Defining and assessing precarious employment

The Malta Chamber of Commerce, Enterprise and Industry has in the past years closely followed developments relating to “precarious work”.

The issue of precarious work is contained within specific sections of the labour market

As a responsible employers’ organisation, the Malta Chamber is not in favour of workers’ exploitation as this runs counter to its social objectives while at the same time distorting fair competition.

The Malta Chamber believes it is incorrect to treat this matter in isolation because it is an intrinsic part of the broader, labour market competitiveness issue which, in turn, is part of Malta’s general economic policy. Besides, it insists that “precarious work” must be both clearly defined and quantified enabling policymakers to place it into the right perspective.

The term has, to date, not been clearly defined and there is no distinction between precarious and illegal employment. The Malta Chamber has never stood for illegality and deplores the employment of people in breach of the law, the deprivation of social security benefits or fundamental rights, including freedom of association, or the employment under conditions that are, nowadays, no longer acceptable.

On the other hand, working conditions that include flexible hours, performance bonuses or definite contracts are positive in that they safeguard employment and reward good performance.

In addition to the need for clear definitions, efforts must be made to quantify the problem. Any further measures to combat abuse in this regard must not be based on anecdotal evidence but on reliable data that accurately exposes the extent of precarious work.

While there are no available statistics to confirm or otherwise, the Malta Chamber is under the impression that the issue of precarious work is contained within specific sectors of the labour market. The Malta Chamber is also of the understanding that the incidence of the matter was brought about in response to (a) rigidities and bureaucratic procedures involving the employment of certain categories of workers in the public sector and (b) the fact that certain public tenders are automatically awarded to the lowest bidder.

Consequently, Legal Notice 44 was published early last year in an effort to regularise the nature of employment relationships, in particular to eliminate abuse in terms of pseudo self-employment. Following this development, there is an automatic presumption of an employer/employee relationship in the event that a person fulfils at least five out of eight criteria.

As already highlighted, this issue is part of the larger labour market competitiveness picture in which Malta has been scoring consistently low within such measures as the World Economic Forum ranking. Over-zealousness in dealing with the matter of precarious work can lead to further slippage down this score, which the country can ill afford. Unnecessary restrictions on labour market flexibility can be counterproductive to economic expansion, particularly in the current circumstances when job creation remains a primary objective.

In terms of flexibility, the Malta Chamber sees a lot of merit in adopting performance-related remuneration schemes. These are specifically designed to motivate employees and to align their effort more closely with the aims of the organisation. Under similar arrangements, the employee’s total package would consist of a guaranteed basic salary and the performance allowance besides any other remuneration which may be applicable. As long as employers operate in recognition of their legal obligations and remunerate their employees accordingly, they should not be coerced into altering the parameters of their performance-related remuneration scheme and any accusation of exploiting workers would be totally unfounded.

Furthermore, social partners should not use “precarious work” as an excuse to contemplate an increase in the minimum wage, in an effort to ascertain a higher ‘guaranteed’ pay. Any increase in the statutory minimum wage would lead to an automatic increase in all wages across the board. If wages continue to increase beyond productivity levels – as empirical evidence continues to show – the country risks placing its economy and the social welfare model in danger.

We must also ensure that no discriminatory measures are set in place to avoid abuse. The Chamber has already objected to proposals made to restrict eligibility in Government contracts to companies whose workers are covered by a collective agreement. Any mechanism to ensure legitimacy and a fair level playing field must not be discriminatory. Besides, similar proposals infringe on workers’ fundamental liberty to join a union or otherwise.

There are certainly other clearer and more acceptable ways of dealing with the situation, for instance through adequate monitoring across various levels.

In conclusion, the Malta Chamber reiterates its position in favour of safeguarding acceptable conditions for workers, as well as a fair level playing field for business. Going forward, a clear distinction must be made between precarious and illegal employment. The Malta Chamber will not condone the latter. On the other hand, once “precarious work” is satisfactorily defined and quantified, the social partners will certainly find the Chamber’s full support in finding acceptable ways to ensure workers’ rights are thoroughly observed in their interest and in the interest of fair competition.

David Curmi is the president of the Malta Chamber of Commerce, Enterprise and Industry.