GRTU puts forward SMEs and micro-enterprises concerns at joint MCESD and MEUSAC Core Group Meeting with Minister Scicluna on National Reform Programme

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.