After years of active representations on the issue, the Malta Chamber of Commerce, Enterprise and Industry welcomed the publication of Legal Notice 46 providing for the introduction of banking of hours across the board.

The Malta Chamber deems this a significant step in safeguarding Malta’s competitiveness, particularly through labour flexibility.

For this purpose, it had been asking for its introduction at various fora where it is represented, including the Malta Council for Economic and Social Development, the Employment Relations Board, the Malta-EU Steering and Action Committee and also before the Parliamentary Committee for Family Affairs where we were invited to make a presentation last November.

Banking of hours enhances our competitiveness because it is conducive to flexibility. As we have often stated, flexibility must be our main driver for success in the current international climate. The concept is straightforward and allows for extra hours worked during peak periods to compensate for times when workers are idle due to leaner demand.

The LN sets a calendar year as a reference period and gives the possibility of both parties agreeing to carry over balances from one year to the next.

The Malta Chamber is also pleased to see that the necessary safeguards have been put into place to ensure fairness and flexibility. For instance, the worker is entitled to choose not to work beyond 48 hours in any given week. Furthermore, hours banked in favour of the worker can only be utilised on normal working days.

Other safeguards included in the LN provide for the payment of extra hours worked when a contract of employment is terminated.

The Malta Chamber is confident that banking of hours will also serve the country well in a broader sense beyond competitiveness. It can also enable easier planning ahead for both the employer and the employee. In doing so, it can serve as a family-friendly measure because it contributes towards the improvement of the work-life balance of people who work in sectors that experience significant peak and off-peak differences in demand.

At the same time, it helps to prevent discouraging people from working in sectors that are prone to irregular demand ­­­or high seasonality.

This provides a win-win deal for all concerned while acting as a safeguard against employment irregularities.

Most importantly, banking of hours promotes job security where it is implemented. It provides a buffer to companies that experience sudden and unexpected drops in demand. Now more than ever, companies can exercise the right given to them by virtue of the legal notice to bank up to 376 hours, which could be used once business picks up again.

In previous circumstances, employers might have acted in panic and could have considered laying off workers sooner in reaction to a significant drop in demand. To this end, the Malta Chamber believes that the higher the maximum allowable hours banked, the more benefits will result from the system.

Banking of hours also makes economic sense for sectors such as retail, which must increasingly compete with online stores from everywhere in the world. It can result in competitiveness gains that can also promote secure (and flexible) employment that would otherwise not be viable or sustainable. The same can be said for tourism that also has to compete with new and more conveniently priced destinations.

Banking of hours can restore viability to the hospitality sector, which is facing profitability issues due to depressed rates and higher operating costs. Taking typical ratios of overtime paid as a percentage of total wage bill, it can be calculated that a hotel employing about 100 people, for instance, would be able to save tens of thousands of euros annually, which it could then invest into energy-saving measures to further safeguard the competitiveness of its operations and its employment capacity.

Similar considerations apply to the manufacturing industry. Here, industry would certainly experience improved delivery time and responsiveness to customer demands.

Within the current international climate, more flexible work practices are essential to ensure the further competitiveness and flexibility of our businesses and our economy. The Malta Chamber firmly believes that this legal notice is a step in the right direction towards this aim.

The author is president of the Malta Chamber of Commerce, Enterprise and Industry.