Small businesses are an essential engine of any economy and when they face challenges they cannot resolve with their efforts it is time for the government to intervene. In Malta, small businesses employ almost a quarter of the workforce, giving the economy a much-needed spread in the labour market.
A survey conducted by the Chamber of Commerce, Enterprise and Industry and the consultancy firm RSM has found that among those companies that employ between 50 and 250 staff the biggest challenge is increasing competition from illicit trade. It is not the first time this issue has been raised by medium-sized companies.
Irregular importation of goods where no Customs duty is paid, provision of services free of VAT charges by businesses that hope to avoid being caught on the radar of tax authorities, selling articles from unlicensed premises and employment of unregistered workers to avoid paying national insurance and income tax are some of the significant challenges facing regular businesses.
Those enterprises that do things the proper way can hardly do anything themselves to overcome these handicaps in their business. Even when they report such abuses to the authorities, little seems to be done because law enforcers at times prefer to close one, if not two, eyes to breaches of rules and regulations.
It is encouraging that the study has demonstrated that medium-sized businesses whose economic activities range from manufacturing to construction, transport, travel and catering are becoming more client-centric. In fact, it concluded that medium enterprises give importance to service excellence and price competitiveness.
It is not surprising to those familiar with the prevailing situation in the labour market that lack of training and losing experienced staff to competitors have become a significant problem for medium-sized businesses. Excessive bureaucracy remains a substantial hindrance despite various solemn declarations by this and previous administrations to snip red tape to help small businesses.
While almost half of those participating in the survey viewed their prospects as positive, much more needs to be done to ensure that small businesses have a level playing field when competing amongst themselves. The government must ensure that sensible regulations are enforced fairly throughout the business community.
Closing an eye to abuse is not a pragmatic approach to encouraging economic growth but a sign of weakness on the part of law enforcers and their political masters. This abdication is even more serious when illegal practices by rogue business people affect the rights of vulnerable workers.
Particular attention should be given to those small economic operators who, although being in the minority, aim to export their goods and services. Malta’s open economy will benefit significantly if less importance is given to local consumption while export-oriented activities are fully supported by government agencies like Malta Enterprise.
What should not be overlooked are the difficulties faced by family-owned operators that accounted for 56 per cent of the survey. Family-owned businesses should be encouraged to make use of favourable legal concessions to ensure that the transfer of operations and ownership from one generation to another promote continuity and stability.
Small businesses usually work hard to generate wealth for themselves and also provide employment to thousands of workers. They certainly deserve all the support they can get to overcome any unnecessary obstacles in their path.
This is a Times of Malta print editorial