Malta Chamber of SMEs

Ilum il-Burdnara waqqfu x-xoghol tal-Freeport bi Protesta

Posted on 31.05.200408.09.2020 by SME Chamber

Id-Direttur Generali tal-GRTU – Malta Chamber of Small & Medium Enterprises
– Vincent Farrugia u l-mexxejja tal-Burdnara ser ikunu fil-Freeport Gate bejn
id-9.30a.m u l-10.30am biex ikellmu lil Media dwar din il-kwistjoni.

1.
Il-Kumitat tal-Burdnara illum ta’ Direttiva lil Burdnara (Cargo Hauliers) biex
iwaqqfu x-xoghol ta’ garr ta’ containers lejn u mill-Freeport. Il-Burdnara huma
sidien privati li jaghtu servizz li esportaturi u lil importaturi ghall-garr ta’
merkanzija mill u lejn il-portijiet.

2. Il-GRTU ilha snin tilmenta u
tipprotesta dwar l-inefficjenza fit-thaddim tal-Freeport Gate mill-Freeport
Management. Ghalkemm saru hafna weghdiet l-investiment mehtieg biex il-Freeport
ilahhaq mal-volum dejjem jikber ta’ containers li jridu juzaw l-facilitajiet
fil-Freeport, baqa ma sarx.

3. Ir-rizultat hu li ta’ spiss il-burdnara
ikollhom jistennew sieghat twal ghas-spejjes taghhom biex jiehdu u jgorru
l-containers lil klijenti taghhom. Kuntrarjament ghall dak li jghidu xi
rapprezentanti tas-sidien li ma jifhmux fix-xoghol tal-Portijiet, is-servizz
tal-Burdnara u wiehed kompetitiv u l-Burdnar ma jistax jaqbad u jghaddi
l-ispejjez zejda lill klijent tieghu. Il-problema mhux fit-trasport tal-merca
izda fl-immanigjar tal-portijiet, l-aktar dak tal-Freeport minfejn jghaddu 80%
tal-cargo minn u lejn Malta.

4. Il-GRTU tghat avviz lill-Ministru u
lill-Freeport (15ta’ April 2004) biex jiehdu passi biex is-sitwazzjoni
tirrisolvi ruhha ghax il-burdnara kienu avzati mill-GRTU biex jieqfu bla htiega
ta avviz iehor. Il-Gimgha l-ohra (24ta’ Mejju 2004) l-Ministru inghata 48 siegha
biex jirrangaw is-sitwazzjoni.

5. Nhar il-Gimgha 28 ta’ Mejju 2004
il-Burdnara damu jistennew is-sieghat biex johorgu x-xoghol. Illum it-Tnejn 31
ta’ Mejju l-Freeport Gate regghet ma kienitx f’pozizzjoni li tlahhaq mall-volum
tax-xoghol. Il-GRTU ghalhekk ordnat il-waqfien bi
protesta.

Smeâ€™s & EU Enlargement

Posted on 28.05.200408.09.2020 by SME Chamber

How to meet the challenge – Grtu proposals

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 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 businessmen 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 AimsGRTU'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.1.3
International AffiliationAs 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 lobbies 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.1.4 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, NIC's
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 help line, 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 situation leads to either reductions in staff or
non-employment altogether.

GRTU claims that when the government enacts
new legislation which may affect the terms of an existing employment contracts,
the contract should be declared void and subject to renegotiations.

GRTU
demands that a Small Business Employers Charter be introduced, stipulating the
rights which employers have when employing staff. Employers cannot be expected
to be held responsible when conditions shift to their disadvantages.

As
the administrative burden of employment and benefits systems are being
transferred to the employer there must be a major reduction in the number of
civil servants previously employed to administer such systems. GRTU expects that
government should reduce and not increase social contributions made by employers
when burdens are increasingly being transferred from the public to the private
sector without due compensation.

2.4 Supporting Small
Businesses
When drafting new policies and legislation, the Government needs
to take the perspective of a small business. This is in line with the European
Charter for Small Businesses adopted by the feira European Union Council on the
20th June 2000. This Charter boldly causes European Governments:

ï‚· “to
strengthen the spirit of innovation and entrepreunership”

ï‚· “to achieve a
regulatory, fiscal and administrative framework conducive to entrepreneurial
activity and improve the status of entrepreneurs”

ï‚· “to ensure access to
markets on the basis of the least burdensome requirements”
ï‚· “to facilitate
access to the best research and technology”

2.5 Economic and Social
Contribution of Small businesses
All today speak of the economic and social
contribution of small businesses. They have been identified as a key source of
job creation, enterprise and innovation. However, despite their relative
success, successive Governments have not given enough effective attention to
their contribution and, consequently, the policy framework within which they
operate constrains them from fulfilling their true potential. The schemes
currently being offered by Malta Enterprise are very interesting and a step in
the right direction, however small firms prefer to hold on to the funds they
earn and to utilise them directly in the fulfilment of their initiatives. If the
government is serious about meeting the ‘productivity challenge’ through
encouraging enterprise and innovation, it must rethink its policies towards the
small business sector.

Contained within GRTU’s submissions to the
Minister of Finance are a number of policy proposals that seek to encourage an
enterprise culture through reducing the constraints and regulations that bind
entrepreneurs. If implemented, the GRTU believes that the government will have
taken a significant step towards bringing the Maltese potential productivity
performance into line with other competing economies. The challenge ahead is
large, but the tools and assistance available to small businesses are few or
non-existent while the burdens keep growing.

It is all too often the case
that policies designed to help small businesses fall short of their objectives
or that other policies fall too onerously on them in their implementation.
Although there are many reasons for this, one of the key factors is the lack of
an adequate understanding of the activities and challenges faced by small
businesses.

In particular, Governments seem incapable of understanding
the difference between a small-unincorporated business and a small-incorporated
(Ltd) company on one side and the difference between a small incorporated
company and a larger incorporated company. The general lack of appreciation of
the sector’s unique characteristics results in the design of policies that
become largely ineffective in their implementation or generate a restrictive
level of bureaucracy. If government policies are to be effective, then policy
makers must develop a fuller understanding of the true nature of small
businesses.

3 Conclusion

GRTU today actively support a wide
cross-section of policies and initiatives at a Pan European level. Together with
other national organisations representing small businesses in the 25 member
states of the EU, GRTU is active in insuring that the Agenda for
entrepreneurship endorsed by the SME Summit in Luxembourg on 22nd April 2004 is
implemented by the government of the member states. We are holding our seat to
the ground. We are proposing an agenda for every year, over the next five years
that we expect government to implement.

In Malta, GRTU is going to ensure
that the new Prime Minister and his cabinet of ministers will implement the
agenda for entrepreneurship. It is the only way forward. And Malta cannot afford
to look back, or lose out.

Are the middle class paying too much?

Posted on 25.05.200408.09.2020 by SME Chamber

Vince Farrugia, director general of the GRTU, talks to Blanche Gatt about
proposals to reduce the tax burden on the middle classes to stimulate Malta’s
economy.

Stop whipping the middle classes! This is Vince Farrugia’s plea
to government and one of the main tenets of the GRTU’s proposals for solving
Malta’s economic problems.

Speaking to me this week during an interview
at the GRTU offices in Valletta, Mr Farrugia highlighted two areas that require
urgent and serious attention if Malta’s economic situation is to improve. The
first is easing the tax and fiscal burdens on the middle classes. The second is
reducing public expenditure dramatically, something government has stated many
times it is committed to, and produced a number of plans to achieve, the latest
announcing cuts of Lm10m across the Public Service, having been publicised last
week following the critical EU report on Malta’s (and several other new EU
member countries’) financial situation.

I asked Mr Farrugia for his
comments on the newly announced government plan to cut expenditure by Lm10m. He
was sceptical.

“Well, they have been saying they plan to cut expenditure
since 1998,” said Mr Farrugia.

“It seems we are very good at devising
targets and writing reports to impress the Commission, but not so good at
achieving them. There is no reason this plan is any different from the others.
I’ve been sitting through meetings and discussions at MCESD for 10 years, as
well as a host of other forums and discussions – I’ve been hearing all this
commitment to reduce expenditure, but I am not convinced. I can’t see any
drastic determination to cut expenditure.”

The problem, Mr Farrugia
continued, is that despite warnings and advice from international institutions,
individual economists and fiscal policy experts as well as organisations like
the GRTU over a long period of time, public expenditure continues to rise,
rather than fall.

“This is our first problem: that the public sector is
growing rather than diminishing as it should be,” he said.

“An incredible
53 per cent of GDP goes to the public sector, including the extra budgetary
units. Even without the EBU’s government’s total expenditure still absorbs a
massive 50 per cent of GDP – Malta is the only country in Europe with such a
high rate. In efficient modern economies the general government total outlays,
as a percentage of GDP, should be no more than 35 per cent… in the UK this
ratio is 36 per cent, Japan 38 per cent and the US, probably the most successful
economy today, the ratio is 29 per cent.”

Past commitments to reduce
public expenditure have failed, he added, because politicians on both sides of
Parliament have used expenditure cuts to gain political advantage, thus
condemning any real initiative to eventual failure.

“Why don’t I believe
that plan to reduce expenditure will work?’ he asked. “Well, because the two
sides of Parliament must sit down and come to agreement on this issue, not just
jump on each other every time there is an attempt to reduce expenditure. If they
don’t sit together in the House and say, we can’t keep expenditure at 53 per
cent of GDP, if they don’t agree in Parliament that they have to solve this
monster of public expenditure, it can’t succeed.”

“What happens every
time?” he continued.

“They commit themselves to a reduction in
expenditure, then the government workers want a raise and the next thing we
know, an election is on its way and we hear of a new collective agreement being
signed. And it’s the same in everything, they keep doing it, and my belief is,
even if they eventually manage to close the budget deficit, they won’t be able
to maintain that situation. They will just open it again.”

The cries for
consensus between the two parties on issues of national administration and
urgency have been echoing across the island for years now. Attempts to achieve
consensus on many key issues have generally failed, and finger-pointing is
practiced by all involved. However, as more and more initiatives are stalled
around intended consensus-seeking tables, the number of voices calling for key
issues to be resolved outside the partisan arena is growing. Many of us outside
the fray are astounded to hear of one failed attempt after another, but as each
situation is exacerbated and worsened by the delay in finding and implementing
solutions, it is clear that solving issues must be the foremost priority of
those involved.

The GRTU’s ideas on how Malta’s current economic problems
should be resolved centre around reducing public expenditure by eliminating
wastage and ensuring public investment is carried out in a cost-effective
manner.

“Frankly, people no longer trust government in certain things,”
said Mr Farrugia. “They are sick and tired of government’s wastage of their
money – look at roads: we are taxed Lm75m a year through car registration and
licence fees, taxation on fuel, and so on. What does government do? They spend a
lousy Lm7m to Lm10m a year on roads. Is that the way to give people fair return
on their money? Take the new hospital – was that planned economically? I think
we all know by now that it was not done in a cost efficient manner. Then we have
Authorities mushrooming all over the place. Take just the Malta Maritime
Authority as an example. It used to be the Ports Department, a small, efficient
outfit that used to make money. Now it is a huge organisation and of course, all
sorts of new charges had to be created to sustain this huge
Authority.”

The question of new charges being introduced across the board
to sustain new Authorities, Commissions and other government entities is one
that has been raised by industry representatives across the board, however, it
is M Farrugia’s contention that they hit small businesses harder, and small
businesses are already carrying a heavy burden. This is what has prompted the
GRTU’s petition to government to ease the burden on the middle classes.

“The majority of people we represent in the GRTU belong to the middle
classes,” explained Mr Farrugia.

“The average self-employed person in
Malta takes home the equivalent of the pay of someone in middle to senior
management. Over the years this is the class that has been suffering the burden.
No longer taking any benefits from government like children’s allowance or
family benefits, they tend to pay charges for services that lower income people
do not. The State keeps taking more money from them, with a crudeness that is
not immediately obvious. For example, the change in the tax bands four years ago
squeezed the disposable income available for the middle classes, and once you
hit the pocket of the middle class you hit the other side of the economy. It is
their expenditure pattern that sustains local business. It is the middle classes
who eat in restaurants, purchase VAT-able goods and services and keep the
economic wheels turning. People with lower incomes pay little or no tax, they
take benefits from government, free schooling and medical care, and their
consumption pattern tends towards spending on non-VAT-able goods. The middle
classes, who saw the change in income tax bands shoot their taxes up from 25 per
cent to 30 or 35 per cent, are also the same people who are purchasing VAT-able
goods and services. We now have a higher ratio of people paying at the higher
rates of income tax, and that should not be the case.”

The GRTU
represents more than 7,000 self-employed and small businessmen and women, who
collectively run a total of some 12,000 enterprises. The self-employed and small
business sector consists in total of some 20,000 individuals, who collectively
employ some 55 per cent of those working in the private sector, that is, more
than 50,000 people. These people constitute a large portion of Malta’s middle
classes, and Mr Farrugia is convinced that alleviating the financial burden on
this sector of society is crucial to solving Malta’s economic
problems.

“Government is following a fallacious economic strategy,” he
said, “in increasing taxation to cover excessive expenditure, and taking always
from the same middle class, who are basically sitting ducks. The middle classes
have become the main whipping boys of government and the economic consequences
of this are that as long as the disposable income of the middle class remains
squashed, demand for goods and services will remain dampened and the economic
cycle remains unstimulated. These entrepreneurs cannot afford to invest in new
ventures or introduce new technology as a result and the effects of that are
very evident today.”

So what does the GRTU see as the solution, I
asked?

“Luxembourg recognised the importance of the middle class to
economic progress to the extent that it now has a minister for the Middle
Class,” replied Mr Farrugia.

“In Austria, where they went through a
similar post-accession situation where businesses faced the same belt-tightening
and restructuring that we face now, they slashed the highest rate of income tax
from 35 per cent to 25 per cent, and this proved a very successful initiative.
So we believe that government should do something different here. At the moment
they are frightening people out of their wits, people are afraid of what is
going to happen with pensions, with welfare – all these issues are scaring
people. What needs to be done is to create a feel-good factor in the local
economy. Ease the burden on the people who will invest, and as soon as we take
one step forward, this investment will follow and we will see an immediate drop
in unemployment. The psychological impact on the economy cannot be stressed
enough, and today this is having a negative effect that we can all see, hear and
feel.”

While government’s latest plan to meet its deficit reduction
target was reported as being based on expenditure cuts and not increased
taxation, sceptics are already questioning this statement. Mr Farrugia is going
a step further and calling for taxation to be reduced, concurrently with drastic
expenditure cuts, as a means of stimulating consumer confidence and spending,
and providing the impetus for further investment.

“The message from the
Austrian government to their people when they slashed income tax by 10 per cent
was that they believed in the people enough to leave money in their pockets,”
said Mr Farrugia. “They were proved right and I believe the Maltese government
should believe in its people enough to leave money in their pockets
too.”

Il-GRTU tappella ghal bidla fid-decizjoni dwar ir-rati tal-Maltacom

Posted on 11.05.200408.09.2020 by SME Chamber

Il-GRTU kienet wahda mill-ftit organizazzjonijiet li meta tressqet
it-talba tal-Maltacom ghand il-Malta Communication Authority biex tinghata
permezz biex tkun tista’ tgholli r-rati, ipprotestat u ghamlet kontro proposti
favur n-negozji z-zghar Maltin. Sfortunatament haddiehor ma tax kaz u issa qed
inewwah.

Il-GRTU argumentat u ghadha targumenta li fiz-zmien meta s-suq
hu ddominat mill-mobiles kien jaghmel aktar sens kieku thaddmet is-sistema
tal-mobiles fejn hemm hlas bis-sekonda u kera xejn. Il-konsumatur kellu jinghata
vantaggi ohra biex jithajjar jzomm u jhaddem il-linja tat-telefon tal-Maltacom.
Kien jaghmel ukoll hafna sens kieku l-konsumaturi komplew jinghataw vantaggi
biex juzaw dejjem aktar l-internet bi hlas fiss fix-xahar baxx.

Il-GRTU
insistiet ukoll li l-Maltacom ma tghabbiex it-telf li qed taghmel fuq
it-telefonati internazzjonali, b’paragun mal-qliegh esagerat li kienet taghmel
qabel, billi tgholli l-hlas fuq il-kera u l-uzu tal-linja tat-telefon lokali.
Il-GRTU stenniet li l-MCA taghti aktar kaz tal-proposti tal-GRTU u mhux injorat
ghal kollox il-lehen tan-negozji z-zghar Maltin.

Il-GRTU tapprezza li hu
importanti ghall-pajjizna li l-Maltacom tibqa’ kompetitiva u tibqa’ toffri
servizz ta’ kwalita lin-negozji u konsumaturi privati Maltin izda temmen li biex
taghmel hekk mhux tghabbi il-pizijiet fuq il-klijentela taghha ghandha izda
ddahhal aktar efficjenza biex tnaqqas l-infieq u tkun kapaci toffri servizz ta’
kwalita ghola u bi prezzijiet aktar kompetitivi.

Il-GRTU ghalhekk
tappella lil Malta Communications Authority biex tirrevedi l-gudizzju taghha
fid-dawl tal-htigijiet reali ta’ pajjizna illum fejn in-negozji z-zghar huma
f’taqtiha kontinwa biex inaqqsu l-ispejjez u jzidu l-kompetitivita biex jibqghu
jfendu u jsostnu l-impjiegi li llum joffru. Dan ma jistax isir jekk kull min
jiflah jibqa’ jzid u jghabbi l-pizijiet li jweggghu l-aktar
liz-zghar.

Thinks Small First

Posted on 06.05.200408.09.2020 by SME Chamber

GRTU proposals towards a Better Business Environment in
Malta

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.

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.

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.

GRTU Executive Council meets the Prime Minister

Posted on 04.05.200408.09.2020 by SME Chamber

Today, Wednesday
5th May 2004, the GRTU Executive Council lead by the President Charles J
Busuttil and Director General Vincent Farrugia, will meet the Prime Minister
Hon. Dr Lawrence Gonzi at 16.00hrs.

GRTU will present to the Prime
Minister a memorandum, called “Think Small First”, which incorporates GRTU’s
Agenda for Entrepreneurship. This document, prepared by the Director General,
Vincent Farrugia following consultation with a wide cross-section of GRTU
members, serves as the basis of discussions with the Prime Minister.

GRTU
leaders will meet the Media on their exit from the Auberge de Castille.

Copies of the Memorandum will be presented to the Media.

Memorandum tal-European Charter for Small Enterprises

Posted on 03.05.200408.09.2020 by SME Chamber

Il-GRTU – Malta Chamber for Small and Medium Enterprises – illum,
flimkien ma organizazzjonijiet nazzjonali ohra li jirrapprezentaw lin-negozji
z-zghar fil-hamsa u ghoxrin (25) pajjiz membru tal-Unjoni Ewropeja,spjegat
lill-kandidati Maltin li ser jikkontestaw ghall-Parlament Ewropew il-gdid,
il-proposti tar-raprezentanti tal-Intraprizi z-zghar fl-Ewropa
ghar-rikonoxximent u implimentazzjoni ahjar ta’ dak li jinhtiegu l-intraprizi
z-zaghar Ewropej.

F’konferenza li saret illum fil-Vivaldi Hotel u li
ghaliha attendew l-Kandidati li ser jikkontestew l-elezzjonijiet tat-12 ta’
Gunju 2004, s-Sur Vincent Farrugia, Direttur Generali tal-GRTU spjegat
il-Memorandum ghal-Elezzjonijiet Ewropej li gie approvat fit-3rdSME Summit
organizzat mill-UEAPME li approvat fl-24 ta’ April 2004
fl-Luxembourg.

Il-Memorandum isemmi dak li sar tajjeb fil-Parlament
Ewropew li ser jispicca fuq kwistjonijiet li jolqtu n-negozji z-zaghar. Jispjega
ukoll x’kienu n-nuqqasijiet tal-Parlament Ewropew f’dan ir-rigward. L-memorandum
ukoll jipprezenta numru ta’ proposti li ghandhom ikunu segwiti mill-Parlament
il-gdid biex jintlahqu l-ghanijiet ta’ Lisbon u jitwettaq bis-serjeta l-European
Charter for Small Enterprise.

Il-Memorandum gie pprezentat f’Malta
mill-GRTU f’isem il-UEAPME – l-Organizazzjoni Ewropeja tal-Intraprizi Zaghar,
Medji u tal-Artigjanat.

Matul din l-Konferenza l-Kandidati li attendew
inghataw l-opportunita’ li jesprimu l-opinjoni taghhom fuq il-proposti li resqet
il-GRTU f’isem il-UEAPME u f’isem l-intraprizi zaghar u medji Maltin.
ï‚· Qed
nibghatlek il-punti ewlenin ta’ dan il-Memorandum.
ï‚· Kopja tal-Memorandum
shih qieghed fuq il-GRTU website: www.grtu.org.mt

Il-GRTU tippartecipa fit-tielet Summit tas-Settur tal-Intrapriza Zghira u Medja

Posted on 28.04.200408.09.2020 by SME Chamber

Il-President
tal-GRTU Charles Busuttil u d-Direttur Generali tal-GRTU Vince Farrugia
ippartecipaw fit-Tielet Summit ghall-Organizazzjonijiet Nazzjonali tal-pajjizi
membri ta’ l-Unjoni Ewropea u li jirraprezentaw lis-setturi tal-artigjanat u
intrapriza zghira u medja. F’dan is-Summit li sar fil-Lussemburgu l-GRTU giet
ipprezentata b’certifikat ta’ full membership mill-Prim Ministru ta’ Lussemburgu
Dr. Jean-Claude Juncker. Dr Juncker kien l-key note speaker tal-Konferenza. Ghal
dawn l-ahhar snin, il-GRTU kienet provisional member ghalhiex l-UEAPME –
l-organizazzjoni Ewropea li tirraprezenta lill-organizazzjoni nazzjonali
tal-intrapriza z-zghira u medja u lis-settur tal-artigjanat hu miftuha biss
ghall-organizazzjonijiet nazzjonali tal-pajjizi msiehba fl-Unjoni
Ewropea.

Fid-diskors tieghu lis-Summit Jean-Claude Juncker spjega
l-importanza enormi ghall-intrapriza z-zghira tal-Ewropa tat–tkabbir tal-Unjoni
ghal 25 pajjiz. Huwa enfazizza l-importanza ta’ dan l-avveniment storiku
fil-kuntest tat-tishieh ta’ l-idejali ta’ paci, stabbilita u ta’ valuri ibbazati
fuq id-demokrazija u l-harsien tad-drittijiet tal-bniedem u tal-koezjoni socjali
li fi hdan l izvilupp ekonomiku konsistenti. Huwa spjega kif pajjizu, l-izghar
pajjiz ta’ l-Unjoni sa ma dahhlet Malta, ha sehem attiv fit-tfassil ta’ l-Unjoni
u fil-process ta’ tkabbir ta’ l-Unjoni.

Kelliemi importanti iehor
fis-Summit kien Dr. Timo Summa, l-envoj tal-Kummissjoni Ewropea ghall-Intraprizi
zghar u medji. Timo Summa spjega l-Agenda Ewropea dwar l-entrepreneurship li
tinkludi l-istrategija tal-Kummissjoni Ewropea ghat-tishieh tas-settur
tan-negozji z-zghar fil-pajjizi li qed jissiehbu.

Id-Direttur Generali
tal-GRTU Vince Farrugia tkellem fuq x’ghandu jsir biex l-Intraprizi z-zghar
jasslu biex ikollhom performance ekonomiku ahjar u jintlahqu it-targets ta’
l-Agenda ta’ Lisbona. L-UEAPME faslet strategija waqt is-Summit li tispjega
x’ghandu jsir biex il-Kummissjoni Ewropea tkun tista verament tiftah
il-potenzjal ghat-tkabbir u l-izvilupp ta’ l-intraprizi z-zghar, l-aktar dawk li
jhaddmu anqas min 10 impjegati.
Is-Summit fassal wkoll manifest biex ikun
spjegat lill-Kandidati kollha li ser jikkontestaw ghall-elezzjoni tal-Parlament
Ewropew fit-12 ta’ Gunju 2004. L-UEAPME qed tinstenna li fil-Parlament Ewropew
il-gdid jkun hemm forza aktar qawwija ta’ parlamentari li jkunu mharga fuq
issues li jolqtu lil intraprizi z-zghar ewropew.

Ghall dan l-ghan il-GRTU
qed issejjah konferenza ghall-kandidati kollha li ser jikkontestaw
ghall-Elezzjoni, fi 12 ta’ Gunju li fija jkun spjegat dan il-Manifest. Din
il-Konferenza ser issir it-Tnejn 3 ta’ Mejju 2004

UEAPME Memorandum

Posted on 28.04.200408.09.2020 by SME Chamber

Small enterprises
contribute substantially to economic growth; they are more flexible, they are
important for the local economy, and for employment. They employ more than 80
million people, which are more than 66 % of total private employment in the EU,
and their impact continues to grow.



Therefore, the Member States have promised within the Lisbon Strategy and the European Charter for Small Enterprises to put SMEs – and in particular small and micro enterprises – in the centre of policy decision-making, but the reality still demonstrates the opposite. In spite of this crucial role of Crafts and SMEs for Europe's economy, policy decision-making still focuses too much on large companies. It is simply wrong to predicate decisions on the needs of a few big companies and allow – sometimes – exemptions for 99,8 % of all companies, which is the share SMEs represent. If Europe wants to solve its economic problems, it has to alter its thinking. “Think small first” has to become the basic principle to which the European Institutions have to commit themselves. Only a strong performing European economy driven by innovating SMEs will be able to achieve the common targets set out by the Lisbon Strategy. All European decision-makers have to realise that social and environmental targets can only be a reality, if a strong economy provides the resources for high standards in these areas. Therefore, UEAPME, which represents more than 11 million Crafts and SMEs from the Enlarged European Union, strongly urges that all Members of the next European Parliament accept this interdependence and become more sensitive to the needs of SMEs in Europe. Furthermore, UEAPME sees the need for better coherence between the policies of the different EU institutions, which, for example, makes a structured impact assessment during the whole decision-making process necessary. In such a process the needs of SMEs should be taken into account on a systematic basis, through hearings involving representative organisations on all relevant issues and through a more open and transparent process. A mechanism to ensure that the SME voice is heard and respected should be put in place. The next European Parliament needs to find a way to take the small business issues on board and to involve the representative SME organisations in the process. In this UEAPME Memorandum on SME Policy for the elections to the European Parliament, Europe's SMEs present their expectations for the new Members of the European Parliament. This Memorandum should be used as a guidance to validate whether a candidate or a party which is running for the election is committed to the needs of SMEs or not. We invite all European citizens to participate at the European Elections and to vote for a better economic environment to allow sustainable development for Small and Medium –sized Enterprises. Paul Reckinger UEAPME President Hans Werner Müller UEAPME Secretary General 1. European Crafts and SMEs face mixed experiences on the policies of the current European Parliament (1999 – 2004) During the current legislative period, the Amsterdam Treaty 1997 and the Nice Treaty 2000 twice extended the power of the European Parliament. The areas for Qualified Majority Voting in the Council in connection with co-decisions of the European Parliament increased and the budgetary rights of the European Parliament were extended. A review of the SME-friendly performance of the newly empowered European Parliament (EP) gives a very mixed picture. SME policy achievements of the current EP The reappearance of the SME-Intergroup (all party) and the strengthening of the SME Circle (EPP) was helpful in getting some issues through, which was important for SMEs: ï‚· The EP supported successfully SMEs’ need to introduce a Late Payment Directive, which really helps them and contributes to easing the financial situation of small enterprises. ï‚· The EP earmarked money, which supported SMEs’ participation in the European Standardisation Process. UEAPME was able to establish NORMAPME as an important partner for SMEs in this Process. ï‚· As one of the activities to overcome SME difficulties of access to finance, the EP increased the money available for financing SME credit guarantee schemes through the EIF. ï‚· The EP supported UEAPME successfully in its campaign for an SME friendly solution regarding Basel II. ï‚· Pressure from the EP was very helpful in confirming a 2-year prolongation of the experiment on reduced VAT rates for labour intensive services. The current EP had also shortcomings and produced additional burdens for Crafts and SMEs On the other hand the current EP missed some opportunities to support SME needs and, even worse, put additional burdens on SMEs by amending proposals from the European Commission: ï‚· Too often, SME representatives were not invited to hearings on relevant issues and the EP did not demand sufficiently systematic impact assessments on its decisions. ï‚· While the EP is financing scientific support for lobby groups of consumers and employees, it refused to allocate relevant money to an SME think tank/Academy. ï‚· The EP tried strongly to extend the social and environmental criteria within the Public Procurement Directive. ï‚· The equal treatment directive creates new unjustified burdens on SME employers, especially though the reversal of burden of proof. ï‚· The EP regularly increased environmental standards beyond the proposal from the Commission and beyond the scientific evidence (electronic waste, volatile organic compounds, air quality), which damages the concept of sustainability, since economic and social aspects are ignored. 2. The European Parliament has to press for the finalisation of the European Internal Market Twelve years after its start, the European Internal Market has to be seen as a success. The Internal Market has increased economic activity and provided more employment. Nevertheless, there are still too many barriers, which hinder the full deployment of the economic potential of Crafts and SMEs. For small enterprises the Internal Market is still not a reality. An important task for the new Parliament will be to remove the remaining barriers and to press for a better implementation of existing regulations: Towards a single market for services: The majority of SMEs in Europe are in the service sector, where the Internal Market is less developed. Therefore, the EP should support: ï‚· cutting red tape and increasing transparency at point of authorisation; ï‚· harmonisation of quality requirements; ï‚· better control of the requirements in the framework of the principle of origin. Towards a common European area of taxation: 25 different company taxation regimes and 25 different administrative procedures for complying with the European VAT System are still a major barrier for SMEs to cross-border trading. UEAPME expects the EP to support: ï‚· reforms of the company taxation systems in order to create a harmonised tax base, but without interfering with the tax-competition on rates and thresholds; ï‚· pilot projects on Home State Taxation; ï‚· harmonisation and simplification of administrative VAT obligations (refunds, formulas, single point of compliance); ï‚· a definitive solution regarding reduced VAT rates for labour intensive services, in order to reduce undeclared work. Make the European Internal Market a reality for Crafts and SMEs Further key areas where Europe's SMEs still suffer from the incomplete Internal Market are: ï‚· Different payment systems, both by countries or bank groups, which are still increasing the costs for cross border payments. SMEs need the introduction of a Single European Area for Payments and therefore the support of the EP. ï‚· The Proposal for a Directive on Unfair Commercial Practices, which concerns especially small businesses in the retail sector, should also cover business to business relations (private and public). ï‚· The modernisation of company law proposed by the European Commission is aimed mainly at big enterprises. The regulatory initiatives should allow a more flexible framework for SMEs. Priority should be given to the simplification of certain rules that are currently an obstacle for SMEs in their cross border exchanges. ï‚· In order to reduce cross border trading costs, the establishment of a cross border mediation or commercial dispute resolution mechanism is important. 3. The European Parliament should strengthen its effort to improve European Economic Governance There is a very complex decision-making system for economy policy within the European Union, characterised by a wide range of actors on different territorial and functional levels. The principles of the European Economic and Social Model enhance this complexity and are at the same time founding elements of this Model. Better economic governance is needed to improve the consistency of economic policy by further development of the regulatory framework where necessary. Towards a more coherent European Economic Policy Deficits in economic governance are one of the reasons for the under-performance of Europe's economy. Therefore, UEAPME expects the new EP: ï‚· to support a more flexible interpretation of the Stability and Growth Pact in accordance with the business cycle and reform necessities; ï‚· to demand an improvement of co-ordination between the main economic actors at European level and to strengthen the role of the European Commission in this process. Towards better regulation – make it a reality The principles of Subsidiarity and Proportionality within the Amsterdam Treaty imposed concertation with economic actors, impact assessments and simpler legislation. However, unnecessary regulations resulting in administrative burdens are still the most quoted problems entrepreneurs have to deal with. This demonstrates that decision-makers have not recognised the reality of daily business in SMEs. In order to make better regulation a reality for Crafts and SMEs, we expect the EP: ï‚· to implement the "think small first" approach as a guiding principle and promote it towards other decision-makers; ï‚· to advocate an obligatory and independent small business impact assessment; ï‚· to review existing directives affecting SMEs with the view to changing these directives if they do not fulfil the standards of good regulations, and the repeal of outdated regulations; ï‚· to allow reasonable and realistic timeframes for the implementation of legislation; ï‚· to support SME friendly procedures (less costly and administrative burdensome) for the European Patent and certifications (quality, environment); ï‚· to support effective information campaigns regarding changes required by new legislation. Services of General Interests: Crafts and SMEs need a more efficient provision of services In a highly competitive environment, SMEs depend strongly on high quality public services, but these services have to be produced in an efficient way in order to be provided at reasonable costs for the customers and the taxpayers. Therefore, SMEs expect the EP: ï‚· to support private production of these services whenever it is possible; ï‚· to resist undermining the European State Aid Law and Public Procurement Law in this sector by a horizontal directive; ï‚· to consider the necessity for a system of European regulators as a second review process to guarantee the implementation of European regulations. 4. The European Parliament should contribute to "the best possible" business environment for Crafts and SMEs Four years after the adoption of the Lisbon Strategy and the endorsement of the European Small Business Charter, both including many promising policy approaches in favour of small enterprises, Europe's economy still suffers from a burdensome business environment. Small and Medium sized Enterprises will only be able to deploy their potential for economic growth and employment creation if they are provided with an adequate environment for access to finance, training and professional qualifications and new technologies. Furthermore, SMEs, especially small and micro enterprises, need a modern and flexible network of business support services and an administration, which is able to deal with their specific situation. Basel II implementation should be used to improve access to finance for Crafts and SMEs Sufficient access to finance for Europe's SMEs is a necessary precondition for realising their growth potential. SMEs expect the EP: ï‚· to implement Basel II without unnecessary administrative burdens for smaller banks; the possibility of a partial use of the IBR approach (internal rating) and the full acceptance of existing guarantee schemes as collateral; ï‚· to support new instruments to improve the access of SMEs to venture capital and seed finance as well as an increase of money for credit guarantee schemes; ï‚· to increase pressure for company taxation reform, which is favourable for the self-financing of SMEs. Crafts and SME need better conditions for innovation Without denying the overwhelming importance of R&D and the "High-Tech" sector for the performance of Europe's economy, it has to be recognised that more than 97 % of economic activities are in the so-called "Mid-Tech" and "Low-Tech" sectors. Most of the innovation, especially in SMEs, happens without explicit R&D. Europe's SMEs expect support from the new EP for a new innovation policy, which focuses on access of SMEs to RTD, ï‚· as a follow-up of the mid-term review of the 6th Framework Programme on RTD, unutilised SME budget for Priority Thematic Areas should be redistributed towards SME Specific Measures; ï‚· strengthening the bottom-up approach (SME Specific Measures) at the next Framework Programme on RTD; but also and more strongly on: ï‚· access of SMEs to already existing technologies; ï‚· developing SME clusters / networks and demand oriented offers for vocational training; ï‚· involving SMEs in the reform of quality standards, like ISO 9000, in order to make them more adaptable towards innovation of production processes. The next Multi-Annual Programme for Enterprises should be used to implement the European Charter for Small Enterprises The Multi-Annual Programme for Enterprises is one of the most important European programmes to support SMEs. The next Programme should focus on the needs of small businesses. Therefore, Crafts and SMEs expect the EP: ï‚· to promote entrepreneurship education through programmes targeted at schools, public authorities, and public in general, etc.; ï‚· to propose an awareness campaign in the field of ICT (such as the Go-digital initiative); ï‚· to facilitate activities of businesses, especially SMEs in third markets (up to now these have only been financed in the framework of investment programmes); ï‚· to re-introduce programmes like "Interprise" and "Europartenariat". Crafts and SMEs need mobile and well-qualified employees Europe’s SMEs are suffering from a shortage of young people with good quality vocational qualifications. At present European education programmes favour academic education and the mobility of students to the detriment of vocational training and the mobility of young workers, trainees and apprentices. Therefore, SMEs ask the EP: ï‚· to push for an ERASMUS-style programme for young workers, trainees and apprentices; ï‚· to establish a European statute for apprentices, which recognises foreign vocational training for young people; ï‚· to ensure that the new generation of education and training programmes contains a programme specifically aimed at promoting vocational training in SMEs and which is easily administrable; ï‚· to ensure that vocational education is valued equally to university education and receives an adequate share of the budget. 5. The European Parliament should avoid additional burdens for Crafts and SMEs imposed by new labour market, social and environmental regulations Europe's SMEs recognise that the Lisbon targets not only include economic performance, but also social and environmental standards in order to improve living conditions for Europe's citizens. These targets can only be achieved if a highly competitive and well-performing economy provides the resources for a better life. Therefore, policy-makers have to avoid endangering the economic base of the European Social Model by introducing new labour market, social and environmental regulations, which have a negative influence on economic performance and are therefore counter-productive. SMEs need flexible labour markets Flexible working time arrangements are essential for SMEs to increase their productivity and competitiveness. But they also respond to the increasing new needs of employees. The same is true for the use of temporary workers, which is very important for the integration of new entrants into labour markets and to cope with seasonal cycles in activities. Therefore, SMEs expect the EP in relation to the working time directive: ï‚· to ensure that the new proposal for working time will not reduce the current possibilities for flexible working time arrangements with the suppression of the opt out; ï‚· to support the extension of the reference period to 12 months as a general rule. With regard to the directive on temporary agency work, SMEs expects the EP: ï‚· to facilitate the use of temporary agency workers, whilst respecting the principal of non-discrimination; ï‚· to avoid greater administrative burdens that will increase costs for the agency and consequently for the user enterprise; ï‚· to leave enough room for manoeuvre for the national Members States to adapt the rules of comparison for workers to their specific situations. Crafts and SMEs need a simplification of environmental legislation SMEs recognise the opportunities linked to environmental issues and accept the need for high quality standards, but most SMEs are not in a position to comply with the full range of administrative and technical obligations. Therefore, SMEs need the support of the Parliament: ï‚· to simplify environmental legislation by adapting it to the size and the nature of the businesses; ï‚· to provide SMEs with the necessary financial and technical support in the framework of the Compliance Assistance Programme proposed by the 6th Environmental Action Programme; ï‚· to integrate SME policy in environmental issues and allow sustainable development. 6. The European Parliament should listen more carefully to Crafts and SME needs Even though there is some lip service by European and national decision-makers in their recognition of SMEs, too many concrete decisions are still made without consideration of the needs of SMEs. Big companies and other stake holders have more resources and /or get financial support from the EP, which allow them more effective lobbying than small enterprises and their representative organisations can afford. Therefore, UEAPME expects that the new EP will listen more carefully to SMEs, create instruments and provide resources, which allow them to present their opinions. ï‚· The EP must insist that for all regulations, which have an impact on enterprises, a serious "Business impact assessment" is carried out before the first reading in the EP is finalised. Amendments made by the Council and the EP have also to be assessed. These assessments must include all compliance costs and administrative burdens. ï‚· The EP must ensure that these impact assessments are carried out independently and are not be sponsored or financed by involved interest groups. ï‚· UEAPME expects that the new EP will invite SME representative organisations to all hearings on issues which are relevant for SMEs and provide the financial means to allow SME experts to participate in such meetings. ï‚· UEAPME expects better involvement of its experts in the work of SME-groups within the new EP (SME Inter-group, SME Circle). ï‚· The EP should support the creation of "Better Regulation Units" within the European Commission and the European Parliament itself, which will support the services in finding the best regulatory approach and is responsible for appropriate consultation of all stakeholders. ï‚· UEAPME expects from the EP financial support for the establishment of an European Think Tank/Academy for SME policy, as the Parliament supports employees and consumers.