SME Chamber

GRTU Political Manifesto 2013

 For the renewal of politics – GRTU has today held a press
conference at the GRTU premises where GRTU Director General Vincent Farrugia
and President Paul Abela together with other senior officials presented GRTU
Political Manifesto for 2013 which is entitled ‘For the renewal of politics'.

In his introduction Mr Farrugia
explained that as the campaign is launched GRTU builds its political manifesto
by gathering the most important proposals, which GRTU presents in a document,
and solicits the political parties to commit to by including them in turn in
their own manifesto.

GRTU pre-empts that there will be
some issues of contention and not all will be easy to commit to but these will
be the issues GRTU will push strongest on, amongst which the Rent issue, the
right of representation, changing criminal charges to civil charges under the
VAT Act and committing not to increase Income Tax and VAT. GRTU gave some
figures in order provide a snapshot of the current situation of SMEs and gave a
description of the most important points , these are detailed below:


1.       Fiscal Economy


GRTU insists on maintaining the
current policy, emphasising on the generation of new employment and economic
growth. We should also continue with the effective policy that provides support
to the groups living on the minimum wage or verging on it. Support through the
social system only according to need to low income families especially families
with children, avoiding however schemes that encourage able individuals not to
work and live out of social services.

An important element of this support
must be the provision of induction to increase their level of skills for
individual with low level of competences, also through adequate employment
opportunities. Support for skills should be given irrespective if the person is
born in Malta or is an immigrant.

GRTU is against any increase on the
minimum wage which is outside the existing system of COLA or another formula
that would be agreed at MCESD. GRTU
continues to insist on a policy that assists the lower skilled and unskilled
workers to achieve the necessary qualifications and skills that enable them to
earn income above the minimum wage. It should not be the responsibility of
employers that in an economy like Malta where 95% of businesses are micro to
sustain any form of living wage, employers are obliged to pay workers their sue
wage according to their productivity, social assistance to supplement a living
wage should not be the responsibility of individual employers

Income tax

GRTU has
been years insisting that the highest level of tax at 35% is excessively high
and that this is not a competitive rate. In the near future 50% of employees
and small enterprises will fall within this highest bracket and therefore the
commitment proposed in Budget 2013, that the rate starts to be reduced on a
period of years until it reached 25% need to be confirmed immediately following
election. GRTU requests a clear commitment that for the next legislature Income Tax will not increase again and if
there are circumstances where Income Tax will increase this will only be
possible with the majority of 2/3 of parliament.


The Budget deficit needs to fall within control
without the need that the current present VAT rate at 18% increase as is
happening in other EU Member States. 
GRTU requests a clear commitment that for the next legislature VAT will
not increase and if there are circumstances where the VAT will increase this
will only be possible with the majority of 2/3 of parliament.


2.       New Investments

Funding and
new opportunities

Adequate research needs to be carried
out together with a plan in order for Malta to benefit from funds within
European project bonds, such as the Connecting Europe Facility. Analysing such
an opportunity for instance should result in possible opportunities for
increasing our port facilities. In
addition, the regulations on micro firms are too tight when accessing funds and
schemes and GRTU strongly recommends a strong change in the mentality at the
provision of State funds to sustain hands-on free expert advice.

private investment through schemes

GRTU has been presenting this
proposal for time and time again and Government has still not implemented this
sufficiently. Malta Enterprise has provided tax credits under the Create scheme
for creative projects within areas considered as creative zones. This should be
further developed in areas such as business incubation facilities, port
activity, marinas, ICT centres, etc…

New sensible investments are always
beneficial to the economy however small enterprises should be able to benefit
more from these opportunities. GRTU requests the earmarking of 25% of new
Government business to go to small businesses. Small businesses should be given
direct help when accessing projects through public procurement that makes up
for their lack of resources. This should go hand in hand with the enforcement
of small business friendly procurement policies across the public sector and
with an 'ombudsman' role which incorporates the task of challenging contracting
authorities on behalf of small firms after a valid complaint is submitted and


3.       Rights of

Self-Employed still suffer from an
acute discrimination when it comes to their rights in comparison to that of
workers with fixed salaries. The employment relations law does not give the
same safeguards when these self-employed come in a position that to defend
their interest must take collective action under the directive of the
organisation representing them. In addition to this the Authorities are
interpreting Competition Law in a way that every action taken by self-employed
having a commercial licence constitutes a breach in Competition law. GRTU
requests the commitment that this discrimination in the right to take
collective action of those economic operators that instead of working for a
salary choose to work on their own is legally determined and clarified.


One important reason why GRTU strongly
recommended micro & small enterprises to support Malta's accession to the
European Union was precisely because the EU provided the best and most
extensive market expansion possibilities for most Maltese based firms. The
Single Market is a top priority issue for GRTU and GRTU is satisfied that it is
extremely active at EU level in the promotion of the removal of tax and
bureaucratic obstacles that continue to hamper the efficacy and effectiveness
of the European Single Market.

GRTU also calls for the introduction of
new schemes as more and more firms are seeking new opportunities. This
particularly applies to firms who have reached the third generation and who are
finding the local market too small for their entrepreneurial capabilities while
reaching out to the larger European Single Market is too costly unless
supported through public finance.

An important element that still hinders
the full potential of the Single Market are the barriers caused by the
fragmentation of laws, especially those related to consumer laws. Government
must commit to the better functioning of the Internal market and push for a
minimum standard of consumer protection across the whole of the EU in order to
make it easy for small enterprise to operate cross border.


One important element GRTU regularly
deals with in relation to the functioning of the single market is duties
imposed by the European Union. We fully understand that Malta has limited
abilities when it comes to implementing such decisions and having a say however
yes we do have a say and we appreciate that our country is seen to act in the
interest of Malta. GRTU is against any type of protectionism. We do not have
much of a manufacturing industry therefore voting in favour of duties that will
lead to more restriction in the availability of goods both in choice and higher
prices to the detriment of Maltese consumers and traders simply does not make
sense. GRTU requests the commitment that when the local interest is evident
Malta votes in line with our interest and does not succumb to political


Further efforts are required to tackle
unfair competition, especially goods coming through the catamaran and evading
particular taxation. This is another issue that has dragged for too long now.
GRTU has tried on several occasions to get the Authorities to take action but
all we got was Authorities that either seemed unable when it fell under their
portfolio and Authorities that washed their hands if they were in a position to
take action. GRTU requests a commitment for concrete action which will bring to
an end this abusive and evasive situation which is also a dangerous one as the
multitude of goods that enter is uncontrollable.


5.       Skills

Talent and skills remain essential
for companies who are trying to survive in testing economic times and want to
emerge from the difficult times in good shape. This makes the ability of our
education and training system to develop skills and nurture talent a key policy
concern for business. Tough economic times also make it more important than
ever that effective education-business partnerships are in place to help
employers improve the skills of their workforces. GRTU can be instrumental to
help foster deeper relationships between on the one hand businesses and on the
other hand universities, institutes, colleges and schools.

Skills and innovation is GRTU's special
target area, Maltese SMEs cannot compete until Malta has a more capable and
skilled labour force with minimum restrictions in Malta' labour market to
unable Maltese SMEs to grasp the opportunities ahead of them. The investment
that the Maltese Authorities have done in skills programmes in all levels of
education has resulted in a relatively large number of SMEs active in high-tech
manufacturing and knowledge intensive services.


GRTU has witnessed very valuable
training and employment schemes which however were time barred. GRTU requests a
commitment to make basic employment and training schemes that provide partial
employers with refunds for their investments made permanent. SMEs cannot time
their employment and investment needs with schemes that have deadlines and they
get very frustrated if they needed to make an urgent or sudden investment,
including employment and the scheme has just closed or will open in the coming

and validation of skills

Many of the self-employed and small
enterprise owners we represent that work manually have gained very important
skills through the years of experience working hands on in their sector. These
are skills that are very valid but they do not have one single paper or one
single indication of the level of competence to show for it. This is something
GRTU feels is very offensive as like this we are throwing away so many valid
skills. For this reason we request a commitment to work closely with the GRTU
to initiate a wave of accreditation for skilled self-employed and manual

Transfer of skills is also important.
Many trades are dying away because the skilled individuals in those trades are
disappearing. The next legislation needs to address the specific skills and
training challenges facing business in the context of the economic situation.

Skills Council for Commerce

Sector Skills Councils (SSCs) are
independent, employer-led, nation-wide organizations that are committed to
working in partnership to create the conditions for increased employer
investment in skills which will drive enterprise and create jobs and
sustainable economic growth. We share the belief that the sectoral approach is
the most effective way to do this. Through their sectoral reach, SSCs are
ideally placed to articulate the voice of employers on skills; to develop
innovative skills solutions and to galvanise employer ambition and investment
in skills and job creation. In doing so, they are key strategic partners
in creating the conditions for increased investment in skills.

The EU Commission has late last year
approved the setting up of an EU level Sector Skills Council for Commerce and
the absolute majority of Member States are able to participate in this EU level
project because they have a National SSC for Commerce. GRTU requests a
commitment for the establishment of a Sectoral Skills Council for Commerce,
Green Jobs and Services (maintenance and garage industries), Crafts Industries.


6.       Rent Reform

considers that the Rent Reform, which was passed with the support of all
political parties, represents the gravest example of initiative against a
significant number of Maltese enterprises since the war. The majority of
European countries make it easy for small enterprises to rent premises for
commercial or economic operations and the tenant is given enough breath to be
able to redeem before the lessee can dismiss him or increase his rent,
including the provision of incentives by the state where the commercial
property owner is a private individual. In such a way micro and small business
in village cores and historic centres are safeguarded rather than risking being
wiped out as is happening in Malta. The Maltese politicians in a unique case of
consensus decided to take away this right which had for so long been practiced
in agreement between both the tenant and the lessee.

strongly recommends the reintroduction of lease protection for all enterprise
owners who lease property from property owners at least for a period of 12
years in which time, independent private entrepreneurs will have opportunity to
redeem their investments before lease owners can evict or force renewal of
lease. This is a protection that exists in many other EU Member States and the
Maltese parliament gravely distorted the situation when all protection of small
enterprise owners on lease of commercial properties was removed. GRTU strongly
recommends the main political parties to commit to this obligating.

efforts to change this law in a system that is just and the tenant is
safeguarded from expulsion have failed. Several times were we told that our
cause is right but no one has risen to protect the enterprises that had their
legally binding contacts cancelled. GRTU appeals to the political parties to
make it clear in their electoral manifestos that small enterprises that operate
from rented premises to earn their living must be protected irrespective of
anything else.

In a modern
society it is unacceptable for the state to interfere unilaterally in
agreements existing between third parties. The state has the duty to ascertain
that efficient and summary processes are in place to determine rent issues
without the necessity of direct state intervention.

appeals that those tenants that had valid agreements recognised by law and by
the lessee, who for so many years had accepted the conditions he himself had
set, must be respected. GRTU remains strongly in opposition to the amendment of
the Civil Code whereby the lease of certain commercial premises is arbitrarily
terminated in 2028 and 2018 for subleases.

solicits that the recent initiative in favour of commercial premises rented
from Government situated in Valletta include all economic premises within all
areas the locality without exception and that similar incentives are introduced
forthwith to all other localities in Malta and Gozo.

GRTU also
proposes that long term incentives are introduced, similarly to those policies
applicable to state owned industrial properties, whereby such properties are
granted on emphyteusis (cens) in lieu of rent.


7.       Access to Finance

GRTU identifies the access to finance
as a continuing hurdle. For micro business throughout 2011 & 2012
improvements have been achieved in this sector especially for loans less than
€1,000,000. GRTU understands that fewer loan applications have been rejected or
made subject to unacceptable conditions at least where Malta Enterprise
guarantees came into operation. The situation for loans to micro firms remains
however difficult in general and the cost of loans are too high for this
sector. The published average rates show a mix of home loans (subsidized
interests) and guaranteed loans by ME (subsidized) and standard commercial
(higher) so in practice accessibility is limited and costly and that is why a
continuation and extension of guarantee schemes is essential. Given the low rate
of defaults on bank loans in Malta, the risk is also highly manageable.  The reduction in interest rates on loans to
business reported by the Banks is therefore qualified.

Maltese banks remain excessively
exposed to the construction and development industry and as a result less
excess to funds is available for other businesses and GRTU hence sustains that
first and foremost new schemes should be created for properties that are not in
use to be converted into a premises from which an economic or commercial activity
is generated in order to create new opportunities and reduce the dependency of
banks on the property sector. It is very important that the maximum amounts of
funds be used for economic activities and existing schemes giving access to
finance and liquidity be extended long term for the enterprises to be able to
plan long term.


8.       Energy cost to enterprise

GRTU does not agree that now that the
interconnector project is being implemented and the consumer can in the near
future have a choice in service between the power station and the
interconnector, these are not kept separate. GRTU feels that these should be
owned and licensed separately and there is no mixture in the supply so that the
consumer knows clearly the price of the service and the credit terms. The
system of distribution should also not be part of the monopoly but can be
privatized. The lack of competition is a big problem in Malta, there should be
different supplies and wholesale now that there will be the opportunity. With
more transparency through increased competition it will become possible for the
users to see the hidden burdens that today they have to carry.

requests that a system is created whereby small enterprises are given different
rates of payment for different periods even on a long term basis. With today's
system long term planning is not possible and nobody knows where he stands when
it comes to prices of utilities and even fuels. Long term planning is important
especially for industries with high energy content.

The emphasis
should mover away from subsidies to use of alternative energy and the
possibility of contracts at length that encourage the enterprise to invest. In
any reform Government makes in this sector it is important that the priority is
the guarantee of the service and that the suppliers accept to compensate when
the service fails and this creates commercial damages to other operators.

GRTU also requests the following commitments:

  • When transferring shares a company
    should not be charged the hefty charge of user change by Arms when proof shows
    the company is still the same.
  • Introduce higher incentives and
    reliefs to the private sector deemed as highly dependent and an intensive
    consumer due to the nature of their work. A night rate should be introduced especially
    for sectors that consume energy even during the night.
  • Grant scheme for research and
    commercialisation of renewable energy processes that, although their technology
    might be common in other countries, could prove challenging due to limitations
    of the Maltese Environment.
  • Enemalta should introduce a
    favourable fixed feed in tariff for large scale renewable energy projects to
    increase stability and attract investment.
  • Enemalta should introduce a number of
    incentives for predictability: fixed price for one and two calendar years, a
    percentage reduction if bill if prepaid, etc…
  • Re-launch of
    additional schemes for reducing energy use in commercial buildings and that
    eligibility restrictions are further lowered to include micro firms.
  • Reduction
    of the three phases and single phase meter rents by 50%. It is not currently
    acceptable to have such high rates simply for having a meter installed in one's


9.       Environment

GRTU is the national business
representative organization that is directly involved in its own managed
national scheme providing Green jobs and services.

The current environmental legislation
is of paramount importance and although considerable achievements have been
made during 2011, the need to make sure that a fair and level playing field is
maintained and is transparent is essential to ensure that the culture of
abiding to such legislation remains an onus on all enterprises.

The implementation of the WEEE
Directive is years overdue in Malta due to the current Eco Contribution being
paid by producers to Government in relation to EEE (Electrical and Electronic
Equipment) placed on the market. Its implementation would mean a reduction of
€8million in Government revenue but it would also mean placing an onus on
producers to work with authorised Schemes, making sure that Legal Notice 63 of
2007 is actually implemented. Implementation would mean one less infringement
notice for Malta.

GRTU also requests the following commitments:

  • Set up of the ‘Producer
    Responsibility Enforcement Committee' announced in Budget speech 2012.
  • Immediate implementation of the WEEE
  • The exemption that was made available
    for reduced rates of payment for first registration of RCVs and Skip Loaders,
    and other waste management vehicles that are installed with built in weighing
    facilities should be reinstated on a permanent basis.
  • The devolution of Wasteserve MRF
    Operations to Private Industry for those waste streams that are catered for by
    Private Industry. This includes the operation and running of the MRF Facility
    at present. This will be the first step towards the privatisation of Wasteserve
    Malta Limited.
  • An investment is carried out so that Malta is
    cleaned from the vast amount of poles and distribution systems that are making
    our country look like a 3rd world country and not an advanced
    country member of the EU.

10.     Pensions

It is vital to increase employment
levels and labour productivity, as well as undertake structural reforms in the
area of pensions, public finance and labour markets, there are uncertainties
regarding the choice of policies and success to address these issues.  For instance, it should be avoided to raise
labour costs to sustain pension systems, which would most likely affect employment
negatively and hinder sustainable growth. It is essential to ensure the right
framework conditions and incentives for employers to continue to provide
supplementary pension schemes. 

The real question remains how to
share the burden of a growing old-age dependency ratio and an increase in
pensions.  Inter-generational solidarity
is a fundamental principle and the effects of the crisis on public finances
cannot be ignored when looking for the best adapted ways of sharing the burden.

discrimination that has to be removed immediately is the discrimination in the
calculation of pensions between workers with a fixed wage and self-employed and
enterprise owner. The system should not be discriminatory and revised according
to an established rate equivalent as it is for those employed.

GRTU also
continues to maintain that the national pension system should be well supported
by the Government even through property transfers for the pension fund. The
list of properties of the joint office and other forms of support are required
so that the pension fund does not remain dependent solely on the contributions
that able workers give not to have their motivation to not work and produce
more declines.

GRTU also requests the following commitments:

  • To support active ageing, Government
    should not tax working pensioners on their pension.
  • A
    pensioner stops benefitting from NI benefits but still pays on the same levels
    for NI when compared to younger workers that can benefit from NI benefits such
    a payment of sick leave. This anomaly should be addressed.


11.     Self-Employed Famers and Fisherman

It is very
difficult for farmers and fishermen to have sufficient income to sustain
themselves all year round. GRTU therefore finds it acceptable for them to have
some type of other income to sustain themselves. Today however a farmer and
fisherman who has another economic activity looses the opportunity of having a
low income tax rate because he looses the status of full time farmer. This
system is unfair and a farmer or fisherman who's main income is derived from
his vocation as farmer and fisherman should not loose the fiscal advantage even
if he increases income through another economic activity as self-employed.


12.     Entrepreneurship

GRTU clearly identifies the urgent need
to push ahead with incentives to sustain entrepreneurial activity. The
guarantee schemes now in action already encourage individuals who are not from
traditional business families to seek entrepreneurship even though they do not
have parent's guarantees to help them start business.

GRTU also requests the following commitments:

  • Include a business perspective on all
    stages of system from early childhood education and improve links between the
    education system and enterprise.
  • Specialized schemes
    that sustain unemployed individuals, school leavers and employees seeking
    alternative career in entrepreneurship to receive income for a period of six
    months renewable to a second period of six months while the individual is
    undergoing a process of skills training in all areas related to entrepreneurship.
  • GRTU proposes increased endeavors by the education
    establishments to provide additional school training in entrepreneurship and
    special sandwich and evening courses for individuals in employment who are
    seeking an entrepreneurial career. Individuals who make the mark in these
    individual programmes will be guided through special schemes provided by Malta
    Enterprise that enable them to rent premises from where to operate as well as
    guarantees an access to finance to help in business start ups.


13.     Responsive Administration

Regulation is the implementation and
enforcement of rules for the conduct of economic and business activities. It
includes national and European legislation and decisions made by statutory
bodies including sector specific regulators. Given that Europe drives so much
of our regulation, it is important that we do not over-regulate or, indeed,
‘gilt-edge' what European measures we are obliged to adopt. GRTU is an advocate
for reform and the reduction of red tape.

Malta's cost base remains high and
this impinges on business sustainability. Businesses are finding it difficult
to cope with the running costs which get incessantly higher. There are a number
of issues that must be address in order to get Malta's cost base right to ensure
sustained economic growth.

Maltese authorities are not only the
cause of multiple burdens but they charge enterprises whenever they get the
chance. The European Commission has clarified that Authorities should have
sufficient funds that they can provide services and courses at no charges. Some
authorities however refuse to collaborate, within their remit, with the GRTU
free of change because they prefer to carry out the same work at a charge. GRTU
requests a commitment that Public Authorities will not run on

GRTU also requests the following commitments:

  • Implement the SME
    tests so that it does not remain a dead letter.
  • All Government
    Departments and Agencies meet all their obligations under the Small Business
    (Malta) Act including the publication User's guidelines to explain the requirements
    being imposed by a new instrument in sufficient time before such an instrument
    enters into force.
  • Give access to social partners of the
    Legal Notice check list to make the consultation process transparent and
  • Introduce an obligation that any new
    law/ change to existing law needs to go to the a specialised department for
    scrutiny of adequate consultation, impact assessment and the reduction of
    administrative burdens
  • New regulations accompanied by an
    impact assessment should clearly outline the economic impact on SMEs and the
    mitigation plan to eliminate this impact
  • Micro businesses to be automatically
    exempt from any new regulation and it will be up to the authority/ ministry
    introducing/ changing the law to lobby into having micro enterprises included
    the law. This especially since impact assessments are not being implemented.
  • Removing once and for all the need of
    audits for the smallest companies
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