Improving conditions at a national level for businesses

GRTU annual report

i. Lifting restrictions on shop opening hours

Following a survey GRTU had conducted with members, it became clear that times had changed and that the majority of its members no longer wanted restriction on shop opening hours. GRTU, therefore, was the main entity backing government and pushing for this reform to take place.

The changes in fact came into force a good number of months following the consultation, however, to GRTU’s disappointment there were still a number of restrictions in place such as having to choose one day of rest and otherwise still having to pay the €700 fee to open seven days a week. This was mostly burdensome on smaller businesses who could not afford to pay such a hefty amount and monitoring such a system would be in reality impossible, leading to unfair competition. GRTU lobbied heavily to have the remaining restrictions lifted. GRTU argued that without such a change there was only marginal improvement from the previous law, that the government misguided businesses and their representatives and that the changes made so far still fell short of meeting consumer demands. During the period of negotiations GRTU also secured an exemption for businesses from paying the €700 fee until the issue was resolved.

GRTU’s proposal to lift the remaining restriction was at the end accepted following much representation. ii. Finding a solution to Excise Tax

Over the last few years government has chosen to widen the range of goods that fall under this tax regime in order to increase its revenue. Even though most of the increases were marginal in terms of amounts, they resulted in heavy bureaucracy on enterprises and an added burden to those that complied with the law as opposed to free riders.

GRTU has and is still campaigning for the total removal of the excise tax extension that has as yet not been justified by this government. Various avenues in terms of lobbying have been explored during the last year and this included multiple meetings with the Minister and Permanent Secretary of Finance, also involving representatives of specific sectors, multiple media statements and initiating a declaration signed by enterprises against the excise tax and stating how harmful this is to their business.

GRTU has also carried out fieldwork to understand exactly how the process works and alleviate both the bureaucratic burden on enterprise and the imbalance through unfair competition. This exercise resulted in changes in the requirements of the declaration, giving enterprises importing excisable goods from Europe once again the chance to clear their goods immediately upon arrival in Malta and ample time to submit the declaration following this. This brought the different channels of importation when it comes to the customs administration of excis- able goods much closer to each other.

GRTU is currently working on longer operational hours at customs, something that has already started being implemented as well as introducing electronic transactions. iii. Local Enforcement System Reform

Money spent on fines had become an increasing concern for businesses. The inevitability of having to consider a substantial amount of costs, emanating from contraventions, as necessary and inevitable running costs, given the Maltese road’s infrastructure, had reached unprecedented highs.

This issue resulted in several meetings with a vast number of sectors, especially enterprises having a direct concern in transport issues, meeting with Ministers, Transport Malta and LESA.

Two important GRTU proposals were taken up and implemented. Firstly, that local enforcement officers would no longer be privately employed but government employed to limit the direct interest in giving contraventions. GRTU argued that enforcement cannot be driven by the need to collect funds but rather towards understanding, educating and ultimately improving the situation. The goal is not to issue more fines, but to provide a better service to the community.

Another GRTU proposal implemented was the introduction of a warning ticket system for a number of contraventions. GRTU argued that not all road illegalities should be treated in the same manner and warnings should first be issued where there is no health and safety concern. GRTU also argued that local enforcement should be strongly based on education. iv. Malta Development Bank

Originally a GRTU proposal put directly to the Prime Minister during an MCESD meeting – this year we witnessed the setting up of the Malta Development Bank. This followed an exercise in which GRTU was a main participant that proved that there is a market failure in access to finance in Malta and a development bank was needed in order to address this.

The Development Bank will in fact not function as a normal bank but will be filling in the gap and help banks give finance where they are finding shortfalls. Through the MDB therefore, business loans that are deemed too risky for one reason or another by the banks would be financed through the help of the MDB.

This is another step in the right direction in GRTU’s quest to increase access to finance for businesses. GRTU was also successful in having its president confirmed as one of the directors of the bank, in representation of Maltese businesses. The GRTU president will be ensuring that tangible improvements are felt on the ground. v. Unfair competition Once again during 2017 GRTU worked very hard to instigate government to tackle unfair competition coming by sea from Sicily. This year important progress was achieved.

GRTU’s proposal to establish a task force on the matter was taken up and this task force started functioning in 2017. GRTU has, however, questioned the effectiveness of the work of this task force on numerous occasions and changes in how investigations and enforcement are carried out had to be made. The effect on the ground started to be felt.

GRTU’s proposal to take the scanner down to where the catamaran berths was also taken up and implemented. This system is gradually improving the situation on the ground with the customs department having more visibility of what is coming into Malta and being able to carry out spot checks to confirm if what has been declared is correct. vi. Human Resources Crises

Over the last years human resources proved to be among the biggest challenges facing enterprises. Lack of skilled and available human resources provided to be one of the biggest constraints that led to many enterprises not being able to expand and limitation of operation. It also led to inflation of wages because of poaching and the businesses that paid most attracted the necessary human resources even though this did not equate to increase in skills.

At the same time Malta has been experiencing the lowest unemployment rate, meaning there remained very little, if any at all, Maltese that were available and ready to work. Employees from other European countries were attracted to higher paying member states and non-EU nationals were very difficult to engage due to a very bureaucratic administrative process.

GRTU has suggested a number of improvements to make it easier to employ non-EU nationals and in fact the process has been greatly reduced in terms of time and has become a bit more simplified. Sourcing third country nationals was however still very difficult and GRTU suggested that in order to help enterprises and guarantee a certain level of safety, third country nationals should be sourced directly through the national employment agency.

This proposal was at first shot down but soon after it was accepted and implementation started in 2017.