INDEX
1. About GRTU
1.1 Membership
1.2 Aims
1.3
Structure
1.4 International Affiliation
1.5 Lobbying
2. Removing
the Barriers to Survival and Growth
2.1 The Small Business Sector
2.2
Reducing red tape and helping the job creators
2.3 Creating a fair framework
for employers
2.4 Tax simplification
2.5 Health and safety
2.6
Enforcing regulations
2.6.1 Health & Safety
2.6.2 Minimum wage and
annual wage increases
2.7 Parental leave
2.8 Employment tribunals
2.9
Fixed term workers directive
2.10 Sex discrimination legislation
3.
Taxation and finance for small business growth
3.1 Addressing public
expenditure
3.2 Public expenditure/GDP
3.3 Boosting profitability
3.4
Supporting small businesses
4. Reducing financial Burdens
4.1 Facts
and Findings
4.2 Proprietors capital revenue
4.3 Reducing regulatory
burdens
5. Lines of action
5.1 Taxation and financial matters
5.2
Education and training for entrepreneurship
5.3 Cheaper and faster business
start up
5.4 Better legislation and regulation
5.5 Investment in
information technology
6. Understanding micro-businesses
6.1 Economic
and social contribution of small businesses
6.2 Incorporated and non
incorporated businesses
6.3 Full time business proprietors
6.4 Barriers to
growth
6.5 Lessons for government policy
7. Submissions for fiscal
relief
7.1 Personal allowances
7.2 Encouraging Investment
7.2.1
Utilising available sites
7.2.2 Inducing proprietors to re-invest
7.3
Capital Allowances
7.4 Debt and equity
7.5 Retaining profits
7.6
Pensions
7.6.1 National pension scheme
7.6.2 Private pension
provisions
7.7 Separate Assessments for the Proprietor and his Wife
7.8
Deferral Relief
7.8.1 Capital Gains
7.8.2 Income tax deferral
relief
7.9 Consolidated profit and losses
7.10 De-escalating fuel taxes
versus escalating oil prices
7.11 Employment relief
7.11.1 VAT employment
relief
7.11.2 Income tax employment relief
7.11.3 Relief from obligations
towards part timers
8. Public Expenditure
8.1 Privatisation
8.2
Subsidies
8.3 Public service compliance unit
8.4 Private sector
representation on government accounts
9. Conclusion
10. Trade
Sections organised within the
GRTU
GRTU proposals
towards a Better Business Environment in Malta
1. About GRTU
1.1
Membership
GRTU – Malta Chamber of Small & Medium Enterprises known also
as General Retailers and Traders Union – Association of General Retailers and
Traders – is Malta's national organisation of independent private businesses.
GRTU today represents more than 7,000 Maltese small business entrepreneurs. Many
of GRTU’s members own or manage more than one enterprise and the total number of
business within the business community is therefore substantially greater. The
vast majority of retailers are members of GRTU and that is one reason why GRTU
has retained its traditional name of a General Retailers and Traders Union as
retailers and traders look to GRTU as their national and local area
representative.
GRTU has steadily grown into a national organisation
that represents business persons irrespective of the area of business they are
in. Traders and wholesalers are an important group, but so are crafts and
services. GRTU is registered as an Employers’ Association and represents the
interests of Malta’s small and micro enterprises and self-employed business.
GRTU has representation on most national consultative economic and social
councils as a recognised social partner at national and sectoral levels. GRTU
sits on the Malta Council for Economic and Social Development, the National
Planning Consultative Council, the Malta Environment and Planning Authority
Users Committee, the Ministry for Economic Services’ Small Business Unit, the
Fruit and Vegetables Marketing Board, the Fisheries Board, the National Council
for Consumer Affairs, the National Traffic Control Board, the Building Industry
Consultative Council, the Malta EU Steering Action Committee, the Council of the
Malta Trade Fair Corporation, the Retail Price Index Management Board, the Malta
Crafts Council, the Malta Standards Authority, the Maltacom Users Group, Malta
Tourism Authority Product Development, the Interministerial Committee for
tourism, the Malta IT Consultative Committee, the Malta Enterprise Board, the
Trade Licensing Board, and the Malta Employment Relations Board, among
others.
GRTU is a non-party political organisation continually
campaigning for the rights of small independent entrepreneurs. Over the past 55
years, GRTU has gained wide recognition and it is today Malta’s major
organisation representing the nations 20,000 self employed and small businesmen
and women. The sector represented by GRTU employs half the total of employees
employed in the private sector. 35% Malta’s GDP is produced to the sector
represented by GRTU. More than 50,000 gainfully occupied owe their livelihood to
the small business sector.
1.2 Aims
GRTU's statute provides for a
multi-type organisation of officially registered businesses whose main and
unifying objective is a decent return on capital invested within a framework of
democracy and free enterprise. Members of GRTU are all proprietors of their own
businesses and they believe that their own skills and capabilities are the most
important factor in their business success. A number of main external factors
are essential for the survival and growth of their business and it is the aim of
GRTU to ensure that these external factors and the business environment in
general is favourable to entrepreneurship. GRTU strives to ensure that critical
external factors compliment the spirit of entrepreneurship of members.
GRTU's policies have always been geared towards the fostering of private
venture and the advancement of small and medium-sized owner-managed enterprises.
GRTU believes that greater prosperity is within reach if commercial principles
and practices rather than political ideology were to guide economic
policy-making.
As a non-profit making organisation GRTU can devote all
its revenues to the best interests of its members. Strength in mumbers means
strength in bargaining. GRTU is run by its members and only small businessmen
and women are elected to the National Executive Council and to Section
Committees. Elections are held every year and membership is
voluntary.
1.3 Structure
GRTU members are grouped in a number of
Divisions according to category of business. Current divisional structure
includes the following:
ï‚· Retailers
ï‚· Importers
ï‚· Manufacturers for
the Local Market
ï‚· Agriculture and Fisheries Trades
ï‚· Transporters
ï‚·
Service Providers
ï‚· Energy Distributors & Vehicles Trades
ï‚· Civil
Engineering and Construction Trades
ï‚· Hospitality and Leisure
GRTU
members are also organised on a local area level. Full list in section
10.
1.4 International Affiliation
As an Employers Association and a
lobbyist in favour of the rights of smaller entrepreneurs GRTU is a full member
of UEAPME which is the European Union Level Employers’ Organisation representing
the interest of crafts, trades and SMEs. UEAPME promotes small businesses
throughout the European Union and other European countries and lobbyies European
institutions on behalf of this sector. Through UEAPME, GRTU participates in the
World Association of Small and Medium Enterprises (WASME). GRTU is also
affiliated to CONFIAD which is the World Confederation representing Customs
Agents and Forwarders GRTU belongs to CONFIAD’s Pan European Network of Customs
Agents. In this organisation GRTU acts as Malta National Representative of
Maltese Customs Agents and Forwarders (Burdnara). GRTU, also holds one of the
two posts allotted to Malta on the Employers side of the European Union Economic
and Social Committee, which under the Treaty of Rome, is the official social
partners consultative forum of the European Council and the European Commission.
GRTU also sits on a number of European Union Consultative Committees like the
European Social Fund Consultative Council. GRTU participate in various for a in
Europe and in the Mediterranean region in representation of Maltese small and
medium enterprises.
As an Association of Traders and Retailers, GRTU is
at European level, member of the EuroCommerce which is the European Union Level
Organisation representing the Retail, Wholesale and International Trade Business
Owners. GRTU sits on the Social and Economic Committee of EuroCommerce and
participates in all meeting and consultations on matters effecting the
commercial sector.
1.5 Lobbying
Founded in 1948, GRTU is today the
major organisation in Malta representing the interest of the self-employed and
small business entrepreneurs in Malta. GRTU operates as a nation-wide lobbying
force committed to furthering the interests of the small business sector. GRTU
is run by business people, for business people and funded by member
subscription.
GRTU provides input to the policy development process of
Malta’s political Parties structure and to government departments, government
agencies and a wide range of organisations that impact on the small business
sector.
2.
Removing the Barriers to Survival and Growth
2.1 The Small Business
Sector
GRTU proposals aim to provide a way forward to stimulate growth in
Malta’s small businesses. The small business sector is both politically and
economically a significant one. Of the estimated 26,000 registered enterprises
in Malta more than 24,000 are small businesses employing less than 10 persons.
It is estimated that small firms in Malta employ more than 50% of the total
private sector workforce and account for more than 40% of total turnover. Malta
is increasingly becoming an entrepreneurial society. People in power and people
in general do not however recognise the increasing influence of small businesses
in creating long term economic prosperity and employment. Employment in large
manufacturing firms is decreasing year by year and the situation is the same in
the public sector, as this sector makes increasing use of outside services and
its role changes to enabler and facilitator. Many more people will therefore be
employed in small businesses and many others will seek to start up in business.
Unfortunately, successive governments’ development presumptions and policies
have reflected the economic requirements of large-scale firms and the public
sector. The resulting structures are inhibiting the formation, survival and
growth of small businesses. It is GRTU’s role to ensure that this mentally is
transformed and developed to one, which is more positive, in deeds and not
words, only towards small businesses.
Technological progress, a more open
world economy and changing market demands mean that there is a requirement for a
constant restructuring of the economy. Malta’s future prosperity depends on our
ability to increase the rate at which new jobs are created within an evolving
economy. GRTU has supported Malta’s accession to the European Union. GRTU
believes that the enlarged European internal market operations under a fair
competitive regime offers Maltese traders and producers tremendous opportunity
for growth and expansion. GRTU believes that as participant in the largest
internal market in the world and operating from a strategic location mid-way
between continental Europe and North Africa, Maltese business enterprises face
great opportunities provided the right business environment prevails. GRTU
proposals strive too successful achieve the desired business
environment.
A top priority for Malta therefore must be to encourage the
formation, survival and growth of Malta’s small businesses, through the
development of an enterprise culture. The burden of bureaucratic red tape always
falls disproportionately on small firms. Small businesses have for many years
been responsible for collecting PAYE, NICs and VAT on behalf of the government,
statutory sick pay and maternity pay is administered by employers, while they
also fund redundancy pay. The additional work being imposed on small business
owners has grown too much and is stealing precious time that entrepreneurs
should devote to the development of their enterprise.
Small businesses do
not generally identify any one regulation as the major problem. It is the
cumulative effect of legislation that impacts upon small businesses, often
because it is owner-managers themselves that are charged with compliance.
According to recent estimates, a small business with less than 10 employees
spends 35 hours a month complying with regulations and paperwork. This task, in
small firm falls on the owner-manager. Furthermore the Maltese authorities have
taken the harsh approach of imposing fines that lead to prison sentences on
defaulting businesses rather than declaring unpaid fines as civil debts. GRTU is
adamant against this imposition.
Small businesses play a major role in
creating wealth and employment. But they can only achieve this with the right
regulatory framework. The major concern of small business owners is the effect
of regulation on their ability to employ staff. More labour recruitment and
employment retention rules have been imposed in Malta in the last year then in
the previous 30 years. The end result is that small business owners are now
reluctant to expand employment.
2.2 Reducing Red Tape and helping the job
creators
The government must pursue a policy of exempting small businesses
from regulations, similar to the American approach whereby firms falling under
an agreed employment / turnover threshold are exempt from regulations that are
more applicable to larger firms. Similarly company law gives special exemptions
to small-incorporated business. These exemptions and thresholds do not exist in
Malta. This is a major claim of GRTU.
In its adoption of the Acquis
Communautaire the government must ensure that the principles entrenched in the
European Charter for Small Enterprises is implemented in Malta.
The
government must undertake a review of existing legislation so that legislation
that is no longer relevant can be weeded out or amended. The contrary however is
happening and new laws are coming in, often badly drafted and they take no heed
of the burdens being over-loaded on small business owners.
The government
must insert ‘sunset clauses’ into Malta’s regulations which mean that if a
regulation is not renewed, it automatically ‘withers on the vine’, and the
government must press during EU consultations for Malta to be allowed to
introduce sunset clauses on both directives and regulations that are not
applicable to small businesses.
Longer time periods must be allowed
between consultation and implementation of legislation at both Malta and at
European Union level and accountability for keeping to agreed periods must be
identified. Too much is being imposed in too short time and business owners are
left carrying the whole lot alone and unassisted.
Government departments
must engage an independent body to publish clear, transparent and accurate cost
compliance figures on business owners of every new regulation. It must become
standard government policy that no new imposition on business is made without an
independent measurement of impact on business and a clear identification of past
rules that are being replaced and not added to.
To address this concern
about statutory instruments, the government must ensure that a Joint Committee
on Statutory Instruments (JCSI) be established with powers to order cost
compliance assessments (CCAs) on all statutory instruments where they affect the
regulatory burden on businesses.
The government should introduce a ‘time
to comply’ assessment on all government forms. Businesses should note the actual
time to comply on a panel on the form, thus generating a running monitor on the
time aspect of the regulatory burden.
The government must order a full
review of how regulation is enforced.
The Ministry for Competitiveness
must produce an independent annual report on the cost of regulation to which the
government should respond with proposed policies and schemes to address the
damage caused.
The Small Business Unit must act as a single information
point for regulatory information, with a telephone helpline, set up to advise
business. IT technology and the evolvement of e-government helps but small firms
without IT facilities are most at sea with new regulations.
The Prime
Minister must give an annual statement to Parliament covering the small
businesses environment and giving details of commitments made the year before,
progress on those commitments and plans for the following year. These
commitments must direct the action of all government departments relative to
small businesses.
2.3 CREATING A FAIR FRAMEWORK FOR EMPLOYERS
Small
businesses are now beginning to be recognised as the major job creators in Malta
too. According to government statistics out of a total of 24,000 enterprises
only 45 employ more than 200 persons. Moreover 94.6% of total establishments are
categorised as micro-enterprises, 4.3% as small and 0.8% as medium. Small
businesses now employ over 50 per cent of the private sector workforce. As the
number of small firm start-ups increases, this percentage should in turn
increase.
However, small businesses do not exist to provide employment
for employment’s sake – they employ people to create products and deliver
services. The numbers employed by small businesses will not grow if employment
law continues to be enforced without the employers’ interests being considered.
Of course employment law should protect the employees where necessary, but this
should not be to the detriment of the employer. Overall the implementation of
the Social and Employment Directives of the EU is causing a seismic shift in
employment law that many small business owners cannot be expected to suffer as
the legal fines and threats are too onerous and private business owners cannot
carry the mental pressure and fear of falling foul to the complex
laws.
Even those businesses that are prepared to overcome these hurdles
do so on the basis of the status quo. This does not take into account any future
legislation that would adversely affect their decision had they been in place at
the time the decision to employ was made. By any subsequent action, government
effectively breaks any agreement that tacitly existed between the two
contracting parties of employer and employee. Employees find themselves
advantaged at the expense of an employer who has not considered the additional
expense at point of recruitment. It is a false assumption that simply because an
employer employs then they are prepared to accept subsequent changes to that
legislation. The present sit
