03 March 2004

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Strengthening the FOI for the years ahead
Malta Federation of Industry President Anton Borg addresses last week’s FOI Annual General Meeting and warns that industry should no longer rely on or look towards government to create jobs. Following are extracts from his speech, in which he also speaks about a change of premises for the Federation, Malta’s prohibitive tax regime, the Federation’s recent exchange of views with social partners and political parties and on strengthening the organisation for the years ahead

Soon after I took over the Presidency of the Federation at the end of February last year, the country passed through two consecutive political events of significant importance that will influence, for many years to come, our business, our economy and our future operations as industrialists in manufacturing, tourism, and service enterprises in general. The referendum in March on EU membership followed a few weeks afterwards in April by General Elections put the seal on the EU membership issue. This majority decision of the people brought about a swift and positive reaction from the Opposition Labour Party that not only decided to remove its opposition to EU membership but also to ensure that Malta will get maximum benefit from this historical decision taken by the people of this country to join the European bloc that will now include twenty five nations constituting the largest and most important economic bloc in the world.
The Federation had done its best during the negotiations leading to EU membership to identify the problem areas and to use all possible arguments and influence in an effort to convince Government to negotiate according to the wishes of our members whenever you came forward with ideas – which you did. I must indeed thank all Council members, the Secretariat and other resource persons from industry who contributed to the expertise we managed to put together. Thanks to this all-round effort, we managed to submit position papers to the Negotiating Team on various sectors and relevant topics and we have clear signs that our submissions were certainly reflected in the concessions granted to Malta under the Accession Treaty. I must not fail to pay tribute to my predecessors in office, especially Joseph Zammit Tabona who was asked to stay for the maximum three years of office as President. His was a difficult time indeed, because the negotiations took place during his presidency of the Federation, during the period 2000-2002.
In the meantime we have tried to keep members continually informed about specific topics that will be presenting changes and opportunities in the post-membership scenarios. We are offering an e-mail service to members of updated information on evolving matters in the EU and we receive queries from members either directly or through the Malta Business Bureau. We encourage you to use our services of the Malta Business Bureau. This is run through our offices in Brussels and in Malta, and both offices have been active and have organised an exhaustive number of information meetings in Malta whilst the Director General of the Bureau in Brussels has personally helped representatives of member firms and even organisations that went to Brussels seeking further information and contacts with the European Commission and other institutions. These activities will continue throughout this and the coming years for your benefit as members of the FOI. The Malta Business Bureau, that the FOI runs through the Malta Business Foundation in conjunction with the Malta Chamber of Commerce and Enterprise, remains in itself a source of information and a facilitator on all things European.
A significant decision in relation to the Malta Business Bureau was taken by the Members of the Federation at an Extraordinary General Meeting held on 17 July 2003. The meeting empowered the Council to negotiate and acquire on a 50/50 basis with the Chamber of Commerce and Enterprise, premises for the Malta Business Bureau in Brussels. This has been done successfully and we are in the finishing stages of a refurbishment program of the premises before we start functioning and even welcoming other sub-tenants to share the burden with us. We have in the meantime received financial backing from Government to run this Brussels Office and we are indeed grateful for the understanding shown in this regard. This again was another milestone for the year under review. I am confident that this will become a feasible project. The singular and dramatic events that happened at the national level have influenced the decisions that the Federation had to take in the course of the year. Council empowered two officers together with the Director General to draw up a revised strategy for the Federation’s operations in the coming years. This was debated and approved by the Council and we shall, this year, be taking steps to put the plan into action in order to strengthen our organisation by improving the services we currently provide to members, by introducing new ones and by making sure that individual attention becomes an integral part of our core operations.
We would not have been able to put into action the idea and plans that we had drawn up during the year, had we not taken one other important step to put the Federation on more solid ground. I am referring to the lease of new prestigious premises at Casa Leone in Robert Sammut Square, Floriana. I am indeed proud that the FOI has acquired this house. It will increase the stature of the Federation and when we are operating from there in a few months time, you will realise how important this is to all of us if we are to be respected as a major employer organisation in this country. We need no longer make apologies about the poor offices we have when we receive Ministers, Ambassadors and foreign delegations. On the contrary, we shall all be proud of the premises of the Malta Federation of Industry. At Casa Leone we shall have enough space to allow for any expansion of services for the foreseeable future. There is enough space for simultaneous meetings, ample space to organise courses for the benefit of members, and, no less important, it will enable our staff to work in a better environment. As I already mentioned, there are in fact concrete plans in place for the Federation to expand on its services to members. These will be announced in due course.
The milestones reached during last year spur us on to achieve even better conditions for industry that is at the moment passing through some difficult times. The Federation’s main theme throughout 2003 was the need to strengthen competitiveness. Undoubtedly we have created a high degree of awareness on the need to protect our competitiveness. Certainly nobody can deny that our Federation was the organisation responsible for bringing the Lisbon Agenda and the targets contained therein to the forefront of the discussions on such an important subject for industry. At the FOI’s insistence, all the social partners are currently talking about this issue. However we now need to take action to tackle the problems that are a hindrance to competitiveness. Our aim must ultimately be to reduce the operating cost per hour in Malta. This can only be done by either reducing our operating costs, or increasing the number of productive hours or, what I believe would be the most realistic, a combination of both. Once the operating cost per hour is reduced to an acceptable level, comparable with that of countries we consider to be our competitors, we must then work to maintain our competitiveness at that level. We need to agree on an acceptable measure of calculating productivity and then ensure that costs, especially wage costs, increase at a slower rate than the increase in productivity.
We should no longer rely on or look towards Government to create jobs. However, we shall certainly hold Government responsible for creating the right operating environment for industry to flourish. In this respect, we have advocated repeatedly that Malta’s tax regime has now become prohibitive for both investors and employees. Solutions must be found in the reform in public finance, with emphasis on pensions and social welfare in general, health and corporations handling the utilities. There is also the need for Government to reduce its involvement in the economy and to reduce public sector expenditure. It is an open secret that at the lower end of the scale there are several able-bodied persons who opt out of the labour market and either go for early retirement on dubious medical grounds or reach out for social benefits whilst working in the black economy. These issues will be our priorities also throughout 2004, because they are the main problems facing entrepreneurs in both manufacturing and service enterprises in our country. They affect Government expenditure and therefore the level of taxation we pay and our operating costs, and they affect the labour market and therefore the level of wages we need to pay in industry to get the right calibre of human resources. We are optimistic that results will also be achieved on these fronts.
We are tackling these issues in various ways. We make our voice heard in the media, we discuss with the Ministers that matter. We get our views across to the Malta Labour Party as the only party in Opposition in the House of Representatives and even to Alternattiva Demokratika. There are frequent exchanges of views with the major Trade Unions both on an individual and private basis, as well as through our membership of the Malta Council for Economic and Social Development. Our tasks are not easy ones. We have got to identify the sore points that have appreciable effect on the time we lose on excessive bureaucracy, on the problem of increasing taxation, on the lack of flexibility in the work-place, on the lack of skills that industry might be looking for, on workers’ excessive sick-leave that employers have to pay without getting anything in return, on the problems with Government organisations, and on so many other aspects that make all the difference in the cost structure of an enterprise.
My appeal to members is to support the Malta Federation of Industry. This is our own organisation. It will be successful if you take interest in what is being done by your council. The general tendency is that there is the FOI that takes care of our issues. Members assume that we come to know of their problems even before they themselves come to know them. Most of the time members think that it is useless communicating with us. It is certainly not the case. Our e-mail and telephone lines are open and we would rather receive timely information direct from members on the problems they are encountering. Push the message down the line in your enterprises. Encourage your managers to get to know about us and to communicate with our Secretariat about any requirements on which we could be able to help. You need to inform us about your needs, your problems and to come up with suggestions. We need your participation or that of your representatives in our Council, the policy working groups and committees.
I am proud to announce here that for the first time in some years, 2003 has seen an increase in the number of FOI members. Although this in itself is extremely encouraging, we still need to pursue the matter of attracting more members on a regular basis. To this extent, all of us FOI members have a part to play. No extraordinary effort on the part of our Council members and of our Secretariat can replace your support by working closer with us - it is the life-line of the FOI. It is most important for the Secretariat and your elected representatives to know in what shape its grassroots are and how to sustain them.

Copyright © Newsworks Ltd. Malta.
Editor: Saviour Balzan
The Malta Financial & Business Times, Newsworks Ltd, Vjal ir-Rihan, San Gwann
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