Strengthening the voice of the private sector
Helga Ellul, president of the newly-merged Chamber of Commerce, Enterprise and Industry, speaks to Anthony Manduca about her vision for the organisation and the private sector.
How did the merger go between the Chamber of Commerce and the FOI?
It was a very positive experience. It was very professional and there was due diligence in the financial and legal areas. Although it took us a good two years to conclude it was done in depth and obviously the more professionalism the better the result.
Have all employees of both organisations been kept? Is there now one director-general?
All the employees of both organisations have been kept on and are being housed here in Valletta (ex-Chamber of Commerce), and for the moment we have two director-generals who are responsible for their specific areas, more or less based on what they had done prior to the merger and working on their specific areas of expertise. We are in a transitional phase and there will be elections in March. Then time will tell us if we have to restructure again internally.
You work in industry. Was your election as president a tactical choice to pass on the message that industry will be given importance by the newly-merged organis-ation?
I wouldn't call it that. I think that there were three specific points that had to be cleared between the two organisations. The first was where we are going to be housed and obviously it was the Exchange Buildings in Valletta. The other point was the new name of the organisation which is the Chamber of Commerce, Enterprise and Industry. The third point was who was going to be the president. The Federation of Industry said the first president was going to come from its organisation. As you know we have three economic groups, representing three economic sectors, within the new organisation and they are of equal importance.
Were any guarantees given to the Chamber of Commerce on your election, such as a selection of a president from their side next time?
No, any selection will be done through a normal election as has always been the case.
Many feel the merger between these two organisations was long overdue and that the private sector is stronger when it speaks with one voice. What about a possible merger with other private sector organisations such as the GRTU and the Malta Employers Association?
Nothing is impossible. However, our two organisations have just merged and we have to first strengthen this new institution. The Employers Association is a very specific organisation and a very dynamic one and we work very closely with it. It's an employers' union. We already cooperate a lot with all the other private sector organisations. Time will tell how we can strengthen these links.
As the first president of the Chamber of Commerce, Enterprise and Industry what are your priorities?
My main priority is definitely to make this merger a success. We must give more value to our members and try to be more dynamic, more proactive, more research- based so our decisions and recommendations can be based more on facts. I think it is important that our members see the value of this merger. There will be a branding exercise and we have to brainstorm what the philosophy of this organisation will be. We must communicate with our members and internally we must strengthen to avoid duplication and have more synergy.
How will you balance the needs of industry with those of importers?
Today there are no big barriers between these two sectors. We have a lot of companies which are both manufacturers and importers, like for example Joinwell.
You recently called on the government to introduce a stimulus package for the private sector. Can you elaborate on this and does your request imply that the measures introduced in last November's budget were inadequate to deal with the effects of the global recession?
We have secured very generous EU funding. We know that the major projects have been outlined such as the funding for the new MCAST campus and the upgrading of the Hal Far estate. These projects need to be implemented quickly. Not too many studies, let's just get on with the job. To be frank I think last November's budget was overshadowed by the new energy tariffs. Also, at that time I think nobody realised just how critical the international economic situation was going to be and so the budget was unable to address this. I think the budget tried to do a lot of things - but a lot of small things. It did not give a major stimulus to the economy.
What are the long-term prospects for industry in Malta?
I can speak very freely about our company (Brand). We have been in Malta for 35 years. Malta has only one resource and that is the human resource. If you update the skills of your employees - and the Maltese workforce is very keen on learning - and upgrade your technology then Malta as a location for industry still makes a lot of sense.
As a result of the poor international economic climate and the revised utility rates some factories in Malta have either made a number of employees redundant or now work a four-day week. Are you worried this trend will continue?
I am definitely worried. We are such an open economy and our exporters, especially those in the automotive industry, were affected by the global economic climate and witnessed a drop in orders. The revised utility rates were another big blow to our manufactures. Companies that have not yet received their utility bills are also in the same situation, because of the uncertainty created.
Just how damaging are the new utility rates for both the private sector and consumers? Is there any hope that the government can be persuaded to change its mind over the new utility rates?
We definitely hope that the government will change its mind. We were the first organisation to say, straight after the MCESD meeting on the utility tariffs, that these revisions were ill-timed and badly carried out. We can understand the issue and when one sits around the table we believe we can find a way out - we had done it with the removal of the levies over a period of time. One needs to measure how much time is needed for the private sector and consumers to absorb these changes. Consumers also lose purchasing power as a result of these new tariffs. There is no confidence in the economy at the moment and what we need to do is start to build confidence in investors and consumers. We would like the new rates to be staggered over a period of time and also to have an energy link with Sicily in order to have energy security. What upset us a lot was that these tariffs were introduced on their own. You cannot have that, what is needed is a proper energy policy and strategy, energy security and sustainable energy, including alternative energy. The country needs to find a compromise over the utility rates question.
What, in your opinion, are the potential growth areas in the Maltese economy?
Some areas haven't even been tackled yet. We could look at health, for example. We have a good medical profession and state-of-the-art hospitals which I think are under-utilised. Another area is education. We know we have strengths there and we have had some success with the teaching of English. Super yachts are another area. With the privatisation of the shipyards perhaps we could find a modern type of shipyard - the maritime sector is very important for Malta.
The government's 2008 deficit was way off target at 3.5 per cent. It has now projected a deficit of 1.6 per cent for 2009 and plans to turn the deficit into a surplus by 2011. Considering the economic situation, should the government stick to this deficit target or should it put this on hold in order to boost the economy as some EU countries are doing?
I would be inclined to say we should still keep a target but we should be flexible. We must try and control the deficit. However, under the present situation one cannot really plan so far ahead. There has to be a balancing act.
How can Malta be made more attractive for foreign direct investment?
We need to keep our competitiveness and we definitely need to be more flexible with our labour market. In all fairness I think even the trade unions are recognising the importance of a flexible labour market. The private sector also needs to work closer with our educational system. We already collaborate a lot with MCAST, but we also have to ensure that the workforce has its skills continually upgraded and is always employable. We also need to strengthen our links with the university and to ensure that the private sector and the educational institutions move in the same direction.
Has any progress been made by the government in paying its dues to the private sector?
We simply cannot have the government creating a credit crunch by not paying its dues. It's bad enough that companies could be finding it difficult to get extended credit and are facing other problems. Not being paid what is due to them by the government makes the whole situation worse. The latest news I have heard about this is that payments are trickling in, but that's all.
How important is it for the Cost Of Living Adjustment (COLA) to be reformed?
We have been calling for COLA to be reformed for years and years and our argument is as relevant today as it was in the past. The private sector has to deal with two pay increases, the government-ordered increase and the increase negotiated company by company. Nowhere in the world do you have such a situation. Even the IMF has recommended a change. Normally companies take inflation into consideration when negotiating with the unions. Obviously there have to be safeguards for employees who are not unionised - there is the inflation index and that can be used for people on the minimum wage, for example. It makes no sense for unionised employees to get two increases.
Do you think there should be more synergy among government ministries?
Yes, we feel ministries should work better with one another. More synergy is definitely needed. Sometimes we get stuck between one ministry and another. In certain areas we need one reference point in the government. It makes no difference whether Minister Tonio Fenech or Minister Austin Gatt handles a situation - that is the government's business - but we certainly need only one reference point.
Do you believe both political parties in Malta are really pro-business?
I would say yes. They realise that business makes the economy go round. I think on this question they are both very united.
It was a very positive experience. It was very professional and there was due diligence in the financial and legal areas. Although it took us a good two years to conclude it was done in depth and obviously the more professionalism the better the result.
Have all employees of both organisations been kept? Is there now one director-general?
All the employees of both organisations have been kept on and are being housed here in Valletta (ex-Chamber of Commerce), and for the moment we have two director-generals who are responsible for their specific areas, more or less based on what they had done prior to the merger and working on their specific areas of expertise. We are in a transitional phase and there will be elections in March. Then time will tell us if we have to restructure again internally.
You work in industry. Was your election as president a tactical choice to pass on the message that industry will be given importance by the newly-merged organis-ation?
I wouldn't call it that. I think that there were three specific points that had to be cleared between the two organisations. The first was where we are going to be housed and obviously it was the Exchange Buildings in Valletta. The other point was the new name of the organisation which is the Chamber of Commerce, Enterprise and Industry. The third point was who was going to be the president. The Federation of Industry said the first president was going to come from its organisation. As you know we have three economic groups, representing three economic sectors, within the new organisation and they are of equal importance.
Were any guarantees given to the Chamber of Commerce on your election, such as a selection of a president from their side next time?
No, any selection will be done through a normal election as has always been the case.
Many feel the merger between these two organisations was long overdue and that the private sector is stronger when it speaks with one voice. What about a possible merger with other private sector organisations such as the GRTU and the Malta Employers Association?
Nothing is impossible. However, our two organisations have just merged and we have to first strengthen this new institution. The Employers Association is a very specific organisation and a very dynamic one and we work very closely with it. It's an employers' union. We already cooperate a lot with all the other private sector organisations. Time will tell how we can strengthen these links.
As the first president of the Chamber of Commerce, Enterprise and Industry what are your priorities?
My main priority is definitely to make this merger a success. We must give more value to our members and try to be more dynamic, more proactive, more research- based so our decisions and recommendations can be based more on facts. I think it is important that our members see the value of this merger. There will be a branding exercise and we have to brainstorm what the philosophy of this organisation will be. We must communicate with our members and internally we must strengthen to avoid duplication and have more synergy.
How will you balance the needs of industry with those of importers?
Today there are no big barriers between these two sectors. We have a lot of companies which are both manufacturers and importers, like for example Joinwell.
You recently called on the government to introduce a stimulus package for the private sector. Can you elaborate on this and does your request imply that the measures introduced in last November's budget were inadequate to deal with the effects of the global recession?
We have secured very generous EU funding. We know that the major projects have been outlined such as the funding for the new MCAST campus and the upgrading of the Hal Far estate. These projects need to be implemented quickly. Not too many studies, let's just get on with the job. To be frank I think last November's budget was overshadowed by the new energy tariffs. Also, at that time I think nobody realised just how critical the international economic situation was going to be and so the budget was unable to address this. I think the budget tried to do a lot of things - but a lot of small things. It did not give a major stimulus to the economy.
What are the long-term prospects for industry in Malta?
I can speak very freely about our company (Brand). We have been in Malta for 35 years. Malta has only one resource and that is the human resource. If you update the skills of your employees - and the Maltese workforce is very keen on learning - and upgrade your technology then Malta as a location for industry still makes a lot of sense.
As a result of the poor international economic climate and the revised utility rates some factories in Malta have either made a number of employees redundant or now work a four-day week. Are you worried this trend will continue?
I am definitely worried. We are such an open economy and our exporters, especially those in the automotive industry, were affected by the global economic climate and witnessed a drop in orders. The revised utility rates were another big blow to our manufactures. Companies that have not yet received their utility bills are also in the same situation, because of the uncertainty created.
Just how damaging are the new utility rates for both the private sector and consumers? Is there any hope that the government can be persuaded to change its mind over the new utility rates?
We definitely hope that the government will change its mind. We were the first organisation to say, straight after the MCESD meeting on the utility tariffs, that these revisions were ill-timed and badly carried out. We can understand the issue and when one sits around the table we believe we can find a way out - we had done it with the removal of the levies over a period of time. One needs to measure how much time is needed for the private sector and consumers to absorb these changes. Consumers also lose purchasing power as a result of these new tariffs. There is no confidence in the economy at the moment and what we need to do is start to build confidence in investors and consumers. We would like the new rates to be staggered over a period of time and also to have an energy link with Sicily in order to have energy security. What upset us a lot was that these tariffs were introduced on their own. You cannot have that, what is needed is a proper energy policy and strategy, energy security and sustainable energy, including alternative energy. The country needs to find a compromise over the utility rates question.
What, in your opinion, are the potential growth areas in the Maltese economy?
Some areas haven't even been tackled yet. We could look at health, for example. We have a good medical profession and state-of-the-art hospitals which I think are under-utilised. Another area is education. We know we have strengths there and we have had some success with the teaching of English. Super yachts are another area. With the privatisation of the shipyards perhaps we could find a modern type of shipyard - the maritime sector is very important for Malta.
The government's 2008 deficit was way off target at 3.5 per cent. It has now projected a deficit of 1.6 per cent for 2009 and plans to turn the deficit into a surplus by 2011. Considering the economic situation, should the government stick to this deficit target or should it put this on hold in order to boost the economy as some EU countries are doing?
I would be inclined to say we should still keep a target but we should be flexible. We must try and control the deficit. However, under the present situation one cannot really plan so far ahead. There has to be a balancing act.
How can Malta be made more attractive for foreign direct investment?
We need to keep our competitiveness and we definitely need to be more flexible with our labour market. In all fairness I think even the trade unions are recognising the importance of a flexible labour market. The private sector also needs to work closer with our educational system. We already collaborate a lot with MCAST, but we also have to ensure that the workforce has its skills continually upgraded and is always employable. We also need to strengthen our links with the university and to ensure that the private sector and the educational institutions move in the same direction.
Has any progress been made by the government in paying its dues to the private sector?
We simply cannot have the government creating a credit crunch by not paying its dues. It's bad enough that companies could be finding it difficult to get extended credit and are facing other problems. Not being paid what is due to them by the government makes the whole situation worse. The latest news I have heard about this is that payments are trickling in, but that's all.
How important is it for the Cost Of Living Adjustment (COLA) to be reformed?
We have been calling for COLA to be reformed for years and years and our argument is as relevant today as it was in the past. The private sector has to deal with two pay increases, the government-ordered increase and the increase negotiated company by company. Nowhere in the world do you have such a situation. Even the IMF has recommended a change. Normally companies take inflation into consideration when negotiating with the unions. Obviously there have to be safeguards for employees who are not unionised - there is the inflation index and that can be used for people on the minimum wage, for example. It makes no sense for unionised employees to get two increases.
Do you think there should be more synergy among government ministries?
Yes, we feel ministries should work better with one another. More synergy is definitely needed. Sometimes we get stuck between one ministry and another. In certain areas we need one reference point in the government. It makes no difference whether Minister Tonio Fenech or Minister Austin Gatt handles a situation - that is the government's business - but we certainly need only one reference point.
Do you believe both political parties in Malta are really pro-business?
I would say yes. They realise that business makes the economy go round. I think on this question they are both very united.