Incomes policies and the Malta case

Abstract

Economic growth is the accepted main vehicle for reconciling the social, economic and political aspiration of groups and individuals. Economic growth also offers the possibility of reducing irregularities within a society and for extending better life-styles and life-chances to the masses. But economic growth needs to be reconciled with a low rate of inflation, since otherwise, inflation worsens the irregular distribution of income and wealth. The current problem of inflation in developed societies is discussed, its various manifestations are reviewed and its various underlying causes are analysed. The critical factor affecter the inflation rate is identified as being the relationship between labour costs per unit of output on one hand, and prices on the other. Governments need to implement policies designed to influence the inflation rate - this inevitably leads them to influence movements in wages. Various additional remedies, both macro-economic and non-macro-economic, which have been applied in various countries are discussed. The subsequent results are evaluated and their implications are highlighted. Finally, the focus is shifted onto the local scenario. The Maltese experience in controlling the inflation rate is reviewed, with particular reference to the current Incomes Policy Agreement. The agreement's provisions, structures and workings are described in detail. Finally, the Incomes Policy experience is analysed and assessed, from various perspectives, providing the reader with an integrated, balanced and comprehensive review of the Incomes Policy's outcome.