13 FEBRUARY 2002

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Vassallo urges doing away with bad practices

By Miriam Dunn

The only way to avert unemployment is to ensure sustainability in business ideas and do away with work practices that go against this principle.

This was the comment of Parliamentary Secretary in the Economic Services Ministry Edwin Vassallo when asked to comment on the shockwaves going through the economy following the news that Farsons is to downsize its fast food outlet franchises.

Asked whether the government should be providing any initiatives or incentives to help retail outlets weather the current economic storm, Mr Vassallo stressed that market competition creates diversity in businesses or services that, in turn, create more new jobs, and must be allowed to do just that.

"Every restriction implemented with the excuse that we are safeguarding jobs is in itself an exercise that hinders that creation of new jobs," he said.

"Workers’ jobs will be saved as long as we are capable of creating circumstances where business is sustainable. This means that anything that hinders sustainability goes against the protection of jobs.

"Thus, we should not do anything that hinders our businesses from being sustainable; every decision that creates a work practice that increases expenditure without increasing revenue should be scrapped, whether it’s a worker or machinery, depending on the case."

Mr Vassallo admitted that restructuring is a process which will inevitably mean difficult decisions, but stressed that he had faith in the local market’s ability to be competitive.

"It is both good and necessary that our businesses go through an exercise of restructuring and I hope that this will be a continuous exercise," he said. "The result of such exercises don’t always produce results that are pleasing, but we should realise that good businesses are those that can take decisions even if they appear harsh."

The parliamentary secretary highlighted the changes he said we will inevitably witness as Malta restructures its economy.

"With our competitivity I believe that in the future we will see more new businesses being launched, and others that close down or change ownership," he said. "This is a normal process, but the market will offer new opportunities for those who want to open a new business, or enlarge their present one or for those who want to change the nature of their business."

Asked directly whether he was concerned that more food outlets could have to take a decision similar to that of Farsons and tailor their operations or close altogether, Mr Vassallo once again pointed to sustainability as the key ingredient to success.

"As the parliamentary secretary responsible for the self employed and small businesses, my interest lies in knowing that these small businesses are sustainable and that the government is committed to creating the best circumstances that lead to sustainable business concerns," he said. "This is because our country’s economy will be sustainable as long as there are both small and big business concerns that are sustainable.

"Because of this, I am in no way worried but rather I am convinced that in the food industry we will not have any loss of employment on a general level, but rather an increase in employment."

He explained that facts show that the greatest number of applications for business concerns is in this sector, although the necessity of good business planning is also tantamount to ensuring a project reaps rewards.

"I hope that more businessmen will plan better, don’t take on more than they can and are realistic," he warned. "Those who plan wisely and who make sure that there is no waste but at the same time provide quality service and reasonable prices will, I’m sure, achieve competitiveness.

"We are negotiating in an era where competition is a reality. This is a market that determines a number of business concerns and it is competition that leads to the guarantee of choice for the customer."

Mr Vassallo rejected a suggestion that the government should be stepping in to solve the problem of seasonality which affects much of the hospitality sector.

"Up till now, facts show that small businesses can be very competitive because they can control waste and they offer a personalised service, which in this sector is very much appreciated by the customer," he said. "I don’t agree with the concept of excessive supply, or with seasonality.

"Although it is a fact that in one season the market is stronger than in another, many are the businesses capable of offering a good service even when there isn’t mass tourism as we have in summer."

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