Will port work savings be passed on?
The Consumer and Competition Division will be carrying out market surveillance over the coming months to see whether the hard-earned reductions in port costs are passed on to clients.The surveillance was suggested by the Malta Maritime Authority which...
The Consumer and Competition Division will be carrying out market surveillance over the coming months to see whether the hard-earned reductions in port costs are passed on to clients.
The surveillance was suggested by the Malta Maritime Authority which wants to ensure that the savings are passed on to exporters and retailers. Authority chairman Marc Bonello said that the division would probably carry out a survey.
"We want to see whether the prices of goods benefit from the reductions of around 20 per cent that we negotiated and, if so, by how much. If the reduction is not passed on - in full - we will want to know why," he said.
"The receivers of the cargo are the importers who supply retailers, and the export industry, which relies heavily on the importation of raw materials. I would also hope that the retailer would keep the same profit margin and pass on the savings to the consumer."
The port reform agreed recently cut the tariffs paid to licensed port workers in two ways. It reduced direct payments to them on the basis that the volume was growing, keeping their overall income stable. However, the major cuts were made by reducing contributions to the Pensions and Contingency Fund, which has accumulated Lm16 million over the years.
"The Pensions and Contingency Fund was growing at an enormous rate for nothing. It was meant to cover the liabilities of the port workers but it can already provide this more than once over. What the government did was guarantee that the fund would cover the liabilities so that contributions can be reduced, to help industry.
"What will it mean to their earnings, which reach up to Lm22,000? Since we started talking about port reform, volumes have increased which will more than make up for the reductions. I am sure that they can maintain the same standard of living if not actually improve it.
"They also have to realise that by increasing their efficiency they will be able to deal with even larger turnovers and earn even more money," he said.
The reform also achieved another milestone: The removal of the cap in the law, which states that there can only be 400 licensed port workers (in fact 357 are active). Port workers were originally reluctant to change this as the total revenue is shared between them: More workers means smaller pieces of the cake. However, terminal operators have been crying out for more people.
This was solved first of all by reassuring them that the cake was getting larger and secondly by the creation of a new category of workers.
These auxiliary port workers will drive the trucks within the terminal that transport containers to and from the quay, the work for which there was the most shortage.
The auxiliaries will not be allowed to do other work (such as lashing containers and locking them together) and will be paid for the work done from the "cake" before this is shared out between the licensed workers.
"The auxiliary port workers will probably be paid on a per hour basis. Why probably?
Because this will be determined in a service level agreement between the port workers and the operators, which will lay down the number of auxiliaries, the truck driving rate and the duration of the contract," he explained.
There were a number of boards related to port work, which will now be merged to form one: the Port Workers' Board. From time to time, it will review whether the number of licensed port workers is sufficient and will make a public call when needed. However, change will be gradual, possibly stretching over decades, Dr Bonello explained.
"Around half of the 357, the older ones, have one-time inheritance rights given in 1992 enabling their son or daughter to take over when they stop work. (It is envisaged that these sons and daughters will form the pool of auxiliary port workers, with an open call if these are not sufficient to meet requirements.) But once the next generation has served its time and the remaining workers without inheritance rights retire, there will be an open call."
It has taken years to get this far but Dr Bonello believes that it was worth it.
"Had we given in to the demands of the port workers before the reform, we would have had nothing to bargain with. Negotiations were rather protracted but at the end the port workers showed a lot of maturity in their approach and this also reflects the good spirit in which these negotiations took place.
"Clearly, from the government side, we would have wanted more reductions in tariffs but it is quite remarkable that we managed to achieve reductions with no industrial unrest - which had seemed quite likely at the outset. But those round the table managed to remain focused. I cannot say talks were always plain sailing but we managed not to veer off course.
"And of course, the government has a social conscience and we cannot hammer only one section of the port industry to make savings. There are other players in the industry: the foremen; the ship agents; and the hauliers (burdnara) in addition to the terminal operators.
"What the receiver of goods pays is made up of payments to all these sectors. We gained some headway with the terminal operators who gave a reduction in their tariffs.
At the moment we are talking to the foremen of port workers and we are sure that we will also reach an agreement with them, which will also provide additional reductions to the industry.
"Then there are the ship agents and the burdnara who operate in a liberalised environment and are supposed to be competing to give the industry the cheapest prices. It remains to be seen whether we can actually achieve further reductions in this liberalised environment."
The surveillance was suggested by the Malta Maritime Authority which wants to ensure that the savings are passed on to exporters and retailers. Authority chairman Marc Bonello said that the division would probably carry out a survey.
"We want to see whether the prices of goods benefit from the reductions of around 20 per cent that we negotiated and, if so, by how much. If the reduction is not passed on - in full - we will want to know why," he said.
"The receivers of the cargo are the importers who supply retailers, and the export industry, which relies heavily on the importation of raw materials. I would also hope that the retailer would keep the same profit margin and pass on the savings to the consumer."
The port reform agreed recently cut the tariffs paid to licensed port workers in two ways. It reduced direct payments to them on the basis that the volume was growing, keeping their overall income stable. However, the major cuts were made by reducing contributions to the Pensions and Contingency Fund, which has accumulated Lm16 million over the years.
"The Pensions and Contingency Fund was growing at an enormous rate for nothing. It was meant to cover the liabilities of the port workers but it can already provide this more than once over. What the government did was guarantee that the fund would cover the liabilities so that contributions can be reduced, to help industry.
"What will it mean to their earnings, which reach up to Lm22,000? Since we started talking about port reform, volumes have increased which will more than make up for the reductions. I am sure that they can maintain the same standard of living if not actually improve it.
"They also have to realise that by increasing their efficiency they will be able to deal with even larger turnovers and earn even more money," he said.
The reform also achieved another milestone: The removal of the cap in the law, which states that there can only be 400 licensed port workers (in fact 357 are active). Port workers were originally reluctant to change this as the total revenue is shared between them: More workers means smaller pieces of the cake. However, terminal operators have been crying out for more people.
This was solved first of all by reassuring them that the cake was getting larger and secondly by the creation of a new category of workers.
These auxiliary port workers will drive the trucks within the terminal that transport containers to and from the quay, the work for which there was the most shortage.
The auxiliaries will not be allowed to do other work (such as lashing containers and locking them together) and will be paid for the work done from the "cake" before this is shared out between the licensed workers.
"The auxiliary port workers will probably be paid on a per hour basis. Why probably?
Because this will be determined in a service level agreement between the port workers and the operators, which will lay down the number of auxiliaries, the truck driving rate and the duration of the contract," he explained.
There were a number of boards related to port work, which will now be merged to form one: the Port Workers' Board. From time to time, it will review whether the number of licensed port workers is sufficient and will make a public call when needed. However, change will be gradual, possibly stretching over decades, Dr Bonello explained.
"Around half of the 357, the older ones, have one-time inheritance rights given in 1992 enabling their son or daughter to take over when they stop work. (It is envisaged that these sons and daughters will form the pool of auxiliary port workers, with an open call if these are not sufficient to meet requirements.) But once the next generation has served its time and the remaining workers without inheritance rights retire, there will be an open call."
It has taken years to get this far but Dr Bonello believes that it was worth it.
"Had we given in to the demands of the port workers before the reform, we would have had nothing to bargain with. Negotiations were rather protracted but at the end the port workers showed a lot of maturity in their approach and this also reflects the good spirit in which these negotiations took place.
"Clearly, from the government side, we would have wanted more reductions in tariffs but it is quite remarkable that we managed to achieve reductions with no industrial unrest - which had seemed quite likely at the outset. But those round the table managed to remain focused. I cannot say talks were always plain sailing but we managed not to veer off course.
"And of course, the government has a social conscience and we cannot hammer only one section of the port industry to make savings. There are other players in the industry: the foremen; the ship agents; and the hauliers (burdnara) in addition to the terminal operators.
"What the receiver of goods pays is made up of payments to all these sectors. We gained some headway with the terminal operators who gave a reduction in their tariffs.
At the moment we are talking to the foremen of port workers and we are sure that we will also reach an agreement with them, which will also provide additional reductions to the industry.
"Then there are the ship agents and the burdnara who operate in a liberalised environment and are supposed to be competing to give the industry the cheapest prices. It remains to be seen whether we can actually achieve further reductions in this liberalised environment."