17 OCTOBER 2001

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On banking, unions and industrial relations

Social Policy Minister Lawrence Gonzi recently addressed a round table meeting on European social dialogue organised by the Malta Bankers’ Association. Dr Gonzi delves into detail on the banking sectors unions and industrial relations

Looking at this sector from a customer’s perspective will immediately prove this point. Until a few years ago, customers would have had to queue up at your counters in order to cash their cheques, transfer funds, make payments etc. Today, with the advent of sophisticated information systems, we talk about tele-banking, we experience direct banking transactions from the comfort of our own homes and we benefit from the transformation that is taking place as a result of the implementation of e-government policies.

The impact of all this on the human resource pool within the banking sector has been enormous. Similarly, the impact on industrial relations within this sector has also been substantial.

But this is no exception. It is perhaps more pronounced in the banking sector because of the nature of the work you carry out and because modern economies have come to depend on the speed with which you provide your services and on the quality of those same services. But this applies practically to all other sectors although in varying degrees.

In a sense, therefore, this Round Table is taking place at a very opportune moment. The backdrop is replete with challenges and opportunities that we all face in today’s globalised world. Recent events have proved to all and sundry that our economies, our industries, our societies have all been dramatically re-dimensioned because of this technological revolution and because of the fast pace at which it has taken place.

I will refrain from going into the historical development of industrial relations and the birth of social dialogue as a crucial factor in the development of these relations. They are developments of which you are all aware. But I will make one simple point.

Against the globalisation backdrop, collective organisation of both workers’ and employers’ organisations have experienced significant changes both on the level of content as well as on the process level of industrial relations. A number of challenges have arisen which entail new forms of co-operation between the social partners.

A recent review of Trade Unionism in Europe, published by the European Trade Union Institute (2000), outlines the challenges being faced by Trade Unionism. According to this study, these challenges arise from:

- Firstly the move towards market orientation in many countries, which has been reflected in deregulatory policies by governments. This includes the reduction of tariff barriers, the facilitation of capital flow and investment, and the privatisation of State Owned enterprises. It has lead to increased internationalisation of economic interdependence, and a more prominent role for international regulatory processes, exemplified by supranational regulatory institutions jeopardising Trade Union influence and position within the nation state;

- Secondly, being major employers of labour, the growth of Multi National Corporations (MNCs) and their profusion across diversely differentiated economies, has further contributed towards the disturbance of the status quo between capital and labour owing to increased capital mobility and volatility. In addition, MNCs have sought to introduce new management ideas and practices, and appear to be predisposed towards enterprise-based labour-management relations.

- Coupled with the fact that MNCs are beyond national regulation, trade union reliance on activity and engagement at the national level is therefore becoming challenging;

- Thirdly, the impact of changes in information technology on the organisation of production and work at enterprise level – the Industrial Relations heartland – increased the scope for greater flexibility of labour. It also eroded the standardised, segmented, stable production process which had facilitated Industrial Relations.

New technology also made it possible to produce the same level of output with fewer workers, led enterprises to re-organise on the basis of team-based activities and flattened management hierarchies linking performance to productivity by way of rationalising their operations to strengthen further their competitiveness. This resulted in the deregulation and individualisation of the standardised collective employment relationship traditionally the core of bipartite collective bargaining;

- Fourthly, shifts in the composition of the labour force away from the manufacturing towards private sector services have reduced employment levels in the areas of traditional trade union membership strength. Additionally, a declining proportion of the workforce employed on full-time contracts in assembly line production, requires trade unions to develop recruitment and representation strategies appropriate for the new constituencies of women workers, part-timers, temporary workers and those employed at small sites.

Although these challenges have forced employers and enterprises to re-structure, the ETUI (2000) comparative study concludes that unions in most western European countries are failing to modernise and to restructure sufficiently to survive in the face of increasing international economic competition, technological change, the growth of flexible employment and the rise of the private sector services.

A New Agenda for Industrial Relations
Objectively speaking, therefore, we have evidence here proving that a broader operating framework for Industrial Relations is necessary for both trade unions and employers’ organisations to remain faithful to their mission.

The scope of Industrial Relations must now be viewed as extending to all aspects of work-related activities. They are the subject of interaction between managers, workers and their representatives including those which concern enterprise performance. Critical issues in the manner in which an enterprise operates include job design, work organisation, skills development, employment flexibility and job security, the range of issues emerging around Human Resources Management and cross-cultural management issues.

As has already been outlined, government, employers and trade unions are increasingly becoming aware of the competitive aspects that need to be factored into the bargaining process. Industrial relations are therefore taking on a strategic value at boardroom level. Competitive advantage is based on the ability to add value to the resource. For this to happen, trade unions and employers need to manage strategically to achieve enterprise objectives for their mutual benefit. On a macro-level, industrial relations processes are shaping themselves in the form of social concertation. Through concertation, trade unions and employers are becoming fully involved in the making of governmental economic and social policies to achieve economic competitiveness while moderating social inequities arising from unbridled market forces.

The challenge, we all face is how to translate all of this into concrete action.

Clearly, one way of doing this is to enhance the national machinery that provides the forum where social dialogue takes place. My Government has chosen to achieve this by upgrading its social dialogue infrastructure. Eleven years ago an administrative decision was taken to set up a National Council for Economic Development which provided the framework for all social partners to meet and discuss issues of common concern. On balance, this experience proved to be a positive development and I have no doubt that the social partners will endorse this statement.

Earlier last year, a decision was taken to revamp this Council through legislation which upgraded its status; widened its scope to cover the social dimension and placed it under the direct responsibility of the Prime Minister.

This process has now been completed after consultations with the International Labour Organisation and with our social partners. Today, therefore, for the first time in Maltese history, Social Dialogue in Malta is taking place within a framework that is regulated by law; that is advisory in nature and therefore assists government in the formulation of social and economic policy, and that includes the participation of civil society.

Of course, the Council remains a tool – albeit a crucial one – that will achieve its purpose only if members and participants continue to contribute in a manner which focuses on the national priorities and needs rather than the sectoral ones. It will also be successful if social dialogue is clearly perceived by all parties as a process of constructive exchange of views based on objective analysis of facts and devoid of any rigid and intransigent stances that are totally unproductive. Constructive Social dialogue is certainly not the result of a debating society that simply goes round in circles without shouldering responsibility. Neither is it the process where one party scores points over another. And neither is it a process of bartering between one partner and another.

It is, to put it simply, a free and open flow of opinions based on objective assessments leading to clear and definite conclusions in the best interests of what is generally termed as the common good.

Effective Unionism
There is another aspect that needs to be highlighted. Today’s economic and social realities are forcing workers and employers organisations to have a second look at their operational methods and strategic objectives in order to develop what is being termed as "effective unionism".

Effective unionism has been described as a form of unionism which focuses on working with employers (and their organisations) in implementing strategies to improve enterprise competitiveness and the quality of work. This is achieved through improvements in work organisation, labour-management relations and skills development, on the basis that an equitable share for workers in productivity gains will be achieved. This form of unionism is therefore proactive and strategic in approach, and is no longer concerned with union actions that are restrictive in nature. The development of effective unionism is contingent on the recognition and application of the rights of freedom of association, to organise and to bargain collectively.

The extent to which trade unions can adopt and achieve advances through this more proactive role will depend on a number of considerations, including: government policy and attitudes at domestic and international levels; the responses of employers and their organisations; and union leadership, organisation and strategies.

Employers’ organisations are also being faced with new demands to rethink their role and develop activities in a wider area in order to remain useful and relevant to business.

Again, this is why my Government has decided to review the entire labour related legislation package in Malta. A fifty-year long wait for an upgrade of the local employment legislation will become a reality within the next few weeks by virtue of the publication of a White Paper integrating the new Employment Relations Act together with proposed revisions of the Industrial Relations Act.

This new body of legislation will change our local employment and industrial relations scenario and will assist government and the social partners in a flexible manner, to ensure that our local economy adapts to the economic and social changes that have taken place in the capital and the labour markets, both locally and internationally.

I will conclude this address by emphasising the fact that the European Union social model provides us with a tested benchmark that has proved to be successful in a number of aspects. It is a model that is based on the need to enhance the human resource base and therefore on the recognition that social and economic progress depends on every country’s ability to have an efficient, reliable and flexible workforce that responds to today’s and tomorrow’s needs.

The efforts invested by the Member States in conjunction with the advent of economic and monetary union would undoubtedly not have been possible without partnership and without input from the social partners in their own spheres of competence. In addition, the trend towards adopting social pacts at national level has given rise to a parallel approach at Community level. The European employment pact, the draft of which was launched at the Cologne European Council, seeks to reproduce on a Europe-wide basis the highly positive dynamism set in train in many Member States.

I am convinced that this is the right approach and that this is the way forward for all of us. Hopefully, this round table in Malta has contributed to strengthen this on-going process and to reaffirm the need to stimulate social dialogue at all levels and at all times.

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