Malta’s authorities fail to fully understand the implications and requirements of competitiveness, and the local business environment is not ‘friendly’ enough, Malta Chamber of Commerce, Enterprise and Industry president Helga Ellul told The Times Business yesterday.
Ms Ellul said that while the Chamber welcomed initiatives announced in Budget 2011 like training and life-long learning which put the onus on job-seekers and employees rather than businesses, it was disappointed months of consultation ultimately had little influence on the government’s final document.
The Chamber, however, urged stakeholders to return to the negotiating table to fine-tune the Budget measures to ensure the recovery recorded this year translated into some economic growth in 2011.
“Our question is: Is 2011 going to be a year of growth?” Ms Ellul emphasised.
“We are aware of the constraints the Minister had in this Budget. Mr Fenech had to be prudent and did not introduce austerity measures as other governments did. We acknowledge that. However, looking back on the year, growth was mainly recorded in the financial sector. All the other traditional sectors, like tourism, manufacturing and retail, picked up but have not reached their 2008 levels of profitability.”
The Chamber – which has presented the Finance Minister with a wide-ranging paper in reaction to the Budget – is especially disappointed a review of the cost of living adjustment mechanism was not announced on October 25.
Ms Ellul stressed the Chamber had never suggested COLA not be retained but had, since the last Budget, called for an urgent rethink of how the adjustment was calculated. Among its detailed recommendations, the Chamber had proposed COLA workings be sector-specific as a way to drive business and ensure competitiveness.
Working groups established within the Malta Council for Economic and Social Development had put in a great deal of work behind the discussions over COLA, but, among other things, the “exceptional circumstances” mentioned in legislation related to COLA have not been defined.
“We were disappointed because at MCESD level we gave so much input. Yet when it came to the crunch, the agreement to review COLA so that it would have a positive impact on the economy came to nothing,” Ms Ellul said.
The Chamber had also hoped to see the introduction of labour-flexibility measures like banking of hours, a system widely accepted throughout the EU but which local unions oppose.
Banking of hours allows companies to call in their employees on extended hours to work on orders or projects and to grant them reduced hours when workloads are lighter.
Ms Ellul said the system allowed businesses to retain highly skilled workers and helped employees strike a better work/life balance. “We could adopt the system as a country and then unions could negotiate procedures around it,” Ms Ellul suggested. “It is applicable to all sectors for different periods of time. New services coming to Malta are very project-based and it is ideal. Banking of hours also contributes to securing jobs and does not necessarily lead to loss of overtime. A couple of international companies in Malta have implemented the system. We are a small country and flexibility should be one of our main drivers. We do not bite the bullet – these are the measures enterprise needs to see.”
While it welcomed the increased availability of EU funding and support to local business, the Chamber said little had been done to streamline procedures and small businesses were put off by the bureaucracy.
The lack of established timeframes for the introduction of schemes was also harming business. The Chamber could not answer queries by firms interested in other schemes announced in the Budget as there was little information available.
“In all fairness, we are still talking about the refunds for eco-contributions of 2004,” Ms Ellul pointed out. “The minister must work hand-in-hand with stakeholders if the economy is to grow. If the authorities are not in tune with business, we will not move forward. This year investment has fallen. There will be repercussions if companies do not invest.”
The president reiterated that the retention of old practices, like summer half-days for public servants or three- to six-month-long procedures to issue work permits, was costing business.
Despite the business community’s plea for no more government-induced costs, government-owned factory rent was being revised, a service charge was in the offing, and there was a new tax on fuel besides the utility bills.
Ms Ellul said springing new costs on sectors like tourism was harmful as it hindered the execution of business plans.
“Issues like new taxes or charges can be dealt with if all stakeholders come to the table and negotiate,” the president said. “Businesses might not like government-proposed measures, but at least they would be made aware of new costs and be able to include them in quotations. Let us not stop at the Budget and return to the table to continue discussing our business environment.”