In the 1970s Malta started experimenting with workers' participation in an attempt to change the industrial relations system based on the British framework to a European model that attempts to tone down the top-down approach. The notion of workers' participation schemes was deemed to be a powerful tool in the decolonisation process. One of these schemes was the appointment of an employee board level representative, generally defined as worker director, in state-owned or run enterprises.
Over the last three years the number of worker directors in Malta has been decreasing. The years between 2003 and 2006 saw the demise of worker directors in the following enterprises: Air Supplies; Tug Malta and the Freeport (following privatisation); Malta Shipyards Ltd (following the restructuring exercise that merged Malta Drydocks and Malta Shipbuilding into this company); Malta Information Technology Training Services (Mitts) and Air Malta (by a decision of the minister). The next victim, as rumour has it, might be the worker director at the Bank of Valletta.
The worker directors are expendable as there are no legal provisions for their election and/or appointment. The only worker directors backed by legislation are those at Enemalta and formerly Telemalta (now Maltacom). The legislation setting up these two parastatal enterprises was revised in 1988 to regulate the election of worker directors on the board of the two enterprises. This was done following the vociferous protests by the union when the government failed to nominate a worker director on the board of the two enterprises.
Another entity where there is a statutory provision for employee representation at the decision-making level is the university. The statute of the University of Malta provides for the election of four employee representatives (two from the non-academic and two from the academic staff) to sit on the council.
These are the only exceptions in Malta where employee board level representatives have a legal status. Indeed, Malta is one of the seven EU member states without a legal framework for employee board level representation.
The last time a genuine effort was made to institutionalise the role of employee board level representation and increase its number was in 1996. The Minister of Finance at the time, Lino Spiteri, who had industrial relations in his portfolio, publicly declared he would like to see an increase in the number of worker directors. He also appointed a working group to draft a code of practice for the worker directors. Unfortunately, the minister resigned a few weeks later. The code of practice was drafted but never given a legal status.
The demise of a number of worker directors over the last few years implies that, 10 years on, the policy is to pull down rather than build on the base that was left unfinished. The logic behind these moves baffles social analysts in industrial relations. This is because it is happening at a time when we are transposing the EU labour directives to make our industrial system more European in outlook and different from the "us" and "them" approach of the British model upon which the Maltese system has been based.
The role of employee board level representatives by presenting the workers perspective at the highest level of decision making may be an effective link between the directors and the workers. In the discourse of corporate governance, workers are defined as stakeholders. What is wrong with giving a voice to the stakeholders at the decision making level?
The argument that a representative of the workers on the board may have a conflict of interest is based on the premise that the interests of the workers and the enterprise do not converge. In other words, the viability of the firm is a cause of concern to the shareholders but not to the workers. There is little validity in this line of argument as there tends to be more room for convergence rather than divergence of interest between the shareholders and stakeholders.
Employee board level representation in Malta has pursued a path characterised by a haphazard, impromptu series of events lacking a definite strategy by the government, trade unions and political parties. Most of the employee board level representatives, perhaps due to the lack of legislation that can legitimate their position and at the same time clarify their role, have had to follow an uncharted course. The absence of work councils has put higher burden on them. Being seen as the only granted token representative at the highest level of the enterprise, their constituents, perceiving them as glorified shop stewards, may exert pressure on them to deliver in tangible terms.
However, the setting up of a works council with advisory and consultative role will not compensate for the abolition of worker director. Board level employee representation differs from work councils in that it provides employee input into overall company strategic decision making rather than information and consultation on day-to-day operational matters.