Fabian Demicoli

Enterprise Consultative Council Meets To Hear Reports On Current Economic Situation Faced By Enterpr

 GRTU's presentation by Vincent Farrugia Director General emphasized the role of Traders and Retailers in the Maltese economy. – When we discuss wholesale and retail trade in Malta, we usually discuss all the commercial sector, because in reality importers and retails are wholesalers as well. Most retailers are retailers only. However, since the liberalisation of commerce the number of importers that are also retailers is continuously increasing.

 

The majority of businesses are all Micro that do not employ more than ten people or Small that don't employ more than 50 people. Their turnover in most cases is low compared with the European level, thus all fall down under Micro businesses.

Most businesses nowadays dominate in importation more and more because of mergers and acquisitions. The large part of importation is being done by direct importers representing brands on the market in which nowadays is on the increase and rapidly in parallel trading. The range of products is enormously being increased since the explosion of products produced in China.

As regards for the volume of sales and turnover, taking into consideration the deflated figures for inflation and not taking into consideration the turnover of sales of motor vehicles the figure can be adjusted on effective days.

In 2010, the index for wholesale, retail turnover and volumes of sales in the last 10 years has approximately remained the same. The index in 2001 was at 104.67 and towards the end of 2010 was 104.67 until 2003, the index was on the increase but started decreasing in 2004, whilst in 2005 it decreased to under a hundred and kept on decreasing in 2006. In 2007 it increased at a high rate but in 2008 it decreased. However, in 2010 we gained the same levels of 2001.

The reasons are various and to understand better the index one has to evaluate the index of the gross private consumption. Taking into consideration the last adjusted statistics based on working days and seasonal affects, one finds that in last august Malta was among 12 other European countries where the retail trade declined. Malta had a substantial decrease of -8.8% like Romania, Spain and Portugal.

In a large country like Germany the decrease was substantial. It's difficult to find out the determining factor but the 2 main factors are: the decrease or increase of salaries or the impact of economic progress on disposable income of households, as well as politics in general that stimulated a decrease in internal economy example during the recession period Germany kept its economic surplus meaning the balance between buying and selling and also in keeping internal balance meaning if its deficit or in case of Germany surplus.

 

Considering the value added from the wholesale and retail sector in Malta, one finds that in 2005 the total added value was 1,053,477,000 and in 2010 this increased to 1,168,173,000. In the last three quarters there was a constant increase that although the total income decreased, the sector was finding a solution to the financial problem and started increasing the added value that is an essential factor.

When considering the total added value in Mata at the end of 2010 was about 5000,000,000. This means that a little bit less than a quarter of the economic value added in Malta come from wholesale and retail. Taking into consideration the employment act from the wholesale and retail sector including the food, transport and storage services was that of 47,835 by the first 6 months of 2010, it then increased for the total of 52,846 that represents 38% of the employment in all enterprises offering a service.

When considering the wholesale and retail sector in 2005, 25,317 were employed while in 2011 the figure raised to 28,136. In the last 5 years during the recession the level of employment remained approximately 28,000 even if in the last year Malta had a downward trend in employment in the service sector from 140,699 to 129,324.

In its analysis GRTU is identifying a number of problems that are affecting this sector. An acute problem is that of the heavy increases in expenses and an even worse problem is that of the electricity and fuel bills. GRTU continuously makes proposals to the Government, in fact a lot of schemes were approved. Moreover, they are being put into action so that more enterprises can structure their expenses on energy products. The second problem is the financial restraint. Although schemes like Micro Invest Schemes and Micro Credit Schemes help a lot of businesses, but  some others are captured in this financial restraint as these types of schemes are not adequate. A lot of enterprises are suffering from commercial debts with other businesses everyone is having long-term loans and then they have to re-pay it since they can loose everything if they don't, sometimes even with excessive overdraft re-payments (installments).

For many businesses, property was a safety valve for them but however, nowadays it is difficult to exchange this tangible asset to a liquid asset and it is for this reason that GRTU in its proposals presented to the Government for Budget 2012, that the main proposal is a scheme that helps these small enterprises win over this problem. GRTU have no doubt that with more advantages from the Government, entrepreneurs can achieve these kinds of problems. Moreover, if these businesses are helped to surpass these kinds of problems all the economy will go through an upward trend.

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