The Chamber says it is “relieved” that the Government has taken notice of some of its concerns and agreed a public sector pay rise which is at the lower end of the scale. It also welcomes the fact that Government has limited the increase in fees to inflation and has left tax rates unchanged.

A statement continued: “However, this is somewhat tempered by the fact that the only growth in employment numbers over the year has been in the public sector. This only adds to the cost burden of the private sector at a time when it has already been hit by above inflation increases in social insurance and the minimum wage.

“The Chamber wonders if the increases announced in the budget have been truly costed to assess the future impact on the private sector and how this could dent economic growth. 

“The Government’s lack of restraint in expenditure is once again having to be covered by cost increases largely borne by the private sector. The long promised efficiency gains from e-government remain a wish and the Government has created an additional 126 civil service posts during the year.  If the cost burden were reduced (as has been promised in successive budgets) the private sector would probably create many more sustainable jobs. Having to face continuous increases in the cost of doing business in the private sector without meaningful progress in efficiencies and productivity in the public sector is disappointing at best.

“If Gibraltar’s economic future becomes reliant on the Government as the main engine of growth then our future will be bleak.

“The private sector remains ready as always to seize opportunities and create jobs as the details of the recently announced treaty become clear and the sooner the full text is published the better.

“The Chamber welcomes the establishment of a Business Transition Advisory Group to monitor the implementation of the new Transaction tax. The transparency of this Committee’s findings will in all likelihood show how the costs of running businesses in Gibraltar are much higher than in Spain. Nevertheless, the Chamber welcomes the Chief Minister’s assurances that the Government will stand alongside the business community to ensure that businesses thrive under these new arrangements. 

“Raising the minimum wage by more than double the inflation rate of 2.9% to £9.50/hour  may be good for those who receive it but most of these workers live in Spain anyway where the minimum wage is around £7.95/hour. This measure will impact mostly on those business sectors that will face the rising costs as a result of the new transaction tax and greater competition from businesses across the border whilst creating an inflationary environment for domestic consumers.

“Setting up a commission to look at introducing a living wage is an interesting proposal although with free transport, subsidised housing and electricity, free education and healthcare, the need for a new higher tier of wages in Gibraltar is at best, questionable.

“As we have said on a number of occasions over the years, the Chamber is happy to work with the Unions and Government to clamp down on illegal labour and particularly those who abuse the employment system by paying cash in hand for undeclared hours worked to avoid their full obligations on social insurance and income tax. This distorts Gibraltar’s employment market, creates unfair competition and adds to the cost burden for the vast majority of businesses which do play by the rules not to mention the impact on government revenues.”