9 - 15 May, 2001

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Economic growth and social rights – an integral partnership
By Edwin Vassallo

Edwin Vassallo, Parliamentary Secretary in the Economic Services Ministry, recently addressed the HCIMA annual conference titled: The Social Charter – a framework for economic growth. Mr Vassallo emphasised on how economic growth and fundamental social rights go hand in hand and that economic development cannot be reached on purely economic criteria by themselves - economic development also relies on the social circumstances in which the market is operating and evolving.

The social and economic changes going on around us, not just in Malta but also around the world, make this a very interesting time. The lessons and experiences we have gained as a nation till now will guide us forward to continue to understand and develop new means, new attitudes and new priorities in order to assist us in our decision-making.
The reality of today’s socio-economic circumstances is the cause for the need to bring together two forces that, I believe, are key ingredients in the recipe for economic development of our country. The social aspect and effect of this economic progress that we all strive to achieve cannot be ignored or treated separately. Economic growth and fundamental social rights go hand in hand with each other. We cannot talk about the one whilst ignoring the other.
Following the 50th anniversary of the Universal Declaration of Human Rights in December 1998, the Cologne European Council of 3 and 4 June 1999 decided to begin work on drafting a charter of fundamental rights to be completed by the end of 2000. The preamble affirms that 'the same importance must be attached to the social aspects as to the economic aspects' of the single market. There are two main reasons for this. Firstly, in terms of social justice, it is felt proper that the ‘internal market’ should entail improvements in the social rights of citizens as well as benefits for business. Secondly, if certain rights were guaranteed, economic disparities in working conditions across Member States would be reduced. Companies in the common market should work on the basis of the same minimum benefits and rights; otherwise the proper functioning of the market would be hindered by distortions in competition.
Every politician and every entrepreneur is aware of the relevance and cohesion of these two aspects. This conference should serve as a good medium in order to get the message through. These two priorities co-exist together for the development of both. We have to understand and believe that economic development cannot be reached on purely economic criteria by themselves. Economic development also relies on the social circumstances in which the market is operating and evolving.
The tourism sector in Malta is a viable and important contributor to our economy. A lot depends on the success of this sector. And it is quite appropriate that this sector of the economy is realising the importance of its social aspect. I am convinced that the conclusions of this conference would be a guiding tool to the other economic activities of our country. This conference is being held in at an appropriate time when we need to reflect on the reality around us and on the new priorities that we have to recognise.
Success in our social policies depends on success in our economic policies.
Economic success is not to be gained at the expense of social rights and obligations.
Economic success should sustain the development in the country’s social expression.
I have to make reference here to the Entrepreneurship Policy Paper that is currently being drafted and that should be published as a White Paper in the weeks to come. The publication of this Policy paper was one of the objectives that I had set out in my Business Plan for this year that was titled "Competitivity through innovation". This Policy Paper is not the result of some requirement from an organisation or authority. It is the product of my Government’s realisation and belief that this country has to remain competitive. Global market conditions necessitate an attitude and an atmosphere of innovative attitudes in order to maintain a competitive edge. The business sector has to be offered, has to be presented with a vision where every person can participate in the country’s development and in his own development.
The underlying principles that form the basis of this entrepreneurship policy are those considered as best practices. These ‘best practices’ are based on a number of administrative and procedural practices that have been and are being identified by a task force set up by the European Commission and itself called B.E.S.T., which stands for ‘Business Environment Simplification Task-force’. My office has in fact been appointed as national co-coordinator for this task force, as the exercise has now been extended to include the candidate countries. These policies and practices that I have referred to are the result of every European member country’s determination that, through the Council of Europe and the European Commission, economic success will not be achieved at the expense of working conditions. The Charter lays down the guiding principles of our economic enterprise’s social behaviour. It builds on the nations’ histories of industrial progress in order to make sure that the same mistakes do not happen again.
Our entrepreneurship policy recognises the need of being innovative in order to attain success. But it also goes further in recognising that being successful in business means operating with social conscience and operating without exploiting the employees or the consumers. And the principles of best practices as indicated in the entrepreneurship policy and sustained by the Social Charter are about eliminating the exploitation of those that we depend upon!
We have succeeded in moving away from the history of class struggles and antagonism and have reached the principles of solidarity and social justice. The gist of the Charter is to instil determined social ethics against all sort of abuse that might lead to class conflicts. Every businessperson wants to make profits and financial gain. I believe that the price of these profits should not be the exploitation of the family and the workers, be they locals, foreigners or minors.
This Charter is a pledge, a commitment, not only for the social aspect of politics but also for the social aspect of business. This is why I see it as the basis of a framework for economic growth. When I say growth, I do not refer to growth for the tourism sector but to growth on a broader and wider national level. This social charter and an appropriate entrepreneurship policy would ensure an economic development based on a culture of principles.
These are principles that ultimately respect the dignity of every human being. The exploitation of workers’ conditions, of children, the lack of health and safety measures (both physical and moral), the lack of consultations, long working hours, the absence of a shared day of rest, these would all be symptoms of a degrading social environment.
It would seem that the social aspect of our decisions would in their turn invoke their own costs. There are certainly some costs are involved, as nothing comes for free. But we should look at these as a form of investment because the returns that are expected far outweigh the costs of not installing these principles in our work practices. This is why we are referring to the Social Charter as the Framework for Economic Growth.
We are fortunate in Malta that we have managed to incorporate most of these principles within our legislative structure. It is now up to all of us here, according to everyone’s respective responsibility, to learn from each other and look at our work practices and recognise improvements and implement a just social strata in this bigger enterprise that is called Malta.
When one considers the number of principles that the Charter establishes together with the ‘best practices’ procedures every country within the European Union is being encouraged to adopt, along with a policy to foster an entrepreneurial spirit, one will be able to see and find a complimentary relationship between the documents. The BEST action program by which our Entrepreneurship Policy is to be achieved in fact seeks to improve conditions in the fields of:
1. Education and training in entrepreneurship;
2. an improved access to finance for SME’s;
3. encouragement for research and innovation;
4. better employment and working conditions;
5. upgrading of support services for the business community;
6. producing a more efficient Public administration.
The above are all objectives that are themselves referred to in the Social Charter itself.
To these important documents I shall also add and mention yet another: the European Charter for Small Enterprises. This Charter also pledges the need to recognise and promote small and medium sized enterprises. In the preamble to the charter it is stated that:
"Small enterprises must be considered as a main driver for innovation, employment as well as social and local integration in Europe. The best possible environment for small business and entrepreneurship needs therefore to be created."
The European Social Charter therefore cannot and should not be considered in isolation. It forms part of a wider base that is aimed at improving the quality of life through what I may call a new economic order. We are not being forced by anyone in adopting these principles. This is a step that we have to take because we are convinced that it will lead to:
a. a better environment and social structure in our working places;
b. less conflicts between employers and employees, which conflicts are always costly;
c. a better quality of product and a more efficient service to the consumer;
d. improved relationships between employers and employees through greater participation of the employees in the decision making process.
So, where are we all going from here? We might not be answering that question today, but I sincerely hope that at the end of this conference we would have realised where we should be going and how we should get there.



The Business Times, Network House, Vjal ir-Rihan San Gwann SGN 07
Tel: (356) 382741-3, 382745-6 | Fax: (356) 385075 | e-mail: editorial@networkpublications.com.mt