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The Malta Employers’ Association has advised government to watch out for greater wage gaps in the economy, which might be created if Smart City does materialise since more IT jobs will be in demand and other occupations will be getting a lower salary.
 Interviewed by Business Today, PIERRE FAVA also commented about the pensions issue and insisted that to sustain a good quality of life as we know it today, a good back up for the future is needed. People have invested a lot in property and this, he emphasized, is a source of income that also needs to be taken into consideration.
Speaking on the MEA’s relationship with the unions, Fava says it has matured to such an extent that they confer with each other on various employment related issues. The enactment of a Social Pact needs the backing of government, but, he concludes, at enterprise level, today there exists a tacit agreement with the unions.
There are a number of constituted bodies; the MEA, FOI, GRTU and Chamber of Commerce. This might give the impression that there are too many employers’ bodies. What is MEA’s distinctive characteristic?
I believe that in the working society that we have today, there is place for all the constituted bodies. They all have a distinct role. Sometimes, yes, they do overlap but I believe that MEA’s winning points is that it specialises in industrial relations and anything to do with employment employer-employee. I see MEA as a sort of boutique in a niche market. In recent years it has been strengthened very much and thanks to the Director General – Joseph Farrugia there has been an increase in membership and in the perception of the Association. I see many members of Chamber, FOI and MHRA come to us for specific advice when problems arise with employees or with the department of employment and industrial relations.
The Malta Employers’ Association has claimed that lack of market surveillance, particularly the evasion of Value added tax as well as eco-contribution by traders bringing goods from abroad without complying with local administrative and fiscal obligations is anti-competitive and placing businesses complying with regulations at a disadvantage. To what extent is this being felt? Can this be better regulated? How?
I’ve had a very long discussion with the Chamber of Commerce about this. Obviously the Chamber of Commerce is concerned about its members losing trade. We are concerned that at the end of the day there will be loss of jobs, lack of employability. Companies like the one I am coming from have a structure. We are importers, distributors and have retail shops. We have a structure of employees, management and advertising. These traders do not have this structure; they usually are a one-man show who go abroad, bring products to Malta and sell them in shops in a clandestine manner.
This is something we have talked to the authorities about and the Chamber of Commerce is taking the lead because it affects them even more but what affects us is employment at the end of the day. In a recent meeting with the President of Malta we did explain to him that this is going to dent employability in Malta. We are in favour of the EU we were always in favour of joining the EU but the EU is there for opportunities and these are people who are not just taking the opportunity but are abusing of the system.
I know for certain that even customs is going to clamp down on this. I believe that it will come to an end.
The public holidays issue has caused much debate. What are MEA’s recommendations and what is it anticipating? When is there going to be a decision?
A couple of months ago I had a meeting with the Presidents of the other constituted bodies and what we decided was that MEA takes the lead in forming a committee. It was chaired by past MEA president, Arthur Muscat and this committee was formed by a number of constituted bodies namely Chamber of Commerce, FOI, and MHRA and together we came up with a few proposals for government. What we did was that we met the unions concerned GWU, CMTU and UHM and discussed with them what our proposals were. Obviously it wasn’t an easy task, but with flexing we did come up with some sort of proposal.
We went to the Minister about this and he did push us so that through the Employment Relations Board (ERB) we come up with a solution. When we came with a solution and were planning to discuss this at the ERB but the meeting was cancelled. We did make our representations to the Director of Labour and to the Minister regarding the ERB meeting but till now two ERB meetings have been missed and the matter has not been discussed. Our stand is and will be that if this matter is not going to be on the agenda of the ERB meeting then we will consider not be attending the ERB meetings. We believe that the solution we were going to propose was good both for the manufacturing industry, for the hotels industry and for employment in general. One sector that has been left out of the equation when government legislated is hotels and together with the MHRA we worked a lot on this and our solution was in the circumstances prevailing, the best one possible for all those concerned.
Dr Alfred Sant was recently quoted saying that those who upheld Budget 2007 are in government’s pockets. MEA felt the necessity to protest. Why? What is the MEA’s relationship with the political parties?
Basically our relationship with both Dr Alfred Sant and with the Prime Minister is pristine to say the least. We meet on a regular basis but obviously we do not go into partisan politics. We felt that the comment that Dr Sant passed was aimed at us constituted bodies. Together we issued a press release and Dr Sant wrote back to us on a personal basis explaining his position. I think that is a closed chapter.
Did he excuse himself?
No, he did not excuse himself he simply explained that he did not target his comments towards us. I think it was a fair comment from Dr Sant and the other constituted bodies including the MEA were satisfied with the answer.
Which budgetary measures was MEA lobbying in favour of in the consultations preceding the budget?
MEA pushed on various points but mainly to increase the employment base in Malta. One condition was the part time jobs which we stressed on and government took heed. There are various positive changes happening for part timers and that would increase employment. Another point was to get more women with children out to work and government has taken a very good position down this road with contributions towards childcare.
A revision in tax bands was a very positive move. People who before were holding back from doing overtime will now do it more freely. This will generate more cash in hand and will help the economy to flourish.
There are rumours that legislation concerning part time employees might change at EU level. On a national level this would mean that there might be discrimination between part time employees’ whose job is the principal employment and others whose job isn’t. How does MEA see this?
MEA did push for a change in the part time regulations. What was proposed and done till now was to have NI contributions paid pro rata instead of a flat rate. What EU is proposing is totally changing the scenario and having part time employees whose part time is their sole employment having pro rata benefits. This will drive employers to employ people who already have full time employment since they will be less costly to the company. This is something which should be discussed and one should see whether the issue has been discussed at EU level but the MEA will be taking a leading role in this.
What are your impressions on the MCESD?
I have been President at the MEA since March this year. What I have seen at MCESD so far and in previous years when replacing other presidents, is that many a time discussions at MCESD are taken over by one or two organisations.
I do not think that all organisations, including both employer bodies and unions, are given enough time to air their views and discuss. MCESD should be structured in a way where all organisations are equally given enough time to present papers about their positions and these papers are passed on to the other constituted bodies. The structure of the MCESD should be changed so that after matters are discussed we give our proposals to government. If there isn’t consensus then there will be a leading opinion of the majority and a secondary opinion so that every time there is a national matter, a paper is prepared and presented to government.
The government will then see the MCESD role as more interactive and more leading than it is today. We had a discussion during the early summer regarding this, we had Joseph FX Zahra coming over listening to us and we have an MCESD meeting lined up where his findings will be presented to us. This will pave the way to changes which I have envisioned for a very long time.
The fuel surcharge has become somewhat of a national problem for businesses. Has this increase stalled production?
When we were presented last year with the surcharge issue, the minister concerned had everything ready and planned so we were given a fait accompli. All we could do that day was give our reactions.
I feel that the way the surcharge came in, at such a short notice did shock all the industry be it manufacturing, retail, wholesale and services. All employers were shocked. At the end of the day it is eating into our profitability but we had discussions and what has to be done is to become more efficient. We have to explain to ourselves and to our employees that we have to make good use of our energy. The government took a good step in the budget by giving incentives for people to buy eco-friendly white goods and it is the way forward. We have had a shock but it hasn’t passed, I think that it will resurface.
What are your views on Smart City?
Smart City is a very positive step forward for ICT. What we are not very clear about is how employment will be created, where and in what areas. We know that there will be a lot of employment in IT and ancillary employment but the structure of the smart city and how it will operate till now has been very vague. We have seen various articles in the press of other things happening around Smart City and I must say I am not very comfortable with that. I believed that Smart City was going to be a Smart City per se and around it there would have been some apartments and ancillary movement but not to the extent I have seen in the press. I have been to Dubai but I cannot compare Malta to Dubai. I was looking at Smart City as giving impetus to the hotel industry and to existing apartments in Malta. It should be made open to the public, the land around it should be made into a public park and having a modernised commuting system to and from the North to the South of the island.
It is the fourth time that a venture capital fund is mentioned in a budget but not implemented. The PM has attributed this to lack of innovative projects, Dr Charles Mangion said that this is an insult to students and workers. What are you views? Will a venture capital fund be taken up if made available?
Yes. First of all a venture capital fund would be a good incentive for graduates coming out of university to be entrepreneurs themselves. We have institutions but when we come to investment for new businesses these people don’t find the help that they require. Some manufacturers in Malta produce low volume specific products and this is a very important role for the Maltese because there aren’t many companies worldwide who can produce specific products. And this is where the venture fund can be used. We can excel at producing products which are more value added than other competing countries.
How involved is MEA in the drafting of employment legislation?
MEA is very involved. The Director General and our lawyer play a very active role. MEA is consulted by government on a regular basis and this reflects the high esteem that the MEA is held in by government. We are also consulted by the Opposition on their position papers and this reflects the high esteem the leader of the opposition holds of the MEA.
We obviously participate in international conventions and seminars on various issues which gives us an insight on what is happening all over the world. We are hands on.
How do you see the relationship between the unions and employers?
I have been in the MEA for the past eighteen years so I have seen the ups and downs but I must say that in recent times we have had a very positive relationship. We meet the unions on a regular basis and I believe that it is a relationship which matured and reached a level of discussion even advisory. We do consult the unions to see their point of view on various matters and they do the same. I don’t tell you that we do not have our clashes but our clashes are discussed and it is more of a ‘sit around the table and discuss’ relationship.
How soon should pension reform be addressed?
We are faced with two opposing views. The government is telling us that it is imminent and the opposition is saying that it is not required for the time being if the funds are appropriately utilised.
We need to address changes because we have a state of facts that by 2050 we will have two workers per pensioner. We need to take action. Today we have a ratio of approximately 4:1, in 2050 it will be 2:1. If you tell me that there is no problem coming I will tell you that you need to put your feet on the ground. We need to take action. Obviously we do not always agree with the way government wants to implement things. The pension itself needs to be restructured, we believe in a second pillar but we also believe people nowadays already have a third pillar in hand and this needs to be looked into.
Do you think negotiation for another social pact should be attempted?
I did not form part of the negotiations for the social pact, but what I saw was that all the social partners got together to discuss what was really needed for Malta to move forward. Although the social pact was not agreed to, many issues and positive measures suggested have been implemented so without there being a social pact, I think that we do have one. The unions are being very receptive to the problems many companies have but I do believe that if we have government backing a social pact then yes we can have an official social pact.
Pierre Fava was interviewed by Charlotte Camilleri |
