The Malta Employers’ Association is marking its 50th year. Director general Joseph Farrugia speaks about what lies in its future, pensions, SMEs and the industry in general

In its reaction to the Budget, the MEA said that one of the challenges facing Malta was to deal with the pressures of rapid growth, such as labour shortages, environmental constraints and a stress on infrastructure. How should this be done?

Economic growth is a desirable objective in itself, provided that it is sustainable and that the economy’s resources are managed in a manner to maintain the momentum. Otherwise it will be sowing the seeds of its own failure.

Due to our limited resources, we experience constraints all around us, for example traffic congestion partially caused by more people going out to work; the limitations of our carrying capacity to expand the tourism industry; overcrowded beaches in summer; the ongoing debate to strike a balance between construction activities and environmental priorities; lack of human resources in many sectors, which is leading to immigration. The best approach to deal with such circumstances is, first of all, to manage economic growth through prioritisation and selective pruning.

A strategic use of our resources will channel them into higher value added areas and the economy in general should be managed in a manner as to adopt a more targeted approach to generating wealth. This could well mean that some activities may have to be downsized because they would not be as beneficial to the economy as others.

The MEA feels that incentives for SMEs should be more defined and accessible and that the public sector needs to be more efficient and streamlined to assist the private sector in continuing to generate economic expansion. What does it have in mind?

There is a global impetus to give SMEs more importance as generators of business, employment and innovative ideas. We have been campaigning for easier access to finance for SMEs and, more importantly, for the implementation of the SME test, which would imply that before any legislation comes into force it will have to be assessed on the extent of its impact on SMEs. Another idea that we are proposing is that of establishing a business clinic to advise and assist SMEs in various aspects of running their business.

The public sector should not be a source of unfair competition with the private sector in the labour market

We have always campaigned for a more streamlined and efficient public sector. The fact that public sector employment is once again on the increase is of concern to us, especially during a time of scarce labour. It is worrying that thousands of persons employed in the private sector aspire for a job in the public sector because such jobs are perceived to be less strenuous and challenging.

During a period when the private sector is generating productive jobs, this is creating artificial wage inflation and increasing the need for foreign labour in Malta. I stress that, while acknowledging that more human resources are required in the public sector in some areas, the public sector should not be a source of unfair competition with the private sector in the labour market.

The head of the ETC said that the average Maltese working week is four hours shorter today than it used to be 15 years ago. What does this mean to employers?

The main cause of this phenomenon is an increase in atypical employment. As more women join the labour market there is an increased demand for more flexible working practices, including part-time work and reduced working hours. To an extent, this is a necessary transformation of our labour market.

There is also an increased number of people who opt to remain in employment working on reduced hours even though they have reached retirement age.

In general, one can also observe a changed attitude towards overtime, with more employees giving more value to leisure and family time compared to extra income from overtime. For employers, this highlights the need to have a more flexible work organisation that is able to match both employees’ and organisational imperatives.

The country’s two largest unions – the GWU and the UĦM – appear to be closer to each other. Is this good or bad news to employers?

Definitely good news. MEA has, on numerous occasions, expressed its concern over the threat to industrial relations stability created by union conflict. I sincerely hope that the current leadership of the main unions work to remove any differences between them and to work to common objectives in the interest of their members and companies’ sustainability. This is one of the reasons why the MEA has been pressing for legislative reforms to establish clear procedures to determine union recognition. It is hoped that the discussions at the Employment Relations Board bear fruit in this regard.

I must also add that the association has an excellent relationship with the unions, based on mutual trust and respect.

Is there place for irregular immigrants in the Maltese labour market?

The internationalisation of our labour market is an inevitable process. More Maltese will be working abroad and concurrently more foreigners will be working in Malta.

If one takes the irregular migrants as a specific segment of foreign workers, we find that many of them are working in occupations which are not popular with Maltese citizens (among the reasons for this is a preference for jobs in the public sector). This, of course, presents many challenges to our society.

The MEA fully supports the implementation of labour laws to ensure that these persons work in a dignified environment and have the same entitlements as other employees.

Secondly, I must add that, in the medium and long term, Malta should avoid the marginalisation of groups due to their ethnicity. The recent experience of other countries teaches us lessons about the horrible consequences of social exclusion. This means that we cannot expect the second generation of migrants who settle in Malta to necessarily work in menial, unskilled jobs because they have been deprived of the opportunity for social mobility.

Some say government employment is on the rise and that a good part of it is due to the fact that the party in government wants to repay those that helped it return to power or to ‘buy’ some people’s silence. What is the MEA’s verdict?

I think it is safe to say that not all jobs created in the public sector over the past few years have been productive jobs.

Pension reform remains a big debate. Some decisions have been taken. Were they the decisions that needed to be taken? How would the MEA handle the situation?

Pension reform is an ongoing process, dictated by the exigencies of changing demographics and fiscal sustainability. The MEA has always been at the forefront of pension reform talks. We note with satisfaction the government has steered away from the introduction of mandatory second pillar pensions.

More attractive incentives are required for a better take-up of third pillar financial products and we are insisting that there should be no distinction between pensionable age and retirement age. The recent report is a continuation of previous reform proposals and the main positive feature is that successive administrations have preferred gradual changes to avoid radical shocks in future.

The MEA proposed an employability index to guide students select courses with better career prospects, bearing in mind that skill demand prediction can never be an exact science

Would you say the private sector is driving the economy?

The private sector was always the driver of the economy. One could add in spite of the government.

Are the country’s education institutions, notably the University and Mcast, churning out the skills and professions this country needs now and in the future?

The degree of success of matching the skills generated by our educational institutions and the needs of employers will depend on the rate of economic transformation, the anticipation of such change and the level of dialogue between the stakeholders. Skills mismatches arise because the supply of skills may not keep up with demand or due to structural deficiencies that channel human resources into areas of study which are not in high demand to the exclusion of others.

This is why the MEA had proposed the setting up of an employability index as a means of guiding students to select courses with better career prospects, bearing in mind that skill demand prediction can never be an exact science.

Another facet to this question is the quality of the qualifications, which presents another reason for better collaboration between industry and education in course design and deeper involvement by industry experts in lecturing, for example.

There have been a number of attempts to update/upgrade labour laws. Where do we stand? Where do we need to go?

These attempts are ongoing. The MEA had presented a comprehensive set of proposals for changes in labour legislation which have been discussed at MCESD and the Employment Relations Board. The next stage is that, through the social dialogue process, these proposals and others that may be submitted by the trade unions will be evaluated and eventually legislated.

I am certain that consensus could be reached on a number of issues and a convergence of opinion on others. The current debate on union recognition at the Employment Relations Board has been productive and mature.

I am certain that other aspects of employment legislation, such as the structure and function of the Industrial Tribunal, will be equally interesting and productive. This will become an important issue, especially given that a recent court decision concluded that the operation of the Industrial Tribunal is not respecting the Constitution.

The MEA is celebrating its 50th anniversary since it was founded. What lies in the future?

The MEA has become the foremost employer organisation in Malta, having a constantly expanding membership base – covering all economic sectors and in terms of size of organisations – that today generates more than 35 per cent of jobs in our economy.

We will certainly continue with our primary mission, which is to represent our members and to advise them on employment and social policy matters.

As the organisation that is specialised in social dialogue, we will remain continuously involved in promoting and maintaining harmonious industrial relations in Malta, which is one of the cornerstones of our country’s competitiveness. As our membership has changed in line with the economy’s economic transformation over the past 50 years, the MEA will also adapt its services to meet the contemporary and future requirements of our members.

We have just successfully completed a rebranding exercise of the association, we have upgraded our premises to reflect a more professional service and we are effectively communicating employers’ perspectives to the public on various economic matters through our television programme.

This year, we have been awarded the National Enterprise Support Award, been shortlisted among the three top projects across the European Union for the European Enterprise Promotion Awards in the category of Promoting the Entrepreneurial Spirit, and also obtained a special mention in the overall categories Improving the Business Environment in recognition of our project known as Providing professional management support to SMEs and educating the public on employment issues.

I am positive that these achievements will further enhance the MEA’s status and propel it to an even brighter future.