Category: Archive – 2015

A Country Thematic Review by CEDEFOP (EU Centre for Vocational Training) on Malta’s Apprenticeship Schemes gave an overview of the current systems in order to pave the way forward for reforms in work-based learning tied in order to make vocational training more closely tied to industry needs. This report was presented today at a Stakeholders’ Meeting held at MCAST in Paola.

GRTU applauded the efforts undertaken to bring forward this report as it sheds light on the previous schemes formerly held through ETC, which is a necessary step in order to reform apprenticeships as we know them and integrate them into education to bridge training with the world of work. GRTU agreed on the importance to rebrand apprenticeships, but also argued that the revamping needed to ensure a renewed quality which both students and employers can trust.

GRTU highlighted the need to ensure that the workings of any such schemes need to be feasible and attractive to micro-enterprises and self-employed. Given that the Maltese economy is made up of mostly such small businesses (at a rate which is higher to its EU counterparts), if the apprenticeship schemes are to be successful, they have to be tailor-made to fit the realities and exigencies of the smaller businesses. If the number of opportunities for trainees to acquire apprenticeships is to be widened and boosted, we need to ensure that considerations of small businesses are taken into account, so that even the wide sector of smaller businesses can also participate in offering these opportunities. The situations of these businesses need to identified and the schemes shaped upon them. For instance, self-employed and micro-enterprises will not have HR departments that can be assigned follow-up and handling of apprentices – but they can offer invaluable training opportunities as well. The scheme has to then be communicated and facilitated targeting also these businesses and not only larger employers.

GRTU also advocated the need for an increasing culture of apprenticeships in building an understanding of the benefits of work-based learning. This is should also serve as a spill-over towards linking educators and trainers with the world of work. If students are going to be undergoing apprenticeships to be linked to industry, we also have to ensure that teachers are in touch with the labour market.

Apprenticeships need to be given quality and value by establishing credits and an agreement on recognisable learning outcomes which both the employer and the student agree upon in order to know what training is to be achieved throughout the experience. However this has to be done in a clear and simplified manner that is not burdensome on partaking employers in a way that discourages participation.

In terms of recommendations related to strategic planning concerns, GRTU suggested that the relationship between small businesses and training institutions needs to be solidified. A setup has to be put in place to ensure an ongoing colloquium with industry which also reflects the needs of micro-enterprises and even self-employed. This would serve as a one-stop-shop for training needs and skills matching.

GRTU also welcomed the responsibility of apprenticeships being allocated to MCAST as the major public VET provider. GRTU however added that it would be necessary that MCAST would now also steer a national outreach to employers together with the help of employers’ representatives and support other training providers, both public and private, to also embark tap into the pool of apprenticeships.

Minister for Finance Prof Edward Scicluna addressed a joint meeting of the MCESD and the MEUSAC Core Group focusing on the National Reform Programme for 2015. The discussion was based on the New European Semester under which the European Commission provides a detailed analysis on the budgetary plans of Member States and gives Country Specific Recommendations (CSRs) which are intended to give direction to how respective Member States should deal with particular challenges in order to perform better in line of EU financial and fiscal targets.

The Commission report described Malta’s economy and labour market as performing well in 2014 with a favourable outlook for 2015-2016. It however highlighted that despite lower budget deficit, public finances sustainability remains a challenge. The participation of women and older persons in the labour market has improved yet remains considerably low. The authorities have focused on reforming the energy sector to diversify the energy mix. Malta’s competitiveness continues to be hampered by structural challenges in the business environment and the innovation framework, notwithstanding improvements. The report states that investment has been muted even though economic performance has been muted.

Minister Scicluna disputed the statements on investment and the means by which is taking such considerations. He also emphasized on the deliverables which the government is setting in terms of budget initiatives which are also targeted at addressing the country specific recommendations. These included, amongst others: finalisation of the Fiscal Responsibility Act; continuing to improve tax compliance and fighting tax evasion; pension reform discussions; public health reforms; measures to enhance labour market and skills; diversification of the energy mix; increasing of energy produced from renewable sources.

At the meeting, GRTU articulated major concerns for SMEs which need to be addressed in period ahead which tie to the comments presented in the Commission report. GRTU stressed the importance of focusing on the fact that Malta’s economy is built around a higher rate of micro-enterprises than the rest of its European counterparts.

A) This implies that administrative burdens need to be addressed tangibly and not only through legislative procedures but also by training all levels of the public service to understand that a delay in procedures may not cost much for a government department but cause serious repercussion to a micro-enterprise or self-employed. GRTU suggested immediate training initiatives, perhaps through EU programmes, which can be undertaken hand-in-hand with employers, to address the sensitivity to the results of administrative burdens on business.

B) GRTU welcomed Minister Scicluna’s statement of commitment towards moving towards electronic payments. This, GRTU explained, needs to be tied with offering new opportunities to existing business models that need to be supported in order to upgrade to turn challenges such as online shopping into opportunities.

C) GRTU voiced its concern on the Report’s comments on lending stagnation particularly in the case of smaller businesses. Banks need to be incentivised to provide the resources for businesses to operate. GRTU also welcomed and urged for further upcoming initiatives to find alternative means of accessing finance such as through providing structured private financing to small businesses to be able to take the necessary steps to the next level.

D) In terms of Research and Innovation indices, GRTU commented that despite giving due importance to academic high level research, it is essential to start considering business-tied innovation which small businesses and self-employed may not have the possible structures to invest in. GRTU suggested initiatives to be coupled between enterprise and public and private vocational education institutions that can provide tailor-made research opportunity support to business ideas and needs for micro-enterprises and self-employed.

E) GRTU stressed the importance of taking necessary measures to address tax evasion. GRTU added that whilst it is imperative to ensure that for fair competition practices are kept, it is perhaps more urgent to ensure that systems are put in place in practice to address taxation which is not being captured at all, such as undeclared goods. GRTU asked for updates about the developments of the setting up of a instruments such as the proposed Guardia di Finanzi alternative as announced in Budget 2015.

The Government is launching a new website that will promote the current products available on the market in relation of green buildings. Malta is already making a lot of advances in relation to greener buildings however it is clear that there is a larger need for more improvement for this concept to grow. This week architect Ivan Bartalo project officer at BICC (Building Industry Consultative Council) visited GRTU to deliver a presentation to a number of operators that provide smart technologies. Through this presentation Mr Bartalo explained the aim of the website and also highlighted the key products and services to be featured in the website. 

These product include:

• Solar thermal heating systems
• Photovoltaic panel systems
• New build and retrofit insulation
• Double glazing doors and windows
• Cladding systems
• Hard flooring systems

This initiative targets consumers to promote products and services that are energy efficient and smart technologies that lead to lower energy consumption and/or the generation of renewable energy.  The website will provide information:

• on the concept of green buildings
• product catalogue of local building technologies
• job descriptions of certified technicians, designers, consultancy and other specialist services
• technical product information
• non-technical advice for homeowners

The government believes that this initiative will not only benefit consumers that will be able to invest in energy efficient technology but also local suppliers that will be able to reach a wider audience.

• Smart, Green Fisheries
• Smart, Green Aquaculture
• Sustainable and Inclusive Territorial Development
• An Integrated Maritime Policy

The Family Business Act to help family-owned businesses survive was discussed during a business breakfast earlier on this week.

During his opening address, Minister for the Economy, Investment and Small Business, Hon Christian Cardona said that the Family Business Act is one of the initiatives that are being implemented by the Government to safeguard jobs, invest in enterprises and to boost Malta’s competitive economy. Its aim 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 thus 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. For these reasons a committee was then set up  to create a legal framework on which family business owners and members could plan and affect their transfer of business.

In order to have an efficient and effective legal framework, widespread consultation has been carried out. 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.

Dr Nadine Sant, Legal Advisor to the Economy Ministry,  highlighted  that the structures of family businesses, the vast majority of whom are micro-enterprises, are often poorly defined.

Dr Sant explained that the proposed Family Business Act would aim to encourage family-owned businesses to register themselves, who occupies what position, the actual ownership structure, who has voting rights and decision-making rights. These will have to be clearly established.

The draft 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.

A structure where one family member owns 99% and the other owns the remaining 1% will not be deemed acceptable for the purposes of the act, in part to ensure that other family members would have a say and an interest in the company’s wellbeing but also to encourage the transition from one generation to the next during one’s lifetime.

Malta Enterprise Head of Incentives Administration Karl Herrera said that registered family businesses would qualify for certain assistance and benefits.

Many of the proposed incentives involve the modification and extension of existing schemes, including increasing the guarantees that can be provided through the Micro-Guarantee Scheme, extending special benefits provided to start-ups under the MicroInvest scheme to family businesses, and providing advisory services that are specific to the needs of family-owned businesses, including legal and accountancy services related to succession and the services of an arbitrator to address any possible disputes relating to the transfer of assets.

GRTU would like to take the opportunity to thank Hon Cardona for involving the  GRTU as 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.  

The next step is for Parliament to debate and ratify the Family Business Act and next to encourage family businesses to trust the legislation and register.

GRTU has replied to a public consultation by MEPA on the Guidelines for Outdoor Catering Areas on Public Open Space.

While welcoming the consultation, GRTU has however suggested that this should be regarded as an initial step and once concrete proposals are in place MEPA should carry out a more in depth consultation explaining in detail the policy changes that are envisaged and any proposed change in procedures.

GRTU does however in principle agree with the objectives outlined by MEPA. We believe that a clear set of objectives is essential to implementing a system that is fair to all the stakeholders involved, including the commercial establishments. GRTU feels that this element of fairness is currently lacking because today, due to a number of reasons, different commercial establishments benefit from different permits when it comes to tables and chairs placed on public open spaces. This variation does not only apply in cases where establishments are found in different localities but also between establishments that are situated next door to each other. GRTU therefore believes that whatever guidelines are established they must be clear and available to any commercial establishing holding the relevant license.

One of the main problems emanating from the system today is that a large number of entities are involved in the decision of permitting and these entities serve the commercial establishments with different interpretations and points of view, which in actual fact makes the acquisition of a permit very time consuming and difficult. The current bureaucratic system should be replaced with a one-stop-shop system that still incorporates the views of all the stakeholders however is able to act according to a clear set of guidelines that limits the level of interpretation, gives commercial establishments equal opportunities, as much as possible, and the permit is issued within a reasonable timeframe.

GRTU feels that when deciding on permitting, the one-stop-shop system should bring together all the stakeholders involved and this includes not only representatives of the various entities but also a business representative, such as a representative from the GRTU. The business perspective is normally lacking within decision-making structures and it is important that the new system caters for such a perspective. In addition the commercial establishment should also be given a right to appeal a decision and be granted an opportunity to be heard by an appeals board.

1. Competitiveness first: There are a lot of factors affecting the competitiveness of enterprises, these include access to finance, unfair competition as well as the regulatory environment. Enterprise competitiveness is still not given top priority. Environmental regulations heavily impact the competitiveness of European SMEs. This does not mean that the environment is not important but regulations need to be implemented in a manner that is sensitive to business and keeping in mind the competitiveness of enterprises when compared to enterprises outside the EU, which are direct competitors. 
2. Access to Finance: The issue of excessive interest rates and bank charges that heavily effect a country’s competitiveness is an issue in many European Countries and GRTU contends that the problem is very pronounced in Malta. GRTU emphasized that more finance facilities must be made available to SMEs and these must be affordable and easy to access. These funds must be made available to all local banks so as to encourage full participation. The Commission should however also facilitate the distribution of such funds to intermediaries apart from banks and encourage bodies that really have SMEs at heart to build the necessary infrastructure. 
3. The Small Business Act: The Small Business Act was a good paper exercise however it was implemented to different extents in the Member States because there was no legislative obligation on the Member States. The Small Business Act has not reached its desired results and a more aggressive stance is required.
4. Standardisation: Standards tend to be complicated to acquire as well as costly. Larger enterprises therefore fair better than smaller enterprises to acquire standards and making standards accessible to smaller business still requires a lot of effort at national level by the GRTU and at EU level by UEAPME.

GRTU is putting together its proposals for the replacement of the despised eco-tax – a promise made by the government in the last Budget – but there are still numerous hurdles.

The tax has to be removed by September 2015.

The issue has been delegated to the Environment Ministry, which will also have to find a way to put into force the environmental contributions Malta should be imposing through the Waste Electrical and Electronic Equipment (WEEE) Directive.

This tax will apply to everything that operates with either electricity or batteries, from white goods to toys, from sports equipment to power tools. The new system will cover hundreds of items, a considerable increase compared to the eco-tax.

The cost of the eco-tax imposed on products no longer made sense as time went on, as it did not keep abreast with technological advancements which saw IT equipment change drastically in weight, size and components. The extra cost imposed by eco-tax made Maltese businesses uncompetitive compared to purchases made abroad and from the internet, and to add insult to injury there was also no proof that the money collected was being used to take care of the environmentally-correct disposal of these goods.

It is estimated that the financial contributions imposed by the directive should be lower than those under the eco-tax regime – although the cost depends on a vast number of variables which are still being worked out. It might be more for some products: for example, it is expensive to collect refrigerant gas as well as the gas and mercury from the old-style cathode ray tube television sets and monitors.

So far, MEPA has issued a number of permits to carry out waste management related to WEEE, including to GRTU’s fully-owned subsidiary, Green MT. Those selling goods that fall under the directive have until June 2015 to join a recycling scheme or to present plans for how they intend to comply with the directive.

“We need to get moving as otherwise, Malta will not reach its recycling targets and it will be fined,” GRTU vice-president Marcel Mizzi warned.

He acknowledged that considerable numbers of items that fall under the directive were already being sold for scrap – for as much as €100 for a van-load – but since this disposal method is hardly in line with the directive specifications, it cannot be registered with the European Commission.

Other countries can focus on manufacturers and very large operators and easily meet the EU set targets. In Malta, entire logistical operations will be needed and pretty much all waste must be collected if we are to reach the targets.

“It might make sense for the different operators and permit holders to pool resources to make the operation more viable and cost-effective,” GRTU CEO Abigail Mamo said.

“Discussions with the different operators are ongoing and so far all options are still being considered, including exporting the waste.”

There are a lot of questions nobody seems to have the answer to yet. For example, one of the options is for the recycler to be paid by weight while the charge will be passed on to the customer by item.

Mr Mizzi said that GRTU has a fair amount of data about what was put onto the market and how much it costs to recycle.

“Perhaps I am making it sound easier than it actually is! With packaging, it was straightforward as we had only a few categories like paper and cardboard, or glass. Can you imagine working out the recycling cost for a car? You would have to look at the cost of recycling the metal, the bumper, the windscreen and so on …”

GRTU members hope that the WEEE Directive will help them to compete, by levelling the playing field when it comes to those who currently evade eco-tax, as well as by bringing their costs into line with those of overseas suppliers.

“But the only way to ensure that small items ordered online get into the recycling channels would be to intercept them through Maltapost, which does not seem to be an option unfortunately,” he said.

Identifying items on which the WEEE has already been paid is another problem.

“A number of our members want the WEEE cost element to show on the receipts as then the customer knows what he has been charged for. And it would be much easier to identify those who are cheating.

“My personal preference would be for retailers to buy stickers showing the tax that has been paid on that item – similar to the banderols showing excise tax paid on wine – but that poses logistical problems. Could you put ugly stickers on toys or mobile phones, for example? And some goods are sold in packaging and fixing a sticker only makes sense if it is on the product directly.

“Of course, that all depends on enforcement in any case. Enforcement by the VAT Department was one thing, but now that MEPA will be in charge it will need to step up its enforcement efforts. MEPA enforcement of the Packaging Directive already leaves much to be desired.

“GRTU expects guarantees that our efforts and those of our members are matched with proper enforcement by MEPA. GRTU would gladly carry out inspections and enforcement itself, but we have no executive powers.”

Source: ‘The Business Observer’ published on 12th March