A meeting between the government and the General Workers' Union over the shipyards' privatisation failed to yield any agreement with the union insisting it was not prepared to budge, particularly on its request to have early retirement schemes issued only when the prospective buyer is known.

Union secretary general Tony Zarb said on leaving the hour-long meeting with Finance Minister Tonio Fenech that the government was going back on its pre-electoral promise guaranteeing the workers' employment.

The union's delegates representing shipyard workers on Wednesday adopted a resolution demanding, among other things, that the early retirement schemes should only be issued when the prospective buyer is known and that the workers who choose to stay on should have their job guaranteed.

Mr Fenech in reaction insisted that the union's stand, on delaying the early retirement scheme despite favouring them in principle, could jeopardise the whole process.

An EU directive, now part of Maltese law, makes it clear that when a company is sold the buyer is obliged to respect previous collective agreements. Particularly under these conditions, no company would be interested in taking over the shipyards with its present workforce.

"We want to offer the retirement schemes now to be in a better position when the negotiations are taking place. At that stage it might be too late for us to do anything if the process reaches a breaking point," Mr Fenech said.

Throughout, he stressed the need for the government to act quickly, highlighting the fact that the EU will only allow the government to subsidise the 'yards till the end of the year.

When asked why the government did not initiate the privatisation process earlier, Mr Fenech said the government felt that this was the "most opportune moment".

He also recounted how the government - as had Labour and the GWU through a report laid on the table of the House of Representatives - had been made aware of the need to downsize the workforce last year.

"We then started attracting a certain interest (by foreign companies)... but they ran for it because they were not ready to go into discussions over some sort of partnership with the government with that amount of workers," he said. "Evidently, I think nobody would have expected us to start the privatisation process in December or January with an electoral campaign due, so now is the opportune moment."

When pressed on this fact and asked whether the government had risked jeopardising the process because of the election, Mr Fenech said: "No, that is absolutely not the argument. The privatisation process was a decision made by the government in the context of the realities we are going through, which are that we will no longer be able to subsidise the shipyards after December 31, 2008 and that there seems to be no alternative."

The government will now be going ahead with issuing the early retirement schemes next week. The minister did not delve into them yesterday but the details were presented to the GWU, which, according to Mr Fenech, did not give any feedback despite saying cursorily that they just needed a few "finishing touches".

Consultation does not mean that the parties discussing have to agree, he said, defending the government's right to forge ahead. "If anything, it's the GWU which is trying to impose its way on talks because it is not prepared to budge."

He also criticised the fact that the union had told its workers to hand over the retirement scheme applications when they received them. "It is obvious that this is an attempt at drawing a list of who is with the union and who is not. I condemn these sort of intimidating tactics and urge the union to rethink its position."

The GWU said last night it was prepared to continue talks on an early retirement scheme only if the government agreed to: retain the dockyard as one entity as a dockyard; speculation did not take place in the case of the dockyard; workers who opted to stay on would be given an employment guarantee, as was done at the Freeport; in parallel with the privatisation process, the government would help the workers set up a /cooperatives; Boiler wharf and the tank cleaning farm would remain part of the dockyard in the interests of viability; and, in terms of EU directives, the union would be consulted and informed on the privatisation process.

The union would be meeting workers again on Monday outside the shipyards. When faced with the main argument being made by the government in support of having the early retirement schemes now, which is that the 'yard's big workforce would scare off would-be investors, Mr Zarb said the government was not yet dealing with an investor and, therefore, it could not know how the investor would react.

Moreover, he added that a potential investor last year had told the GWU that it would actually be interested in increasing the workforce.