Employers urge parliament to consider their proposals

Five employer organisations yesterday expressed regret at the "general disregard" from both sides of parliament to their recommendations on the law governing conditions of employment and industrial relations, and they appealed for the recommendations not to fall on "deaf ears".

In a report, they said they were concerned about the measures introduced and others that were in the pipeline, saying the measures threatened to erode Malta's competitive edge by raising labour costs, while there were no corresponding measures to improve productivity.

The debate, the bodies said, had focused too much on which party was prepared to give employees better working conditions and not enough on which could guarantee sufficient generation of wealth to be able to pay for them.

For these reasons, the Malta Employers Association, the Federation of Industry, the Chamber of Commerce, the Malta Hotels and Restaurants Association and the GRTU, Association of General Retailers and Traders, appealed to politicians on both sides of the House of Representatives to give consideration to their recommendations.

Their latest recommendations were yesterday published in a report called 'Compensatory measures to offset the erosion of competitiveness through the proposed measures of the bill on conditions of employment and industrial relations'.

Changes in the conditions of employment and industrial relations, they insisted, had to be discussed within the context of the global scenario, where Malta had to compete not only with EU member and applicant countries, but also with developing countries all over the world to sustain its standard of living.

The provisions discussed in the bill, together with expected increases in labour costs resulting from the introduction of occupational health and safety measures, and possibly, social welfare reforms, clearly needed to be balanced by other measures to keep Malta's manufacturing and tourism industry, and business in general, afloat.

"Employers are not against improving working conditions and living standards. Proof of this is the recent survey on working conditions conducted by the European Foundation which reveals that in many respects, working conditions in Malta are better than those of other EU applicant countries and comparable to EU states," they said.

However, employers had emphasised throughout that the key to better working conditions was higher productivity.

The employers' proposals on the White Paper on Conditions of Employment and Industrial Relations had stated that generation of wealth had to be supported by the three pillars of stable industrial relations, flexibility and competitiveness.

The constituted bodies said the issue of labour competitiveness also had to be addressed with respect to other relative costs of production.

This meant that the costs of implementing the measures in the bill had to be analysed as part of a wider scenario that incorporated other factors that influenced Malta's competitiveness. The fact was, Malta could not compete if it was more expensive than other countries in all aspects of production, they said.

The measures proposed do not directly address the provisions in the bill, but are meant to make the improved conditions sustainable through a reduction in costs in other areas that could generally be achieved through better efficiency.

The compensatory measures were also proposed in view of other measures that might raise costs of production in the near future, namely occupational health and safety, social welfare reform and environmental costs.

On health and safety, the constituted bodies said they had always looked forward to the introduction of measures as a means of safeguarding employees' health and to minimise the incidence of injuries at the place of work.

The codification of rules and a serious enforcement, they said, should place all employers on the same footing. Although these measures should result in a saving in fewer absences from work, they also involved the costs of implementing the measures and of maintaining systems.

"This would be a burden especially on SMEs, if they would have to engage experts to conduct risk assessments and regular audits, besides investing in equipment and training of staff."

The bodies said it was common knowledge that the welfare gap was an issue that would have to be addressed.

"This may affect costs of employment either directly if employers will have to increase their share of contributions to the pension funds or else indirectly through wage claims to offset a fall in the standard of living if employees have to fund their own pensions and the National Health Scheme.

"Industry may also have to face increased costs related to environmental protection. These costs may be related to changes in packaging, disposal of waste, and the installation of equipment to reduce emissions."

The five constituted bodies also proposed counter measures related to thresholding public holidays falling on weekends; vacation leave, meant as a break from attendance not from absence; port charges; utility rates; flexibility in the public sector to provide support services; and taxation levels.

On public holidays falling on weekends, they said that employers had long been contending that the vacation leave entitlement in Malta, coupled with the number of public holidays, was too generous compared to that of other countries.

"It is clear that leave entitlement in Malta compares to those countries with the highest entitlement. Needless to say, non-EU countries have less productive days lost.

"The proposal takes into account the fact that the recommendation submitted by employers whereby public holidays falling on weekends would not be added to vacation leave was not accepted.

"A reasonable compromise would be that of setting a threshold for the maximum number of public holidays falling on a weekend that are added to vacation leave. It is recommended setting this maximum at two in any given year. This means that up to two public holidays falling on weekends will be added to vacation leave. The remaining ones will be forfeited."

From a calculation based on the calendar for the next 10 years, this would entail a loss of an average of 1.3 days per annum over this period.

"The proposal will serve to stabilise fluctuations in optional leave from one year to the next (this year there are six added days) whilst minimising the effect on employees' entitlement. "At the same time, the increase of 1.3 productive days to employers is significant."

The report says that vacation leave is meant as a break from the daily drudgery, stress, and familiarity, so that the employee may get refreshed and recharged for a new spell of work.

But if the employee is on a type of leave other than vacation leave, he/she should not expect that in addition to such leave he/she should be entitled also to vacation leave for that period.

"The principle that vacation leave is based on attendance and not on absence is already laid down in the current legislation but the legislation lacks consistency in this matter."

The Wage Regulation Orders state that when an employee is in employment for less than 12 months during any calendar year, he or she shall be entitled to such part of the said vacation leave as was in proportion to the number of months in employment.

"To be consistent, employees who are on sick leave or special leave or on authorised or unauthorised unpaid leave or on any other leave ought to have such periods of leave deducted from the calendar for purposes of calculating vacation leave entitlement for that year so that the entitlement will be on a pro-rata basis.

"The implementation of this proposal should also reduce abuse of sick leave."

The report says that port charges is an area where costs are definitely "unreasonably high".

"Industry has long complained about the exorbitant local charges that it has to absorb for the shipping and landing of goods. This situation has actually become worse in recent years.

"A recent comparison of port handling costs has been drawn up and published by the Ministry for Economic Services in its document on an Industrial Policy for Malta which highlighted the difference in costs between Malta's ports and the main ports in Europe.

"These show clearly that importing a 40ft container into Malta is five times more expensive than in Antwerp, twice more expensive than in any UK port and two and a half times as expensive as in Marseilles. This charge is slightly lower for exportation of cargo. However, the overall situation remains serious.

"In recent months an effort was made by the Ministry for Transport and Communications to bring the major stakeholders together in a Consultative Council for Port Reform. The Freeport Terminal Handling Company refrained from participating, and this prompted the GWU to stop participating as well. The FOI, the Chamber of Commerce and the GRTU contributed to the discussion.

"However, the conclusions did not gather consensus and besides have not been translated into any plan of action that will result in any decrease of these local port handling costs to reasonable levels."

The report calculates that the present costs of importing through the Freeport a 20ft container are in the region of Lm136 and Lm216 for a 40ft container. These rates are higher than in Antwerp by 485 per cent and 197 per cent than in UK ports.

"We are hereby asking the government to commit itself to make the necessary changes in port management that will bring about a drastic reduction in charges to achieve competitive levels over a period of two years. Our charges should achieve at least parity with those of UK ports by the end of 2004."

On energy charges, the employer bodies remarked that industry in Malta was paying one of the highest rates of energy in Europe. According to figures published in the Italian journal Il Sole 24 Ore (November 2001), the rate in Malta of 3c7 kw/hr as calculated on maximum demand is the third highest when compared to other EU countries. Only the rates in Belgium and Italy were higher.

Electricity rates for all types of business should be reduced with effect from January 2003 at the latest.

On water costs, the report says that for the manufacturing, tourism and commercial sector in general, at Lm1.10 /cu.m. the water rate is the highest known rate in Europe.

"Apart from this the quality, especially for the food industry, leaves much to be desired. It is common practice for food producers and even other manufacturers to treat the water for removal of impurities, total dissolved solids and hardness before using mains water in their processes. This entails even more costs that contribute to decreased competitiveness.

"It is recommended that water rates for business should be reduced in the coming budget."

A common complaint by businesses, the bodies said, was that important services in the public sector were not available in the afternoon during the summer months: "It is recommended to introduce flexible systems to ensure that such services are available even during the afternoon during summer."

Taxation as a percentage of GDP had risen from 36.3 per cent in 2000 to 37.3 per cent in 2001, they said.

"We suggest that with effect from the next budget the tax floor be raised by the cost of living increases to minimise the increase in labour cost, and the corporation tax be reduced."

The constituted bodies concluded by saying that the proposals were meant purely to achieve a sense of balance which would make the increases in labour costs sustainable.

"They are meant to complement, not replace, the recommendations that the main employer organisations have already submitted regarding the proposed changes in the current CERA and IRA. It is to be noted that even our minimum wage is higher than that of some EU countries (Portugal, Spain and Greece), and definitely higher than that of most applicant countries.

"This is significant because the cost-of-living adjustment is based on the social wage.

"Is hoped that these recommendations do not fall on deaf ears if we truly have the long term national interest at heart."