Wages and salaries in government companies

Workers are entitled to their wages because they are providing either a good or a service to their employers and so they are an important factor of production. Christ himself declared that "... the worker is worth his keep" (Matt. 10:8).

When industrialisation embarked on its long trek, workers were initially paid miserable wages. Unfortunately, the authorities sided with capitalists and the workers did not have any protection and rights. Economists at the time theorised that maximum labour supply occurs at subsistence wage level, justifying that approach in terms of "morals" as workers were considered depraved people.

It was further theorised that within the ambit of circulating capital there was a wages fund from which workers were paid before the manufactured product was sold. This entailed that, for employers to pay wages, they had either to borrow money at a charge or else play with the productive cycle.

With greater theoretical sophistication it was realised that wages could be adjusted to the workers' marginal physical product. Economic theory came to the employers' rescue to perceive at what point workers were needed and when they would be superfluous. Financial services have helped business people to overcome fears and misconceptions on potential bankruptcies.

But these were not enough to allay workers' fears of being paid a pittance for a hard day's work. At first the only way out for the workers was to rebel against their employers and riot in the streets. When trade unionism made its mark, workers' rights and welfare increased substantially.

The new problem was union power. Employers feared this power as it disrupted their plans and businesses. So they invested more in labour-saving machinery and hiring more managerial expertise. In this way it was thought that trade union power could be contained.

But unions were all out to increase their rights and they succeeded until governments realised that unrestrained trade union power might jeopardise the national economy. To forestall industrial problems many governments enacted laws to provide more remedies for injustices committed at the place of work. This had the effect of a decline in union membership.

In Malta trade unions are still very strong despite the fact that governments here set up systems promoting workers' rights and providing for remedies when discrimination or injustices are committed.

The reason, perhaps, for such union strength is that trade unions have the power to raise wages to unreasonable levels and governments are unable or unwilling to resist such abusive behaviour.

Recently, it was reported that the wages/salaries at a government company, Interprint, range between Lm14,500 and Lm19,000. It is not surprising that such a firm runs losses when its labour costs are so high. It is surprising that a loss-making enterprise can award its employees such princely remuneration.

The lowest grade in the Interprint pay scale almost equals the salary of the Permanent Secretary at the Office of the Prime Minister. In other words, the pay of the head of the civil service is in the range of the lowest paid Interprint worker!

Ministers' pay is lower than that of the highest paid worker at Interprint. Indeed, not even the Prime Minister, the person responsible for the administration and governance of the country, can reach the maximum salary that Interprint pays. There must be a reason somewhere along the line. The reason lies in union power and in its strategy of negotiating separate pay deals for each government company. Thus, one can find a courier working in a government company being paid over Lm30 a month more than his equivalent in a government department.

Differences between government departments and government companies are not limited to pay. There are other benefits. Workers in one particular government entity are entitled to 70 per cent of their pay if they retire early; others have generous grants, allowances, paid leave and other "craftily invented" rights incorporated in collective agreements.

Such situations give rise to many doubts. One would be justified to ask whether a person appointed to a given post is able to negotiate a collective agreement; whether there can be collusion between trade unions and government negotiators; whether all collective agreements in this category are sanctioned by the government before they are signed and whether there is a special unit that examines, investigates and assesses the impact of such different conditions.

It makes sense to reward employees who have succeeded in making profits; but it is debatable whether increases are justified when companies are making losses. When trade unions insist on pay increases when losses are incurred, they risk being accused of acting irresponsibly.

It is time to reassess the whole industrial relations front.