Saturday, 26th April 2008
Government offers investment aid to ST
The government has formally offered investment aid to ST Microelectronics, Finance, Economy and Investment Minister Tonio Fenech said.
Speaking to The Times yesterday, Mr Fenech said the aid is for the company to continue investing in Malta, including in new product lines that are not being produced in its Asian plants.
He said the aid offered was "substantial" but would not give further details because talks with the company are still in progress.
Mr Fenech described the situation at ST as worrying for the government, adding that talks had kicked off after the company informed the authorities about the prevailing circumstances.
ST, which employs about 2,000 people and is responsible for around half of Malta's exports, is thought to be planning to reduce its workforce after being put under pressure because of a downturn in the world electronics market and the plunging dollar.
Problems started brewing with the General Workers' Union last week when the company failed to pay its employees the promised bonuses and wage increases as per the collective agreement.
However, the GWU, which represents the majority of workers, said yesterday the company had agreed to pay the due increases with next week's salary.
When contacted, the secretary of the GWU's technology, electronics and communications section, Andrew Mizzi, said the employees were due to get a €232.94 (Lm100) one-time bonus and a €2.91 (Lm1.25) weekly increase with the salary paid on April 18. But this increase was not included in their pay cheque.
Mr Mizzi said that when the union contacted the company, it was told that there had been no instructions from the mother company abroad to include the increase, which had been stipulated in the collective agreement covering the years 2006 to 2010.
During talks, ST said it would only give the promised increase under a number of conditions: that no further increases or bonuses are given for an indefinite period of time, the collective agreement is renegotiated, a new one is negotiated for new employees and the number of workers is reduced drastically, Mr Mizzi said.
He said that although the company wanted to cut its workforce, it had employed about 100 new workers over the past three months, 10 of whom only last Monday.
The GWU said it was waiting to start talks about the company's situation.
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Comments
Your statement that ST Malta is under pressure because of a downturn in the microelectronics market and because of the weak dollar is only a very slight percentage of the truth. The Company has been telling its employees (as well as all and sundry) for many years now (even BEFORE the start of the new Millennium and for those who care to listen properly) that the real threats to the Company operation in Malta are the rising labour costs. ST Malta's manufacturing rivals are all located in the Far East, including China, where the labour cost is a mere fraction of the Malta costs. It takes no genius to therefore realise where the problem really lies. Suffice to say that over the last 12 months ST Malta has reduced its labour force by about 400 personnel and the minimal trickle of employees that have been engaged in the meanwhile are either extremely essential personnel or are otherwise replacements to maintain the production line chain. An STMicroelectronics plant in Morocco, manufacturing similar type devices to the Malta Plant, has already been closed down.
The Government and the GWU should know that the real issue is the heavy differential loss that the Malta Plant is incurring on current labour costs. The GWU itself during the last week gave many employees a copy of a letter sent to them by the Company where this labour loss cost that the Malta Plant Operation is enduring is stated to be in the region of $US 56 MILLION. Will any sensible and sane shareholder continue to carry this loss - including those who operate local businesses - without taking drastic action?
ST Malta personnel are far from being at ease as to what may transpire over the coming months. The feeling of insecurity is paramount and very real. I do not aspire to speak on behalf of all employees, but I can assure you that the majority are really worried that a short term gain could mean longer-term tragedy.
I need not state that this Plant, currently employing 2,100 persons, is a vital artery of the Maltese economy and should not be allowed to become a political football because ultimately it will be a tragic loss for all of us - not only the employees. It is very apparent that those authorities that should really be taking note of what's happening are pussy-footing around the real reasons and coming up with all kinds of useless solutions when the real issue is the LABOUR COST! Why is everybody avoiding admitting that this is the real problem - which is what the management of ST Malta has been saying for years and years.