Updated - See government reaction below - A government scheme to employ nearly 600 jobless people will be earning the General Workers Union more than €8.5 million over five years, The Sunday Times of Malta can reveal.
Also, while these ‘new’ workers – who in the meantime have been struck off the unemployment register – are being paid from public funds, the National Statistics Office categorises them under private sector employment because they are on the books of a private foundation owned by the GWU.
These details emerge from the contract signed between the government and the GWU, obtained by this newspaper under the provisions of the Freedom of Information Act.
The Community Work Scheme of the Jobs Plus agency – formerly the Employment and Training Corporation – is now managed by the GWU through a government concession.
While the government and the GWU had initially confirmed some details of the scheme, they both refused to publish the contract and the payments associated with it, citing “commercial reasons”.
The government has now provided the contract following a request submitted under the freedom of information law.
The trade union was selected following a request for proposals which attracted two other bidders: a consortium formed by Grand Thornton, JCS Demajo and Konnect Ltd and another from JF Services Ltd. However, according to the government, the GWU submitted the best bid.
The contract stipulates that as from February 1, 2016 and for the following five years, a new non-profit foundation set up by the GWU will employ and take over the management of some 600 long-term unemployed from the books of Jobs Plus.
In compensation, the foundation is to be given an ‘operational fee’ of €980 a month per employee, from which it should pay the new full-timers the standard minimum wage.
The scheme allows the GWU – a ‘friendly’ trade union – to make a considerable profit. Its foundation will be raking in about €3,000 a year on each ‘jobless’ person assigned under the scheme – amounting to a profit of €1.7 million a year.
“The scheme also enables the government to manage some of its employment statistics,” a top Jobs Plus official said.
“At the same time that it struck 600 long-term jobless off its unemployment register, it also boosted its employment statistics as the new government-paid jobs were put on the books of the GWU’s foundation – a private entity. Thus, the NSO considered this as growth in private sector employment.”
When asked, a spokesman for the NSO confirmed that these employees werecategorised under the private sector for statistical purposes.
The foundation’s employees are assigned work with either local councils or other government departments and their pay cheques come from public funds.
This is not the only government income which the GWU is currently bringing in. Since Labour returned to power, the government has been leasing a number of properties owned by the GWU for public use.
Arms Ltd rents part of the GWU HQ in Valletta for its use, something which the Auditor General found to be illegal, while Transport Malta is paying the union €500,000 a year for the use of part of the A3 towers in Paola, owned by another GWU commercial entity.
Government reaction - GWU profit will be less
In a reaction, the Ministry for Education and Employment said the General Workers’ Union would not make a profit of €3,000 a year on each of the 600 previously jobless workers transferred to a foundation.
The ministry said one needed to consider national insurance contributions the union would have to make on behalf of the employees and statutory bonuses, which amounted to €1,400 per year per employee.
“In addition, no consideration is given (in the above article) to the management and overheads incurred in the management of such initiative,” the ministry said, insisting the profit was “far less” than the €3,000 indicated in the report.
It did not say what profit the union will make from the scheme.
The highest offer received was 20 per cent above the cheapest offer
The ministry explained how the scheme was awarded to the GWU by Jobsplus after a competitive tender. The scheme saw 600 long-term unemployed individuals being transferred to a foundation run by the union, where they receive the minimum wage.
The union gets €980 a month per employee from which the minimum wage and NI contributions are deducted.
However, the Education Ministry noted that the 600 individuals had formed part of the Community Work Scheme between 2009 and 2015, through which they only worked for 30 hours, receiving 75 per cent of the minimum wage without benefiting from leave or sick leave. Under the new scheme, the individuals were earning a minimum wage and enjoyed full employment rights, it said.
The foundation’s employees are assigned work with local councils and government departments.
The ministry defended the choice of the GWU, insisting its offer was the most competitive. “The highest offer received was 20 per cent above the cheapest offer,” the ministry said. The tender had also stipulated that the prospective employer should pay all workers the minimum wage.
The ministry said that, over the past years, a number of social partners, including trade unions had benefited from Jobsplus contracts.