|
|
|
|
Under Maltese company law the only recognised corporate structure is the one-tier system: the two-tier structure has never been recognised. Companies are governed by a board of directors which manages the business and exercises all corporate powers.
In Malta, at present 10 companies provide for worker board-level participation, of which six are state owned. The remaining four companies are privately owned: three by the General Workers’ Union (GWU), the largest trade union on the island, and the other by the Labour Party. There are 12 elected representatives to the board of directors (so-called worker directors).
Where board-level participation was introduced it was done in a number of different ways. In the case of a number of corporations owned by the government and the University of Malta the right is based on legislation. In some companies, however, the relevant provision can be found in the collective agreement, while in others an agreement was reached and is still in place.
Only company employees are entitled to become board-level employee representatives. In general they are directly elected by the employees. On appointment, worker board members have the same rights and duties (including remuneration) as the other directors.
Historically, worker board-level participation dates back to the 1970s when the newly elected government vowed to take a new economic direction and adopt a new form of industrial relations in which worker participation was to play a leading role. The original concept, involving board-level employee representatives, was inspired by the socialist ideology of worker self-management. However since those days worker participation at board level has increasingly come under pressure. At the shipyard Malta Drydocks, for example, by 1975 all eight directors were to be elected by the workers (self-management system). In 1997, however, the number of elected employee representatives was reduced to four (half the board) and in 2000 to a single representative. Recently, three companies abolished the employees’ right to elect board-level employee representatives as part of their privatisation process (Drydocks among them).
Maltese industrial relations law follows the British system of industrial relations, with the shop steward representing the trade union at shop-floor level and collective bargaining being conducted at enterprise level. Within the current industrial relations system – based on conflict and negotiation – board-level participation has apparently never really functioned properly in Malta. Consequently, the idea of board-level employee representatives has been regarded with suspicion by both management and employees.
Source: The European Company - Prospects for worker board-level participation in the enlarged EU (edited by Norbert Kluge and Michael Stollt). Brussels 2006.
The country reports on board-level participation in the new member states are available in several languages.
Documents
< top
|
|
|
SE in Malta: A Viable Option?
by Saviour Rizzo, Workers’ Participation Development Center, University of Malta (December 2004)
In October 2004 the Employment Involvement (European Company) Regulations were published in the Government Gazette and incorporated in the Employment Industrial Relations Act (EIRA 2002). To date this legal notice has not stimulated any interest in the public debate. The lack of response to this act of legislation must be seen in light of the following:
- the inherent constraints of the economy of a sovereign small-island state;
- past experience of workers’ participation in Malta.
The Economic Scenario
One fundamental characteristic of Malta’s labour market and economy is the absence of large enterprises. Only six manufacturing firms employ more than 500 employees in the private sector. Among small and micro enterprises the family basis of ownership and management stands out.
Nevertheless, despite the constraints associated with smallness, peripherality and insularity, Malta has a significant manufacturing sector, most of which is foreign based. Out of a total of 17 firms based in Malta employing more than 250 employees, 16 are foreign owned and cater for foreign markets. The only locally owned manufacturing firm among the top 17 is a brewery. Maltese entrepreneurs tend to invest in the hospitality industry. Indeed, the only Maltese multi-national firm can be found in this sector.
In the export-oriented manufacturing sector, which is often highly unionised, industrial relations tend to be relatively harmonious and rarely erupt into industrial strife. This is in contrast to the public and quasi-public sector which is almost totally unionised and perennially liable to industrial conflicts between trade unions and government.
The Experience of Worker’s Participation
In both spheres the legacy of Britain looms large: employee representation at the workplace seems to be more in line with the British than the European model. The main link between the trade union and the workplace is the shop steward on whom most trade union training programmes are targeted. There are 14 board-level employee representatives, all but two of whom are at state-owned or -run enterprises. Consultative bodies representing employees at the workplace are practically non-existent. Such is the lack of a culture of consultation at workplace level that a recent agreement between Air Malta and the four unions representing the various categories of employees to set up a works committee was hailed as a breakthrough in industrial relations.
The current apathy regarding workers’ participation in Malta stands in sharp contrast to the situation in the 1970s. At that time the newly elected government was seeking to end the island’s ‘fortress economy’ mentality by making its economy dependent on its own initiative rather than on annual subsidies from the British government and its NATO allies aimed at maintaining the island as a fortress in the Mediterranean. To accomplish this self-reliance it pledged that while seeking new economic directions, it would also adopt a new form of industrial relations. Worker’s participation was earmarked to play a leading role in the new scenario.
The government adopted a three-pronged approach to spread industrial democracy. First, it introduced workers’ participation in the management of enterprises in which the state had a controlling interest. The aim was to create a niche in the manufacturing sector run by workers. However, government, in order to upgrade economic performance and profitability, was constrained to seek partners from abroad for joint ventures. In this process government was forced to renege on its avowed principles and bow to the constraints of market pragmatism.
Second, workers’ committees were set up in all parts of the public sector. Rather than engendering mutual trust, however, these workers’ committees ended up generating deep-seated suspicion between public sector employees and senior government officials. The trade unions, in dispute with the government, suspected that that these committees were being used as a tool to circumvent strike action. On the other hand, government accused the unions of using the committees for self-aggrandisement rather than to enhance participation. Once their term of office ended no fresh elections for workers’ committees were held.
Finally, we might mention what happened at Malta Drydocks, Malta’s largest employer by far. Drydocks was originally a naval dockyard for British warships and was converted into a commercial enterprise by the British colonial government. Four years after attaining independence in 1968, an Act of Parliament made the dockyard the property of the Maltese government. In 1971 the newly elected government set up a Board of Directors made up of three trade union officials representing the workers and three members appointed by government. The person of the chairman was agreed on by both sides. The industrial peace ushered in by this system enabled Drydocks to make a profit for the first time in its history in 1973–74. The prospects of a viable economic Drydocks induced the government to amend the Drydocks Act, to the effect that the enterprise was to be run by a board directly elected by the workers. By this amendment the Drydocks became a self-managed firm and for some time it appeared to be a textbook example of workers’ participation.
However, the profitable trading positions of the mid-1970s were not maintained and in the early 1980s the company plunged into loss. The losses became chronic and the enterprise had to rely on heavy government subsidies to survive. These subsidies, as the press continuously argued, became a burden on the Maltese tax payer. Two reports commissioned by government – one on the financial situation and the other on the management system – made damning comments on how self-management was operating. The press took its cue from these reports to lambast the ‘myths of workers’ participation’, with one weekly newspaper commenting that ‘workers’ participation has failed as much as communism and extreme forms of right- and left-wing socialism’ (Malta Business Weekly, 13–19 February 1997). Following the publication of the two reports the participation system at Drydocks was dismantled. The reversal of this self-management system sounded the death knell of workers’ participation.
The euphoria surrounding workers’ participation in the 1970s was ultimately not sustained among policy-makers, trade unions and workers. The high trust relationships which it sought to establish failed to materialise both in the public sector and at Drydocks. Perhaps the piecemeal and haphazard way in which it was introduced was its undoing. The way each side, driven by the self-interest of their individual members, tried to manipulate the system to its own advantage made workers’ participation look more like a blatant struggle for power than a tool for improving working conditions.
Of course, the system must also be analysed in the context of the economic constraints of a small, resource-poor island state, heavily dependent on foreign investment. Drydocks was a unique case. Had this commercial enterprise, which is socially owned, demonstrated that workers’ participation is conducive to higher productivity and a sound financial position, then the case for workers’ participation would have been stronger. This demonstration effect was not forthcoming.
Conclusion
In retrospect, the Maltese experience of workers’ participation over the last 30 years has been a string of abortions and miscarriages. The current indifference towards transposition of the SE directive can be therefore be explained in the following terms:
- the absence of Maltese transnational companies with bases on the European mainland;
- the almost total dominance of foreign-based companies, most of which tend to be SMEs;
- the absence of a tradition of legally instituted bodies of workers’ representation at the workplace;
- bitter failures to sustain workers’ participation schemes: trade unions are wary that such schemes can be manipulated by managers to circumvent their actions, whereas employers, on the basis of past experiences, are afraid that such practices can be used to satisfy worker self-interest to the detriment of the firm.
These factors all contribute to a situation in which at present a European Company incorporating the principles of workers’ participation does not seem a viable option to any of the industrial relations actors.
Survey: The European Company – Perceptions of Employers in Malta
The survey indicates a considerable lack of knowledge among Maltese employers about the topic of the European Company. Very few employers could imagine converting their company into an SE. However, this skepticism does not stem from a potential requirement to enhance employees’ participation rights. This applied to more than three quarters of the respondents. The survey was carried out in October/November 2005 by Saviour Rizzo of the Centre for Labour Studies, University of Malta. Download survey as pdf.
< top
|
|
(3) Transposition process
|
Report: Takeover Directive - Its Implementation in Malta by Saviour Rizzo, Centre for Labour Studies, Malta (July 2006). Download report as pdf.
Report: Transposition of the Regulation on European Cooperative Societies (SCE) and the Directive on worker involvement in SCEs by Saviour Rizzo, Centre for Labour Studies, Malta (July 2006). Downloadreport as pdf.
Updated report: Transposition of SE legislation in Malta
The Maltese law on employee involvement in the European Company (SE) was adopted in October 2004.
The Malta Financial Services Authority (MFS), which manages Malta’s Registry of Companies, has still not issued the regulations governing the Act that transposed the SE Directive. According to the views expressed by officials of this Authority, the prospects of Maltese companies setting up an SE in Malta are very slim. Moreover they maintain that the law is too complicated. According to the lawyer working in the registry of companies of this Authority, to date there have only been a couple of queries about SE from lawyers.
DOCUMENTS: (Link to EU Commission website, inofficial translations are available for some countries)
< top
________________________________________________________________
Transposition of the SE Directive into Maltese Law (30 July 2004)
The SE Directive has so far not been transposed into Maltese law. It is being debated at the Employment Relations Board, which is a tripartite consultative body comprising four employees’ representatives and four employers’ representatives, together with four members appointed by the government. This board has to be consulted by the minister before publication of the legal notices embodying the detailed regulations implementing the Employment and Industrial Relations Act (EIRA, 2002).
The passing of regulations by means of legal notices in parliament rather than amendments to the Act proper is the preferred flexible method chosen to keep the act up to date with any changes which may be required, including the coming into force of EU social policy directives, such as the SE directive. Transposition of the SE directive following recommendations made by the Employment Relations Board would take place by means of such a legal notice.
There have been no position papers or other responses from the social partners on this directive. One reason may be that the Maltese social partners are still trying to take on board the new legislation, enacted a few months prior to EU accession in order to bring Maltese industrial relations into line with the EU acquis communautaire. The changes introduced into the law (EIRA) that came into force in December 2002 include parental leave; guarantee fund regulations; fixed-term contract regulations; information and consultation regulations; collective redundancies; transfer of businesses (protection of employment); working time organisation; and European Works Councils. The effects and implementation of these new regulations are still being monitored by the Maltese social partners.
Moreover, industrial relations in Malta are based on the British rather than on the European model. Indeed, Maltese trade unions have a workplace representative, known as a “shop steward”, who is the effective link between trade union officials and management. It is mainly through shop stewards that trade unions can monitor what goes on at the workplace, and by and large, Maltese trade unions tend to invest heavily in their informal and formal education. The culture of workers’ participation in the workplace is embodied in the functioning of the shop stewards rather than in a tradition of institutional representative bodies. Works councils are conspicuous by their absence. Even board-level employee representation is rather limited: at present there are only 14 worker directors in Malta, and, with the exception of the two in firms owned by the largest trade union, these worker directors are to be found in state-run or state-owned enterprises.
Either because the Maltese social partners are still digesting the new regulations or because of this lack of a worker participation culture at enterprise level the SE directive has, so far, not stimulated any debate among the social partners. Many employers deem the new regulations embodied in the EIRA (2002) too cumbersome. The employers seem to believe, implicitly or explicitly, that what they term excessive labour market regulation, far from being a sensible response to slower growth may be the cause of it. This view has been endorsed by the Director General of the Malta Employers’ Association (interview 19 July 2004). The employers are therefore proposing that Maltese industry be given some breathing space to enable it to adjust to the new situation, especially at a time when economic growth has slowed down and the Maltese economy is still undergoing restructuring. This plea may not go unheeded by the legislators.
However, at this stage nothing is certain. Transposition of the SE directive is still in the drafting process which entails a series of deliberations and consultations by the minister and the Employment Relations Board.
by Saviour Rizzo, Workers’ Participation Development Center, University of Malta
< top
|
|
|
Survey: The European Company – Perceptions of Employers in Malta
The survey indicates a considerable lack of knowledge among Maltese employers about the topic of the European Company. Very few employers could imagine converting their company into an SE. However, this skepticism does not stem from a potential requirement to enhance employees’ participation rights. This applied to more than three quarters of the respondents. The survey was carried out in October/November 2005 by Saviour Rizzo of the Centre for Labour Studies, University of Malta. Download survey as pdf.
< top
|
|
(5) Other relevant information (Info-Box)
|
Tripartite Seminar on European Company (SE)
On 12 April 2006 the Centre for Labour Studies at the University of Malta in collaboration with the Friedrich Ebert Stiftung (FES) organised a tripartite seminar with the aim of arousing interest in and providing relevant information about the European Company. The guest speaker at this seminar was Michael Stollt, research officer at the European Trade Union Institute (ETUI-REHS). Participants in this seminar included representatives of the two main Maltese employers’ associations – Malta Employers’ Association (MEA) and the Malta Federation of Industry (FOI) – officials from the Malta Financial Service Authority (MFSA) and members of the legal profession.
The Malta Financial Services Authority (MFS), which manages Malta’s Registry of Companies, has still not issued the regulations governing the Act that transposed the SE Directive. According to the views expressed by officials of this Authority, the prospects of Maltese companies setting up an SE in Malta are very slim. Moreover, they maintain that the law is too complicated. According to the lawyer working at the Registry of Companies, to date there have only been a couple of queries about SEs from lawyers.
< top
|
|
|
