The Director General of the Malta Employers’ Association, Mr. Joseph Farrugia addressed the delegates present at the 98th session of the International Labour Conference held in Geneva in June 2009. The following is the full text of Mr. Farrugia’s address.

Speech by Mr. Joseph Farrugia
Employers’ Delegate for Malta

It is to be expected that, given the developments of the past year, the report of the Director General addresses the crisis and its impact on the various regions and countries worldwide. The Director General is to be congratulated for the insightful manner in which the report explains the impact of the crisis and provides a solid backdrop on which the social partners could interact to seek solutions to the global recession. The report is a passionate call to action, to which the social partners have responded.

This conference was an occasion where the process of social dialogue was put to the test. The report of the Director General called for a Global Jobs Pact to mobilize the tripartite constituents in all member states to develop a response to the crisis. This was a worthy initiative which ran parallel to the proposal by the IOE to focus the conference to propose exit strategies from the economic crisis.

The Committee of the Whole on Crisis Responses has been an excellent forum for an exchange of information about different international experiences. The outcome of this committee – the document: Recovering from the Crisis – A Global Jobs Pact - provides policy guidelines and options to assist countries in exiting the crisis. This is a fresh approach coming from the International Labour Conference that should be sustained in years to come, as it adds value to the constituents of the ILO, and also enables it to focus more clearly on the issues that fall within its mandate. The debate in this committee was constructive, lively and the result is something that can be easily communicated to policy makers across the world.

Indeed there are signs of green shoots that shed a glimmer of hope on the current bleak situation in many economies. However, the fact that many indictors point towards a time lag between the recovery of the economy and the job market, as has been amply demonstrated during this conference, highlights the need for policies that are specific in their objective to safeguard existing jobs, and to generate productive employment opportunities to absorb the jobs that have been lost in the shortest time possible. This is clearly no easy task and such policy responses have to be country specific in their design.

Malta has its own distinguishing economic characteristics. It is a small and open economy which is strongly dependent on global aggregate demand for its exports and tourism revenue. Any fiscal intervention to stimulate growth has to be targeted to have any positive impact, since it risks leaking out of the economy through increased imports, resulting in a deteriorating balance of trade.

Trade unions must realize that rather than spending money on increasing wages to employees holding public sector jobs, which are virtually recession proof, any government stimulus through increased expenditure should be channeled towards protecting jobs in the private sector which are more exposed to the ravages of the global crisis. This can be achieved primarily through strengthening the sustainability of Maltese enterprises, facilitating access to finance to SME’s, and intensive training and re-skilling programmes to enhance job mobility that enables workers to secure alternative employment where necessary. It is fully understood that even if economies manage to find the path towards economic recovery, the post recession scenario will be, in some respects, radically different to the one prevailing twelve months ago. All social partners will be facing fresh challenges to adapt to a re-shaped economic landscape following the earthquake bought about by this financial crisis. SME’s will play a crucial role as a starting point in job creation and in re-building a healthy private sector. Active labour market policies also play a pivotal role in matching the skills demands of a recovering economy with supply.

In Malta, government has responded to recommendations by employer bodies to go for targeted interventions at enterprise level rather than for national measures to mitigate the impact of the crisis. In this way, numerous companies in the private sector suffering from reduced export orders are benefiting from financial assistance that has enabled them to retain the existing workforce through job sharing schemes. Employees are also benefiting through training schemes purposely designed to upgrade their skills, through job retention, and minimal impact on their take home pay. In spite of these efforts, jobs have still been lost and the economy has experienced negative growth in the past two quarters. This is not due to the financial sector in Malta, but mainly due to a fall in exports and tourist arrivals.

Employers are also urging government to speed up the execution of public sector projects, many of which are being financed through funds available from the European Union. These projects will have an immediate impact on aggregate demand, and many infrastructural works will also generate employment in the long term. We also need to tap into the potential of green initiatives to reduce dependence on fossil fuels and to generate green jobs.

In conclusion, I maintain that if any good is to emerge from a crisis of this magnitude, it lies in the lessons that can be learned to avoid a repetition of the events that led to the financial meltdown, amongst which is the need for better governance of the financial markets in several industrialized countries. The upheavals in labour markets also give scope for the ILO to design ground based activities which augment the relevance and impact of the institution, and of tripartite social dialogue at national and global level, in line with the ILO Declaration on Social Justice for a Fair Globalisation of 2008.

The Director General of the Malta Employers’ Association, Mr. Joseph Farrugia addressed the delegates present at the 96th session of the International Labour Conference held in Geneva this month.

The following is the full text of Mr. Farrugia’s address.

Speech by Mr. Joseph Farrugia
Employers’ Delegate for Malta

On behalf of the Maltese Employers’ delegation for this conference, I would like to convey my congratulations for the Director General’s insightful report to the conference. It has a sense of freshness and novelty in the sense that rather than focusing one major theme, the report opts to tackle a number of major issues that are interconnected in the manner that they address different aspects of the promotion of decent work for sustainable development.

The debate on sustainable enterprises, which is part of this year’s conference agenda, is a step in the right direction in that the role of business is recognised as being central to the achievement of decent work in the economy. However, the report seems to suggest that world business is dominated by multinational enterprises, at the expense of ignoring the pivotal role of small and medium sized enterprises, which are frequently the main generators of new investment, innovation and employment opportunities. This is definitely the case in Malta, where more than 85% of enterprises are classified as SME’s. If the ILO is to cover labour issues in their entirety, the debate on sustainable business and decent work needs to come down from a rather elevated and idealised level of discussion to cater for the reality that is faced by the vast majority of enterprises, which need the support of a business friendly regulatory environment for them to flourish and generate employment.

Certainly one major global challenge facing humanity is the conciliation of economic development and the material well being of the world’s citizens within environmental constraints. The Report rightly points to the need for a fully integrated sustainable development strategy, and that the technological transition to sustainability can itself be a source of creation of ‘green jobs’. The point that sensitivity to environmental issues and job creation are not mutually exclusive is certainly relevant for Malta, as over-development may provide short term boosts to the economy, but have negative long- term consequences.

In his Report, the Director General states that: ‘Trade liberalisation is associated with both job destruction and job creation’. This certainly reflects the experience of the Maltese economy over the past few years, in particular since it became a member of the European Union. There has been considerable job destruction as numerous low value added manufacturing units have relocated to cheaper cost destinations, and thousands of jobs were lost. On the other hand, Malta has experienced an unprecedented influx of foreign direct investment during 2007, which, together with a healthy expansion in financial services, has resulted in the creation of new jobs, a positive increase in real GDP growth and a drop in the rate of unemployment. It is a challenge for all social partners to see that the gains of these developments are available to all society. A section of the labour force is still employed in low value added sectors, others have lost their job and need retraining to integrate themselves in jobs requiring new skills. There is also a stronger need for closer collaboration and stronger dialogue between employers and educational institutions to channel the human resource into more productive channels, and to reduce the number of school drop outs, which, in spite of substantial investment in education, is still of concern in Malta. The Report provides a negative view of income inequality. However, it must be acknowledged that income inequality resulting from labour market forces can also be a way of encouraging job and occupational mobility to reflect the needs of a dynamic economy. Income inequality can, in fact, be a positive force as long as all citizens have the opportunity to avail themselves of better employment prospects.

The Director General’s report makes a reference to the ILO constitution, which states that the organisation of work cannot be separated from the organisation of social responsibilities. This principle applies to all social partners, not just employers. Governments must live up to their social responsibilities through providing a regulatory framework that promotes enterprise. Unions also need to carry their share of responsibility in acknowledging that companies operate within a competitive environment. This is the way that social partners can work to reduce decent work deficits. The Director General points at regular full time wage employment as an indicator of the extent of decent work deficit. I think that it is difficult to have an international benchmark to measure decent work deficit. Moreover, although Malta has a relatively high percentage of the labour force in full time indefinite employment, new demands from both organisations and workers may require a move away from traditional forms of employment. This should not automatically be interpreted as a widening decent work deficit. The concept of flexicurity that is being discussed in the European Union seeks to promote the interests of both employees and employers through more flexible work contracts. For example, the provision of part time employment, and temporary agency work, can, together with other measures such as child care, facilitate a higher female participation rate in the labour force.

On social protection, the Report is over-ambitious when it suggests a global approach ‘to organise solidarity across borders’. It would be more realistic for ILO to be instrumental in diffusing tripartism across nations, and through such tripartism, customised solutions to the issue of sustainable social protection can be designed, since national situations differ tremendously in their demographic characteristics, availability of resources and socio-cultural dimensions. The concept of social solidarity across borders is useful in tackling problems that small nations in particular cannot be expected to resolve on their own. A clear case in point is migration across the Mediterranean Sea. A comprehensive, trans-national effort is required to address this problem, as small nations like Malta cannot be reasonably expected by the international community to handle such massive and dramatic demographic movements single-handedly.

The tripartite model of social dialogue that defines the character of the ILO is reflected in the Maltese social dialogue institutions, and through the strength of this constant collaboration major challenges have been faced and surmounted. This is evident in the fact that Malta has been successful in its efforts to join the Eurozone in the begi nning of 2008. This achievement opens a new chapter in the history of economic development, which has been possible through the input of all social partners. It is a clear demonstration that a convergence of ideas between government, unions and employers is possible on crucial issues to further the national interest. As the report states, this is the basis of good governance in democratic societies and dynamic economies.

The Director General of the Malta Employers’ Association, Mr. Joseph Farrugia addressed the delegates present at the 95th session of the International Labour Conference held in June 2006 in Geneva.

The following is the full text of Mr. Farrugia’s address. 

Speech by Mr. Joseph Farrugia

Employers’ Delegate for Malta

The report of the Director General is tangible proof of the increasing relevance and dynamism of the ILO in its efforts to spread the principle of decent work throughout the world, in spite of the many global and national forces that may impede the organisation from reaching its goals. It is on this note that, on behalf of the Maltese employers, the Director General is to be congratulated for the results that have been achieved in each of the major strategic objectives that form part of the ILO’s decent work agenda. It is indeed a positive development to witness the implementation of decent work country programmes that are focused to tackle labour related issues at national and regional levels through the practice of tripartite social dialogue that enables strategies to be translated into concrete action.

The report also lists as one of its objectives the provision of a context for debate about the institutions and policies required to create decent work for all and to diminish the uncertainty rapid change provokes.  This aspect of the report is certainly of great relevance to Malta, as our country also is passing through a phase of rapid economic restructuring. The pace of economic transformation has been the result of accession to the EU, the need to meet fiscal criteria to introduce the euro as our currency in the beginning of 2008, and also due to a pressing need to build a competitive economy that can survive and grow in an aggressive global competitive environment.  Indeed, Malta has been experiencing a significant reduction in jobs in areas of low value added manufacturing, which has been balanced with a healthy inflow of foreign investment during the last couple of years in sectors which demand a higher skill content. The success or otherwise of this strategy of transition will depend on the input of all the social partners and it is clear that social dialogue is the mechanism that reduces the friction that can be part and parcel of social and economic change. We fully support, and actively participate, in tripartite dialogue on key policy issues, and believe that the Malta Council for Economic and Social Development, which is the Maltese institution where tripartite dialogue is practiced, can be more influential in promoting the principles of decent work in Malta.

The essential precondition for decent work is job creation, and therefore establishing an infrastructure that supports and encourages entrepreneurship is crucial to achieve the objectives of the millennium development goals through fair globalisation, full and productive employment, and decent work for all. In a world where national barriers are being eroded, investment invariably flows to countries and regions that offer the necessary flexibility and competitive conditions. Global competition in the market for goods and services is also being reflected in competition in the factor markets, including labour. Job creation is thus becoming increasingly dependent on the price of labour, and, more importantly, on the quality of labour which is influenced by the degree of flexibility, and trainability of the labour force. This implies obligations not just on the part of employers, but also on employees. Perhaps the emphasis on employee rights in the report needs to be supplemented by an emphasis on the importance of fostering a flexible work environment  that is more adaptable to changing situations. There is also the need for national policies aimed at encouraging a higher participation in the labour force, developing skills and retraining employees to fit into new jobs. Education is a key element to ensure that the labour force is able to avail itself of decent work opportunities, and more resources need to be channelled by ILO into skills development programmes, as these are essential tools in the fight against poverty. Educational programmes should also focus on developing entrepreneurship skills as a means to generate productive employment.

Maltese employers have been advocating a higher resource allocation to education, and to channel structural funds from the European Union into upgrading the human resource as a means of avoiding structural unemployment, which can result in having a segment of the labour force facing worsening working conditions. Labour market policies are also needed to address the possibility of a brain drain in sensitive areas like health, and to curb wage inflation caused by labour shortages in expanding sectors of the economy.

The global economic environment is also affecting the mobility of workers. Malta is witnessing an increasing flow of immigrants who risk their lives to cross the Mediterranean from African shores in the hope of living in a place where their fundamental rights are respected, where they may have job opportunities and access to social protection. This phenomenon is proof that there is still a long way to go in many countries and that a core aspect of the solution to such migrations is the design and implementation of the Decent Work Country Programmes. These are the means available to bring the global debate down to country specific frameworks and policies and should be the main focus of ILO.  Discussing issues like decent work, productivity and skills development from a global perspective is relevant only in so far that such discourse is given form into specific action plans at national and regional levels.

In conclusion, it is the belief of Maltese employers that the ILO has a specialised function and it must not detract from its primary role of encouraging enterprise, and developing the infrastructure to generate productive and decent employment opportunities for all. The ILO mandate of dealing with the world of work, and with the interaction of employers and employees is in itself ambitious and, rather than widening its sphere of influence in a manner that might overlap with other institutions, the ILO can be more effective if it opts for depth in its core activities in order to retain its distinguished identity and to increase its effectiveness.