EU-wide harmonisation in the social policy field? Personally, I do not think the minister, in spite of her loosely worded statement, most probably provided for her by the Cabinet or her advisers, really wants Malta to match what other northern rich and more socially-generous countries want to give in the social policy field for the sake of obtaining a level playing field. On competitiveness grounds it would be self-defeating, would it be not?

A kinder interpretation to be given is that the Maltese government wants that what the European Parliament (EP) is suggesting in its report should be applied to all as a minimum and that this minimum, whether 18 or 20 weeks of leave, should be given on full pay by all. Whoever can afford more is his/her country’s business. But this is what my S & D colleague, Edit Estrela, is suggesting in her report approved in plenary during its first reading last October 20. Like many of its directives, the EU normally seeks a level playing field through a uniform minimum, leaving the countries that can afford to top up their standards to do so freely.

Could the government explain why it should be in favour of the extension and be against the EP proposal on grounds of it not providing a level playing field?

And now we come to the biggest fallacy of all that, in spite of its shortest parental leave period, Malta’s package is a significantly generous package on account that, contrary to other countries, it does this on full pay. No studies or even a chart or table is submitted to back this hollow statement.

Now, economists and international economic agencies such as the OECD prefer to compare like with like. In order to compare systems with different payment rates and durations of paid leave periods, they work out the full-time pay equivalent (FTE) tables, in other words the duration of paid leave if it were paid at 100 per cent of last earnings. So while Ireland gives 26 weeks of maternity leave not on full pay we can calculate that it gives the full pay equivalent of 20.8 weeks. One can compare this to Malta, which gives 14 weeks of maternity leave all on full pay. Of course, one must not ignore the balance of “unpaid leave”, which is also relevant to get the full picture of the maternity leave benefits and of which Malta has none.

So what are the facts as based on the EU and OECD databases?

Fact one: Malta has the shortest maternity leave duration in the whole European Union.

Fact two: on a FTE basis there are only two countries, Belgium and the UK, with a marginal lower FTE at 11.5 and 12 weeks respectively. Germany and Cyprus have equivalent paid leave duration to Malta but, as remarked above, all countries are more generous with their additional unpaid leave balance. In fact, the UK has a 52-week leave duration.

So where is Malta losing out due to its presumed social policy generosity?

In conclusion, it would pay Malta more to let go this “level playing field” argumentative banner and study well its own unique situation of having the least generous social policy in Europe in this area and for which, in return, it gets the lowest female participation rate. The economic implications are considerable. I have no doubt that once the issue is studied in a truly professional manner the government would come round to reform this significant social policy irrespective of the EU’s own conclusions.

The Times, Wednesday August 31, 2011

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