MCESD: Twenty years later

The Malta Council for Economic and Social Development is 20 years old. It was set up in November 1988 as MCED, that is without a reference to the social dimension, with the specific aims of designing a development plan and proposing a wages policy. Rather than marginalise trade unions, the Maltese government at that time sought to incorporate them into the formulation of national, economic and social policy so as to make the transition to a more liberalised economy smoother. This negotiation at national level in a tripartite institution, representing the three social partners, was meant to complement rather than substitute negotiation at the enterprise level.

To the raw observer, the achievements of MCESD, throughout its 20 years of existence, might not sound as being remarkable. The agreement on incomes policy in 1990 with its mandatory cost of living adjustment (COLA) based on the retail price index (RPI), in some way or other, defused the confrontational stance so evident in the beginning of the 1990s during the trade dispute at Phoenicia Hotel.

By and large, the council, by keeping the social dialogue at national level alive, offered effective brokerage of a trade-off between different interests. The pre-budget discussion with the Minister of Finance has enhanced its profile.

In 2001, it was given a legal status by the MCESD Act. Its role is still advisory and consultative but its aims have been redefined. Its main competences are defined as being able to: (a) "promote social dialogue and consensus among social partners on issues related to sustainable economic and social development and (b) propose desirable and feasible goals and targets to give effect to the strategic economic, financial and social development objectives of the government and to recommend measures which would further their attainment" (MCESD Act, Chapter 431 of Laws of Malta).

Thus, MCESD represents a platform that allows employers and trade union representatives to exert influence on policy making. Symbolically, it is an institution that possesses the ability to raise and debate issues that concern the political and economic sustainability of the state. By acting as a forum for social partners to exchange information and provide mutual support, it can act as a stepping stone to the renegotiation of capital-labour relations that is able to meet the challenges posed by the global economy.

During the last two decades, capital-labour relations have changed dramatically, mainly to the disadvantage of labour. Envisioning the MCESD as an institution that should redress such an imbalance is too idealistic, while stating that the members should attempt to suppress their differences would sound as mere glib talk. This does not however mean that members representing different organisations should use the mechanism of this institution to pursue their self-interest. What they should do is to acknowledge these differences and view them as an opportunity to make MCESD more than the sum of its parts.

Its role would be better served if it acts in the background of activities, so to speak. Its invisible hand can convert egoistic behaviour into something cooperative and socially constructive. In other words, the role of MCESD should not be seen as merely symbolic. On the contrary, it should strive to adopt a project-oriented approach by systematically establishing internal working structures, such as committees and/or issue-specific projects and working groups that aim at making the decision-making process more streamlined towards attainable goals that enhance the competitiveness of the Maltese economy and, at the same time, sustain social cohesion.

Admittedly, there are many factors and conditions that can impede its capacity to act, to overcome the self-interest of its members and to develop into an institution with a national perspective. Its practices can be influenced by a government approach related to the quality and timeliness of the information it transmits to the members of this institution. It has to operate within the parameters of an inflation paranoia that has gripped EU member states in order to converge with the Maastricht criteria, the intensification of competitiveness and the increasing mobility of capital that can easily change the localisation of economic activity.

The recent financial crisis has added a new dimension to these harsh realities. But these realities should spur the social partners within MCESD to communicate with each other in a more meaningful way so as to devise a viable strategy.

By pursuing common, collective goals, MCESD can become a forum that can influence national policy making. But will members at MCESD ever manage to develop common perspectives and mutual understanding? Will it remain merely a symbolic institution with a passive attitude and showing no capacity to act? Can it play a role in overcoming factionalism?

Mr Rizzo is acting director of the Centre for Labour Studies at the University of Malta.