Fabian Demicoli

Abuse of Status of Self-Employed


To
the extent that self-employed choose of their own free will to run businesses
on their own account, there is no issue. Employees who become genuinely
self-employed are a normal part of the labour market and the economy.

Therefore
consideration is or should be given to how they can benefit from joint
facilities like integration into existing organisations and inclusion in
different parts of the social security systems and pension schemes, health and
safety in the workplace and accessibility to vocational training institutions.
If
the change is however not based on a genuinely free choice of self-employed
status, social risks are in practice transferred from the firm to the
individual workers. This leads to abuses ranging from evasion of social security
contributions, through tax evasion and abuse of labour rights, to undeclared
work. This is a serious distortion of competition for the genuinely
self-employed, micro businesses and SMEs.

The
real issue is of protecting genuine self-employed against the abuse of their
status by two different groups:

1.       The employers who continue to recruit
workers in precarious conditions to offer cut-price services against
competitors

2.       Free riders who under the guise of
self-employed act in direct competition with genuine self-employed without
abiding to tax, standards and other licensing and wages regulations, succeeding
in eating away substantial ratio of markets at the expense of the genuine
self-employed who abide by all applicable laws.

In
this regard it would be useful if especially problematic sectors were
identified, where such abuse occurs most frequently, and standards of work are
agreed upon that would serve as guidelines for the sector.

The
competitiveness of genuine enterprises must be safeguarded and placing further
burdens on working regulations will do more harm than good to bona fide
self-employed and micro businesses. Reliable regulation is the safeguard itself
to sham self-employment. Sham self-employment should be combated through better
registration and monitoring of the real position in the labour market. Malta's
labour regulations are strong enough to avoid abuses of self-employment and no
further regulation is required. What is required is tackling directly
problematic sectors and helping them abide by the current regulations.

Public
procurement must ensure it does not reward any abuses to further tackle unfair
situations. We however strongly object to regulations that in any way reduce
the opportunities of subcontracting to self-employed and small firms. Any
proposal in this direction would completely disregard the way contracts are
performed in Malta. The vast majority of contracts in the public or private
sector are mainly of joint ventures between major contractors or enterprises
with the ability to work on major contracts, and a vast array of small firms
and genuine self-employed who work on a subcontracting basis. This is a right
that is given by various EU legislation so much so that 420K of micro and small
firms in the EU participate in subcontracting across border within the EU
single market. Maltese legislation cannot hold SMEs from other EU member states
from competing for subcontracts on public sector tenders and it will be
completely unacceptable if while other EU businesses can compete Maltese
self-employed and small firms are prohibited.

The
issue for GRTU remains one of the abuse of the self-employed status. This is
too widespread and GRTU has been insisting all along to provide the necessary
institutional structures to minimize or abolish this abuse.

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