The European Commission stated that the National Reform Programme for Growth and Jobs drawn up by the Maltese authorities identifies and responds to the main challenges facing Malta and that it is clear and based on a good analysis of the current situation, with ambitious objectives and concrete measures.
In its Annual Progress Report on the new partnership with Member States for Growth and Jobs, the Commission said, “however, those measures do not in all cases appear sufficient to achieve the objectives and prioritisation and coherence across policy areas is not always evident.”
The main challenges identified in the Maltese National Reform Programme (NRP) are sustainability of public finances; competitiveness; the environment; employment; and education and training. The Commission broadly shares the NRP’s analysis of the main priorities, though it would tend to place more emphasis on competition issues, addressed in the NRP as one of several areas under the key challenge of competitiveness.
The programme’s strengths include the emphasis on improving human capital by raising educational levels and increasing participation in training and lifelong learning. Among the other positive aspects in the programme is the emphasis given to environmental sustainability. The European Commission believes that implementation will be facilitated by the clear and inclusive governance structure and the continuity envisaged.
The Commission’s Progress Report encourages the Maltese authorities to develop further measures to strengthen competition and improve the quality of the regulatory system. The Commission also calls for a reduction in the tax burden on labour and for work to be made more attractive through a comprehensive review of the tax and benefit system.
The NRP reported that after strong expansion at an annual average of five per cent during 1994-2000, the Maltese economy practically stopped growing over 2001-2004, reflecting intensive industrial restructuring and deteriorating international competitiveness. Labour productivity growth has been well below EU average during the same period.
It also noted that GDP per capita has grown less than in the rest of the EU during that period and stood at 69 per cent of the EU average in 2004. Malta's employment rate is only 54 per cent, despite significant potential gains that could be achieved from the development of human capital. The unemployment rate was 7.6 per cent in 2004.
The National Reform Programmes which are submitted by EU member states offer a succinct overview of planned macro-economic, micro-economic and employment reforms at national level for the period 2005-2008. They were drawn up by member states for the first time in autumn 2005 on the basis of a set of 24 Integrated Guidelines proposed by the European Commission and agreed by heads of state and government. This is a key element in the redesigned arrangements under the EU’s Lisbon Strategy for Growth and Jobs.
The new way of working has reinforced the partnership between the Commission and member states and is beginning to give new impetus to the drive to increase prosperity and to allow more people to share in it. For example, the new system helps identify the many examples of successful and innovative policies which exist in every member state, so that others can learn from, adapt and adopt them.
The Commission will now work with member states to enhance the above mutual learning process, to support their efforts to implement their NRPs and to discuss how programmes can be strengthened.
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