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Author: SME Chamber

GRTU requests MCESD meeting following BREXIT vote

Posted on by SME Chamber

Following Britain’s referendum result at the end of June, GRTU Malta Chamber of SMEs President Paul Abela has requested a meeting of the Malta Council for Economic and Social Development for Government and social partners to plan together a way forward in a context of an EU without Great Britain.

There is definitely an expected impact for the political and economic reality of the European Union and developments have to be followed closely. The political setting in Great Britain is also moving fast with resignations from PM David Cameron and with lead EXIT campaigners now refraining from taking leadership in a possible post-BREXIT United Kingdom whilst calls for Scottish Independence resurface.

Nonetheless whilst following these developments closely, our focus should only remain on Malta’s own positive economic momentum. There should not be any alarm bells but rather maintain Malta’s economic growth and identify opportunities in this new setting. This was Paul Abela’s first reactions to a MEUSAC Core Group meeting held days after the British vote. 

 

Launch of a New Code of Practice for Outlets serving Alcohol

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A new Code of Practice for outlets serving alcoholic beverages was launched amid calls for a more inclusive social responsibility to promote common welfare.

The new code replaces the one introduced 15 years ago and is the result of collaboration between The Sense Group, the Institute for Tourism Studies

 (ITS), the Malta Hotels and Restaurants Association (MHRA), the GRTU Malta Chamber of SMEs and the Malta Bartenders Guild (MBG).

The new code introduced for the first time concerns the element of binge-drinking and lays out guidelines on how to deal with people who would have exceeded legal drink limits.

Outlets which serve alcoholic beverages for consumption on premises contribute to social well-being by providing venues for socialising and entertainment. It is for this reason that outlets serving alcoholic beverages acknowledge their social responsibility through these ethical guidelines.

These outlets must:

  • Only promote legal consumption of alcohol;
  • Not serve alcoholic beverages to any person below the legal drinking age. If a bartender or serving staff is in doubt as to the age of the purchaser, proof of age should be requested and ascertained;
  • Not serve alcoholic beverages to known alcoholics. Serving staff should make an effort to identify negative behaviour that is related to alcoholism and aim at preempting issues that may arise as a result of excessive consumption of alcohol;
  • Not serve alcohol to anyone who has clearly exceeded the legal drink driving limit and is identified to have the intention to drive afterwards. In such cases they shall offer alternative non-alcoholic beverages and advise clients to either seek passage home with someone who is within the legal limits or, either takes public transport or a taxi. Bartenders should take the initiative in such instances and offer to make the necessary arrangements themselves;
  • Manage intoxicated, antisocial or disruptive clients with safe removal from the premises. It is very important that all members of staff immediately inform management or supervisor on duty, to take control and address any problematic client/s, as this can easily turn into a bad situation if not handled properly;
  • Be responsible for the safety of their clients, when trying out new trend of recipes, or creating new recipes making sure that they are aware of any ingredients and allergic reactions that may cause to their clients;

During the launch Tourism Minister Edward Zammit Lewis said that the European Union had been had been discussing issues relating to the consumption of alcohol for a number of years.

“The EU has actively worked with a number of institutions and industry representatives in order to increase awareness and introduce best practices towards establishing a responsible and updated policy regarding the consumption of alcohol.

GRTU discusses long-standing issues afflicting Gozo businesses during its mission in Gozo

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The GRTU Executive Council and management team embarked on a mission that brought them closer to the reality of Gozo based businesses.
 
During a day that was specifically focused on Gozo GRTU’s top management team held meetings with Gozitan entrepreneurs as well as the Gozo Business Chamber.
 
High on the agenda was the issue of accessibility of Gozo. Gozo businesses expressed their concern that the permanent link project between Malta and Gozo was earmarked to take very long to be completed and when considering the dire situation they were in, any unnecessary delay meant irreversible damage.
 
Gozitan enterprises still do not feel that the accessibility issue of Gozo is a priority for our politicians. They are facing a reality where it is immensely difficult and close to impossible for them to do business in Gozo and the decision makers are not concerned with the problems afflicting Gozo.
 
Whilst appreciating that an environmental assessment is necessary, this should be carried out within specific and justifiable timeframes. The environment should not be used as an excuse to postpone projects that were needed yesterday.
 
They therefore expect Government to make all the necessary effort and focus on finding solutions and not excuses as to why the project should be further delayed. Government needs to come up with a reasonable timeframe and project management proposal that would be agreed upon through consultation and endorsed by social partners representing businesses.
 
GRTU stated that following a presentation by Prof Gordon Cordina GRTU was not only convinced that Gozo needs a permanent link but it is also fully backing its members. GRTU will be lobbying the Government to achieve the desired results.
 
GRTU invited the stakeholders to join forces with the GRTU to increase pressure to speed up the permanent link project and to find solutions that would improve accessibility conditions in the immediate. Businesses cannot wait over 10 more years for something to be done, there are short to medium term solutions that would help them survive the interim and these must be implemented.
 
The permanent link is not an end in itself. Gozo requires a number of drastic measures to become the thriving economy everyone hopes for. Accessibility is however the main measure that will help other initiatives become effective. Without the permanent link any measure will be weak because its potential can only be reached with increased accessibility.
 
Gozitan enterprises also expressed their concern on the political situation. They said that the Government and the opposition are wasting precious time bickering instead of investing time to tackle important business issues that have been shelved for too long.
 
During its visit GRTU took a number of its member’s proposals and will be following these up accordingly.
 
Part of the activity also included a discussion on changes to update the GRTU Statute as well as a team building activity to lay forward a strategy for the organization.

GRTU Executive Council meets Dr Nadine Sant, Legal Advisor to the Economy Ministry (MEIB) to discuss the Family Business Act

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The aim of the family Business Act is to address obstacles and problems that those operating a family business face especially in instances of business transfers. 

Family businesses constitute 75% of Maltese enterprises and they employ a substantive number of people. Most of these family enterprises pass on to the second generation. However, during this transition, only 30% of these family businesses succeed and only 10% make it to the third generation.
 
Dr Sant highlighted that the structures of family businesses, the vast majority of whom are micro-enterprises, are often poorly defined. She said that to have an efficient and effective legal framework, widespread consultation has been carried out.
 
Dr Sant explained that the proposed Family Business Act aims to encourage family-owned businesses to register themselves, who occupies what position, the actual ownership structure, who has voting rights and decision-making rights. Amongst other things, the Family Business Act will include a clear definition of what constitutes a family business. This will control abuses and is a very important initiative considering that family businesses registered under this Act will be eligible for tax incentives.
 
The Family Business Act allows a broad spectrum of legal scenarios through which a family business may be operated: limited liability companies, registered partnerships, unregistered partnerships, and even listed or trading companies on a multilateral trading facility. The act defines family businesses as those owned by at least two members of the same family, although a small minority stake by non-family members is permissible.
 
The registered family businesses would qualify for operational assistance and fiscal benefits. The benefits introduced with the new Act are mainly twofold: those pertaining to the operation of the business per se, and those pertaining to prospective transfers between family members of immovable property or shareholdings on which Duty is payable.
 
The Operational Benefits
  1. Micro Investment of a maximum tax credit of €50,000 over a three-year period, naturally subject to Malta Enterprise’s terms and conditions;
  2. Legal and Accountancy advisory services up to €2,500 over a five-year period; to any family business owners that would require assistance in the case of transfers 
  3. Assistance for Arbitration sittings to address any possible disputes relating to the transfer of assets (five free sessions).
  4. Education and training for owners and their employees of up to €1,000 annually per family business;
  5. The positive consideration of lease renewals occupying government premises;
  6. Loan guarantees of up to €500,000 per business for the purpose of acquiring the business or parts thereof.
 
The Fiscal Benefits:
  1. Duty on Documents on immovable property being transferred between family members of a family busiess shall be chargeable on the first €500,000 of the value of the property transferred at the advantageous rate of 3.5% or part thereof;
  2. In the case of Duty on Documents payable on the transfer of shares of a family owned company between family members, or interests in a partnership, trust or foundation, no duty will be chargeable on account of the first €150,000 of the value of the shares or interests in a partnership, trust or foundation transferred.
 
GRTU is one of the main stakeholders which has worked on the legal framework of the Act in conjunction with other stakeholders which have worked on the Family Business Act. 

GRTU urges Hon Chris Cardona to assist in its fight against unfair competition

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The issue of unfair competition created by operators that import products and give their services from Sicily to Malta has been going on for almost 10 years. The situation worsened a couple of years ago, an indirect cause of the economic crises, where an unprecedented number of Sicilian economic 
operators were negatively affected by the economic downturn and sought refuge in the Maltese market.
 
There is nothing wrong with economic migration, exports and tapping into foreign markets, that is why Malta joined the EU in the first place, to make use of the single market. When economic operators tap into foreign markets through unfair practices, that put them at an economic advantage, in comparison to local operators the problem becomes a big one.
 
Maltese businesses report a drop in sales as a direct result of unfair competition from Sicily as high as 30%-50%. The impact this issue has had and is still having on Maltese businesses is terrifying. Maltese businesses have a very hard choice to make,
evade taxes like the Sicilians do to be able to compete or watch their business die out year on year until they close down.
 
Sicilians do not simply under declare, they also do not charge, and therefore pay, VAT under the pretence that the goods are for export and therefore no VAT is due, since the goods will not yet reach the consumer and therefore are not subject to VAT. 18% is too high a margin and Maltese businesses are undercut, with no chance of competing.
 
This argument was explained to Hon Chris Cardona, as Minister for the economy, investment and small businesses. GRTU was accompanied by local furniture retailers who told the Minister that they are watching their business slowly go to ruins. They insisted that they will not let their business die out and if need be they will relocate to other EU countries where they can survive. It would be very bad news if Malta had to lose its local businesses, that are today in their second and third generation, because the Government is not capable of addressing such a straight forward issue.
 
GRTU fails to understand and it is extremely disappointed with the way the authorities are dealing with this issue. The point of entry that is enabling all this is just one and the authorities know this but they still fail to address the issue and hide behind a mountain of excuses.
 
Both this and the previous administration have failed to address this unjust situation and there is no reasonable justification for this. GRTU had falsely hoped that having two Government commitments in the Budget speech would mean that the situation has changed but this was not to be. The cross sector of businesses this is affecting is significant, these include amongst others but not limited to, furniture, white and brown good, pool services, etc….
 
As the Minister responsible for SMEs GRTU called on Hon Cardona to help it with his efforts from within the Government, mainly to address inadequate measures taken by the Ministry for Finance so far. The checks conducted by Customs and the measures taken by the Ministry for Finance have not borne any fruit and businesses have felt absolutely no level of change.
 
GRTU has been through this issue time and again with the Ministry for Finance and their efforts are ineffective. Their resources are wasted finding all the reasons not to do something instead of doing the opposite. The bottom line is that we have a big problem on our hands, a problem Government has recognized and has committed to eradicated budget speech after budget speech. We will no longer entertain excuses. If we do not see results we will go public if need be to exert the necessary pressure. As Minister for SMEs we need your help to make the necessary pressure and solve the issue.
 
GRTU insisted that a checking system is required for the authorities to know what is coming in through the catamaran both for security purposes and to ensure fair competition. The Authorities have reasonable suspicion to carry out the necessary checks and it is the obligation of the Maltese Government to ensure that VAT is collected and curtail abuse as necessary.
 
GRTU has made to main proposals as way forward:
 
  1. Setting up a task force to eradicate unfair competition – The task force would be composed of the Ministry for Finance, Customs, Inland Revenue The Ministry for Economy and Business, GRTU as well as other necessary stakeholders. Its task would be to take decisions on action to be taken, evaluate results, and oversee the handling of reported abuse.
  2. Introduce Scanners at the new quay – There is already a scanning/stripping system that is utilized at the Freeport and this should be introduced at the landing point of the catamaran. The system is a random one but it is also an automated one. As such GRTU suggests that either all vehicles coming through drive through the scanner of else an automated system is introduced where vehicles are inspected randomly and based on suspicion.

Valletta Shop Scheme

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The Valletta shop scheme launched in 2015 has come to an end earlier this month with over 100 applications submitted by operators of Government owned shops in Valletta.
 
Was the Scheme a success or not?
Prior to answering this question, a few points need to be raised. This was the second version of a scheme for Valletta shops, the first one being launched offering only the option of a long lease. That was definitely not a success. It was GRTU’s prerogative to discuss with Government for the second scheme to be a greater success. GRTU successfully proposed that in lieu of rent, shop operators should be offered an emphyteutical grant (cens). This had a multitude of attributes. Firstly it would provide much needed collateral to the shop operator. It would provide greater security of tenure to forthcoming generations. It
would allow shop owners to give their shops on lease. It would lift the burden of maintenance from Government’s shoulders. Crucially, it would give Government the opportunity to update the Lands Department files with correct information as to who actually holds the title over any particular shop.
 
Nonetheless, one flaw which Government insisted on retaining from the previous scheme was the zoning which identified the price bracket that the shop operator would have to pay in order to benefit from the cens. The zoning was and still is flawed because it does not reflect the value of the properties situated in Valletta’s streets correctly. Government should analyze the application submitted in depth because it will evidently shows which zones were successful and which weren’t.
 
The value of retail outlets in Malta and Gozo is extremely location sensitive. Valletta being the case in point, is not only street sensitive, in many cases values differ widely from one stretch of the same street to another, and in certain cases even one side of the same street to another.
 
GRTU believes that this scheme was undoubtedly a success when compared to the first scheme. However, considering the hundreds of Government owned shops in Valletta alone, the success could have been much larger if careful attention to the zoning was given before its launch, as GRTU had warned at the time. For example, on the eleventh hour, Government accepted to change Zachary Street from Zone 1 to Zone 2. However, GRTU’s pleas to change zoning in parts of St John’s Street, parts of Merchants Street and St John’s Square to name a few, fell on deaf ears.
 
GRTU still believes that there is room for improvement if Government goes back to the drawing board when it comes to zoning and this may be applied not only to Valletta as a pilot project, but also to the other localities in Malta and Gozo.
 
GRTU solicits Government to start a consultation process as soon as possible to determine which zones need to be amended,
and how to amend them.

Il-GRTU titlob lill-Ministru ghat-Trasport jikkonsidra jerġa’ ddawwar it-traffiku ġewwa ċ-Centru tal-Mosta ghal kif kien qabel l-1996

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L-GRTU dejjem poġġiet bħala prijorita’ fuq il-programm tagħha l-iżvilupp tal-lokalitajiet bħala fonti ta’ ħolqien ta’ impjieg u avvanz ta’ attivita’ ekonomika. Il-GRTU qiegħda taħdem kontinwament mall-Malta Tourism Authority, Transport Malta, Kunsilli Lokali u s-sidien tal-intrapriżi fil-lokalitajiet bil-ghan li jinħolqu attrazzjonijiet ġodda sabiex niġbdu aktar xogħol lejn il-lokalitajiet.

Aktar kmieni dan ix-xahar is-Sur Paul Abela, President tal-GRTU flimkien mas-Sur Joseph Zerafa, r-rapprezentant ghan-negozzjanti Mostin iltaqghu mas- Sur Edwin Vassallo, Sindku tal-Mosta waqt laqgha organizzata ghan-negozzjanti Mostin. Waqt din l-laqgha gew diskussi diversi issues fosthom li s-sistema tat-traffiku terga tigi lura kif kienet fl-1996. L-arranġament wara l-1996 kellu mpatt qawwi fuq is-sidien tant li f’survey li l-GRTU kkummissjonat dak iż-żmien irriżulta li l-bejgħ kien niżel b’50%.
 
Il-GRTU żammet diversi laqgħat mal-Kunsill Lokali li dak iż-żmien wasal għal din id-deċiżjoni sabiex issib l-aħjar arranġament possibbli. Kienu għalxejn it-tentattivi li l-GRTU għamlet sabiex din id-deċiżjoni tiġi riversata għaliex f’temp ta’ ftit xhur din is-sistema ġiet introdotta u għadha sal-llum fis-seħħ.
 
Il-GRTU tħoss li l-Mosta hija wahda mill-lokalitajiet li l-aktar li rnexxew bħala ċentru kummerċjali u dan is-suċċess huwa raġuni mportanti għalhiex l-istandard of living tal-Mostin huwa fost l-għola f’Malta. Skont studji li saru dak iż-żmien mill-Kunsill jirriżulta li kienu jgħaddu ammont sostanzjali ta’ vetturi miċ-ċentru.
 
Għalkemm hafna mill-Mostin, bħal ħafna lokalitajiet oħra, jaqilgħu l-għixien tagħhom minn barra mill-Mosta, is-sidien tal-ħwienet, l-familji tagħhom u l-familji tal-impjegati tagħhom, jiddependu għal l-għixien tagħhom mis-suċċess kontinwu tal-Mosta bħala lokalita’ li tattira passing business dejjem akbar.
 
Għal dan il-għan l-GRTU qeghda titlob laqgħa mall-Ministru Joe Mizzi sabiex flimkien mall-entitajiet kollha nvoluti tasal f’kompromess li jkun ta’ benefiċċju għal partijiet kollha kkonċernati.

Engagement of Migrant Workers Proposal – Positive Initiative Subject to Fine-Tuning

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GRTU Malta Chamber of SMEs has long called for better regulation of casual work particularly within the context of migrant workers occupying a particular and useful role within our labour market but which does not benefit correctly both to lawful economic operators as well as other law-abiding employee counterparts.
 
It is therefore by no uncertain terms that GRTU supports such initiative in principle and welcomes the concept of regularisation in favour of better use of efficient resources, combating the black economy and exploitation of workers, and eradicating unfair competition practices in this sense. The approach adopted in terms of creating a Job Brokerage Office which shall act as a liaison between the human resource and the employer demands, is also a positive approach of moving closer to fair practice.
 
GRTU has submitted its feedback in relation to the Job Brokerage Office proposal in order to put forward its suggestions to fine-tune the proposal in a way which eradicates specific details which are cause of great concern in a proposal which would otherwise be a very positive development in regulation such work.
 
1. Although the voucher system is a commendable way to address the relationship between the employer and the potential human resource, the breakdown of pay structure will not achieve the desired encouragement of regularisation as it may lack an element of fairness.
 
Despite the proposal claiming to be based on the minimum wage it sways from this principle when one goes into the details of how the pay structure is broken down. The actual price paid by the employer is Eur6.00 per hour (or Eur5.50 per hour at best if purchased under the highest bundle of hours). The migrant worker receives Eur3.80 per hour. The prices proposed vis-à-vis the actual pay received by the migrant worker engaged put forward two concerns:
  • A lack of incentive in terms of law-abiding employers in relation to employers who still opt to operate within the black economy whereby if a migrant is paid at actual minimum wage in the black economy, such worker is receiving more than the Job Brokerage Office proposal and such employer is paying less.
  • There is an element of lack of fairness towards the notion of equal respect and equal pay between migrant workers and their counterpart workers which undermines the concept of fair and equal integration into the labour market, since such migrant workers shall be pocketing less than minimum wage in practice.
The 10% of the NI contributions may make sense as this is a contribution equivalent to regular NI. However the calculated additional cost above the minimum wage which is claimed to reflect 24 days leave, 10 days sick leave and statutory bonus should not be included in this sense. This is clearly none other than an operational tax to cover costs for the government authority managing the scheme. This additional payment by employers is not truly being passed on to the migrant worker as the worker is in effect receiving far less than this.
 
2. The proposal shows that it is already ready to offer a degree of flexibility, with suggestions such as adhoc arrangements in specific industries with seasonal situations for instance. It is necessary that this principle is followed and it is flexible to serve its purposes rather than becoming an overly bureaucratic exercise.
 
3. There needs to be a clear information campaign and roll-out of this new system. The point here is not to police and fine, but rather to educate businesses that this is a fair way of operation. There should therefore be a clear transition period from when the system starts and until all businesses understand how and when to use it before imposing enforcement which to date is very limited and therefore fines.
 
4. In the case of enforcement, the proposal identifies an increase in enforcement by stating that there shall be 16 rather than 8 enforcement officers. The business community would have its mind more at rest with knowing the nature and strategy of enforcement rather than the number of officers. For instance, it is imperative to have a fair and transparent system which chooses spot-checks at random rather than repeat spot-checks on the same businesses. There should be a method to report potential abuse.
 
5. The imposition of penalties is also a cause of concern. A level playing field is necessary through enforcement and implementation of enforcement through fines would be understandable. Nevertheless the proposed penalties which fall under
a parallel reform, namely the JobsPlus Act, are first and foremost unnecessarily costly. Some fine-tuning of the costs already imposed are definitely a strong deterrent to anyone not using the new proposed system of Job Brokerage since it is beneficial in nature. There is no sense other than creating an overly burdensome fine to businesses as a revenue for public coffers to have such fines reaching the sums of Eur5,000.
 
Moreover it is adamantly uncalled for to also include the possibility of trade-license revocation. One has to consider the implications on other company directors, the families of the business owners, the general implications of such revocation and other business commitments entered into, and last but not least the effect on the lawful employees who are employed with the business in question, as well as their families.

GRTU’s collaboration with MCAST to promote Entrepreneurship

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GRTU has recently embarked on a joint pilot project with MCAST to raise the level of Entrepreneurship in accross the board within the project.
 
In November, GRTU launched the campaign ‘Be your own Boss’ an outreach exercise that targeted MCAST students. As part of this activity GRTU invited various representatives from the business community to exchange their views and experience with the students. The aim of this action is to highlight the skills and capabilities needed to successful establish and operate
a business.
GRTU believes that to truly learn entrepreneurship, apart from curricular activities, student must be inspired and exposed to the spirit of entrepreneurship itself. Throught this exercise students heard stories of how a diverse range of business sectors were set up, directly from the individuals that started the businesses. This included the challenges and joys of being in business.
 
GRTU has also established a skills council made up of entrepreneurs that are able to meet with MCAST representatives to analyse the institute’s business courses and determine the changes that need to be made for the modules to truely reflect the current business environment.
 
This pilot project was carried out on the BA (Hons) in Business Enterprise. During this session a number of aspects were identified that could potentially increase the occupational standards in the industry. The exercise will be followed with other meetings targeting different courses within the institutes.
 
GRTU also plans to continue the outreach exercise to promote entrepreneurship amongst students that have the potential to become prospective entrepreneurs.