Between January and February, the Malta Chamber actively provided feedback to the Government’s national tourism policy for the years 2015-2020. The Chamber consulted its Tourism Business Section and broader membership in order to incorporate the feedback in its submissions.
The Government’s policy was guided by three main principles, namely (1) Managing visitor numbers, (2) Raising the level of quality, and (3) Reducing seasonality. The Chamber agreed with these principles as they are directly interlinked. The Chamber’s feedback focused specifically on the level of quality across the tourism value chain. This principle closely mirrored one of the recommendations made by the Malta Chamber in its Economic Vision for 2014-2020, whereby it advocated quality and the adoption of a ‘nothing but the best’ mentality across the economy. The Chamber also spoke of the need to attract higher-end tourists which would require significant product improvements, leading to the highest standards in the general environment, transport, logistics and general amenities, among others. The Chamber also spoke in great detail about the necessity of improving our human resources through training and retraining, and the need to adapt to the new developments in the sectors through e-tourism and independent travelling.
The Malta Chamber also held a meeting with the Minister for Tourism Edward Zammit Lewis in order to present its submissions. The delegation was led by the Chamber President who was accompanied by members of the Board of Management and representatives of the Tourism Business Section.
National Reform Programme
The Malta Chamber participated in the annual consultation meetings to discuss the country’s submissions to the European Commission in relation to the formulation of the Country Specific Recommendations (CSRs). Two meetings were held this year at MCESD level to discuss Malta’s National Reform Programme (NRP) with the Minister of Finance. The Chamber’s submissions focused specifically on fiscal policy and the long-term sustainability of public finance, labour market and skills, resource efficiency and the general business environment.
The Chamber’s assessment also noted a number of areas which require further attention, namely the general business environment, competitiveness which remains hampered by structural challenges, lack of innovation and rigid labour laws. The Chamber also pointed out that the Commission’s staff working document had reported that investment had remained muted despite the favourable economic conditions and that fiscal evasion was not being addressed in a timely manner. The Chamber insisted that in its Economic Vision 2014-2020 and subsequent pronouncements, it had pointed to the need for these matters, among others, to be addressed without further delay and would be willing to assist and cooperate with the administration to achieve a better business environment and an overall better- functioning economy.
The Malta Chamber, through its Human Resources Committee and the assistance of Dr Matthew Brincat, prepared an extensive report about amendments to the Employment and Industrial Relations Act (EIRA). The Chamber’s feedback was collated mainly through a number of focused sessions in which HR committee members and other HR managers/practitioners representing all segments of the economy were present and gave their feedback. Issues raised included industrial action, trade union recognition, redundancy, sick leave, payment for work of equal value, the composition and operation of the Industrial Tribunal and probationary period.
The document was submitted to the Ministry for Social Dialogue, Consumer Affairs and Civil Liberties and the Employment Relations Board (ERB). At the time of writing, discussions were ongoing between all employers’ organisations to formulate one position paper to present at ERB level.
Removal of Eco-Contribution on EEE and Implementation of the WEEE Directive
The Malta Chamber, through its Energy and Environment Committee, was instrumental in lobbying extensively with the authorities and achieving the complete removal of Eco-Contribution on Electrical and Electronic Equipment (EEE) in favour of companies joining an authorised scheme or declaring self-compliance. This change was enacted on 1st September 2015. The Malta Chamber had been advocating for such a reform since 2007.
In its feedback to the authorities, the Chamber noted that the Ministry took heed of its past proposals to remove eco-contribution on WEEE related products in order to encourage companies to take on their obligations in accordance with the producer responsibility principle.
The Chamber nevertheless raised a number of issues tied to ‘historical’ waste, enforcement and some amendments in relation to the bank guarantee being proposed by Government on waste schemes and self-compliant companies. The Chamber organised an information session in July to inform its members about the changes being introduced and held a number of meetings with the Minister for Environment Leo Brincat and MEPA officials.
In its Budget 2015 speech, the Government announced a new measure to create a maternity leave trust fund to address concerns related to discrimination based on gender at hiring stage. From the onset the Malta Chamber stated that in principle it was in favour of this system as it was meant to encourage more female participation in the labour market whilst at the same eliminate any potential discrimination against women at recruitment stage. It had also reported that this approach was common practice in the other EU member states and has been so for a number of decades especially in Scandinavian countries.
The Chamber nevertheless raised a number of concerns particularly in the case of employers who would be negatively impacted such as those who employ males out of necessity and due to the nature of the job. The Chamber also stated that the employers’ contribution was not set for a foreseeable period and remained liable to increase in the event that the fund was insufficient to cover the full cost of maternity leave in Malta. The Chamber also raised concerns about the backlog that any late introduction of this system could create for IT companies that offer payroll/accounts software to companies due to changes in their systems. Unfortunately the Chamber was proven right as the system was introduced in the last week of July. For this reason the Chamber organised an information session in the first week of August to discuss the implementation of this measure. As a result of the Chamber’s lobbying, agreement was reached to delay the first payment to the trust fund to September.
Following this initial stage, the Malta Chamber was asked to be represented on a new Board of Trustees that would manage the new trust fund. John Huber was nominated to represent the Chamber. At the time of writing the Chamber was lobbying with the authorities to issue the relevant application forms without further delay for companies to apply for refunds of their employees’ basic pay during their maternity leave.
Employment of People with Disability
Over the course of 2015, the Government introduced a measure to integrate people with disabilities in the labour market by enforcing the 1969 law through a system of labour market active incentives and contributions by those companies that do not reach the minimum quota prescribed by law. The Chamber argued that the measure had been introduced without prior consultation and that there existed challenges which required further discussion.
These challenges included the unclear definition of a person with disability, clarification of which register/database of persons with disability will be used and that no discrimination between registered and non-registered disabled persons would apply. Further to this, the Malta Chamber proposed amendments to the Data Protection Act in order to inform employers on whether their employees are registered as disabled; this information is currently not available. The Malta Chamber also proposed the creation of a database which matches the skills and abilities of those who are registered as unemployed with the vacancies or jobs that the private sector can provide.
The Chamber also stated that this measure should not be regarded as merely a way to reduce the rate of unemployment amongst people with disability but as a measure to offer quality stable jobs through which the people employed can truly contribute to the economy.
Following various consultations with the relevant stakeholders, the Malta Chamber, in coordination with the Malta Employers Association and the Employment Training Corporation, reached an agreement to discuss the formulation of a Memorandum of Understanding to address all the challenges that remain in order to properly implement the measures. At the time of writing discussions were still ongoing.
The Malta Chamber participated actively in the consultation launched by the Government’s Pensions Strategy Group to review our pension system. The Chamber welcomed the publication of the consultation document entitled ‘Strengthening the Pension System: A strategy for an adequate and sustainable Maltese pension system’. The Chamber maintained that discussion on this subject should remain alive and prioritised by any administration given that it affects the economy in terms of the sustainability of public finances as well as national competitiveness.
The Chamber’s views on the Consultation Document were generally positive, particularly in view of the fact that despite very limited room for manoeuvrability it did not seem to create any shocks to the economy. Indeed, no increases were being contemplated in retirement age or in social security contributions for both employer and employee.
Reference was made to equity release mechanisms for pensioners who were asset-rich but limited in cash and the Chamber called for these schemes to become better regulated.
The Chamber clarified its position on Second Pillar pensions stating that their introduction must not be contemplated unless it is preceded by a blueprint with clear timeframes and other relevant information in order to ensure that business is in a position to plan adequately. The Chamber did not believe that this is the right time for creating additional burdens for the business community also because Third Pillar pensions had only recently been introduced with very limited tax incentives and the benefits of such schemes have not yet materialised.
Above all, the Chamber continued to insist that the sustainability of Pensions be approached via enhancing national competitiveness and promoting economic growth. This approach promises more and higher value-added jobs for Malta’s workforce which is conducive to rendering the pensions system more sustainable.
As part of the consultation process relating to the 2016 Budget, the Chamber called on Government to reduce energy tariffs for all businesses in view of changing circumstances since the reduction of 25 per cent was first announced in 2013.
The Malta Chamber also called on Government to refrain from surprising businesses with shock measures announced in the Budget speech, as was the case in 2014 with the introduction of excise duties on wine and pneumatic tyres. The Chamber added that measures which were introduced haphazardly and without any prior consultation clearly disrupted business activity and brought momentum to a halt in the respective sectors. The Malta Chamber therefore called for a proper implementation plan and the necessary legislative backing for every measure proposed.
The Malta Chamber also gave priority to RTDI which is seen as one of the foremost pillars upon which any country’s lasting economic growth rests. The Chamber argued that RTDI can provide the competitive edge which is not related to operating costs. The Malta Chamber called for the establishment of an Innovation, Research and Development Strategy for start-ups that would provide a vital avenue that leads to improved long-term competitiveness and enhanced business growth. The availability of a proper and sustainable infrastructure in research and innovation (R&I) provides the Maltese industry with a better chance of building and retaining a more resilient and competitive position.
The pre-budget proposals were presented to the Ministry of Finance and the MCESD.
As part of the consultation process leading to the 2016 Budget, the Manufacturing Economic Group put forward a number of concrete recommendations that may lead to an effective decrease in the cost of energy for businesses. These recommendations included, among others, a modification of the existing night tariff system to a peak/off-peak system coupled with a significant reduction in the eligibility threshold, a bulk-buying arrangement for industrial estates, the possibility for companies to purchase energy supply from the most cost-effective source in light of the improved energy mix, as well as further incentives for investment in renewable sources of energy, more energy-efficient equipment and machinery, and discounts for cash payments.
The above suggestions were discussed at length with the Prime Minister, Minister Konrad Mizzi, Minister Christian Cardona and Enemalta’s CEO Frederick Azzopardi during separate meetings in the run up to the Budget 2016 Speech. Despite all efforts and despite the fact that the Budget did not address energy tariffs for businesses, the Chamber remained confident that the groundwork achieved through these efforts by way of its concrete proposals will lead to concrete results in the near future as hinted by the authorities.
Budget 2016 Reactions
In its reactions to the 2016 Budget, the Malta Chamber noted the underlying priorities of the Budget speech, namely fiscal consolidation, strong economic growth and better living standards for all. These priorities were similar to the objectives the Chamber itself proposed during its active participation in the Budget’s consultation process. The Chamber had also advocated further progress in fiscal consolidation and national competitiveness.
The Chamber noted that the 2016 Budget continued to build on the previous year’s efforts in a number of areas including income support for low and middle-income earners and pensioners, further investment in human resources, environmental initiatives and the real estate sector.
The Malta Chamber noted its disappointment in that there were no measures to address the further lowering of energy tariffs for business, which was the Chamber’s prime recommendation prior to the 2016 Budget. In terms of competitiveness, the Chamber was also disappointed to note that little or no mention was made of the proposals made by the Chamber in the field of Research, Technology, Development and Innovation (RTDI).