SME Chamber

GRTU’s Reaction to the EU Proposed Services Directive

The Services Directive strives to completely liberalise the
Services sector from as early as 2006. This EU Commission Proposed Services
Directive poses a tremendous challenge for Malta. Small businesses who in an
economy like Malta are increasing coming from the services sector, do not have
the training, facilities and support necessary to participate in services work
in other EU member state. This is the opposite of what exists in countries like
Italy. Once the service sector is fully liberalised it would be much easier for
other member states’ services providers to take up contract work in Malta than
for Maltese contractors to take up work in other EU member states. Our
enterprises in the services sector are simply not geared for this

and METCO, and to a great extend Malta Enterprises also, have only assisted
manufacturers. “Export” for the services sector is limited to few companies who
have the capability to work abroad. Malta will therefore suffer economically, as
the balance will be adverse to Malta. This Directive would completely liberalise
the market for all services like estate agencies, recruitment agencies and
professional services, besides retailing, wholesaling, trading, repair works,
construction works, internal decorations and fittings and all form of service
provision including all work of the self-employed except transport,
telecommunication and specifically regulated sectors.

This is a great
threat for Maltese labour. It is also a threat for our GDP as our GDP is
essentially the earnings from employment and the income of our enterprise
owners. If work is delivered by foreigners who come to Malta for short stays,
who spend very little here and expatriate their earnings while most of the
payments are made abroad, the multiplier effect of the loss of earnings will hit
the Malta market very hard. Under the Services Directive recruitment agencies
from other member states could recruit workers from third party countries –
Egypt, Tunisia, Russia and China … and transfer these workers to Malta to take
up services contracts in our factories, hotels, hospitals etc including supply
of labour services. This is a far greater liberalisation than what exists now.
Furthermore foreign providers working in Malta will be guided by the rules of
the country of origin and not of Malta.GRTU believes government is
taking this threat very lightly. That is why in the Conference the Services
Directive held on 01/10/04 at Inter Continental Malta, GRTU Director General
Vince Farrugia said that GRTU was demanding that the Government of Malta objects
to the implementation of the Service Directives before the year 2010. Vince
Farrugia said that GRTU expects that by that time government would have obtained
sufficient funds from the EU to sustain Maltese services providers to empower
them to take up work in the EU countries. GRTU Directors General reminded
government that though this proposed Directive has been on the EU Agenda since
2002, nothing was said about it prior to the EU Referendum. Indeed what happened
in MEUSAC was directed towards ensuring that once the Free Movement of Workers
and the Free Movement to Establish Services was implemented as Malta acceded to
the EU Malta would have the necessary safeguards to defend Maltese work
opportunities. The Services Directive as proposed by the EU Commission
effectively circumvents the safeguards in the Maltese Government / EU agreement
on the Free Movement of Workers and forces Government to open up further the
Maltese market for services.

GRTU contends that in the current economic
situation with stagnant GDP growth, implementing the Service Directive by 2006
as proposed by the EU would create serious economic problems for Malta and this
would make the targets of the National Action Plan for Employment even harder to
achieve as Maltese investors would be less willing to risk investing in Malta.
GRTU is demanding the drawing up of a serious Social and Economic Impact
Assessment Analysis before government decides on this Directive. GRTU is also
requesting greater participation and debate on this Directive as practically no
service provider in Malta is aware of the Directive and of its

GRTU, in principle, is not against the Directive as
eventually Maltese service providers will need to take up their share of work
from the enlarged Internal EU Market, but 2006 is far too early for Maltese
enterprises to compete effectively. GRTU is appealing to the Maltese Government
to obtain all the necessary safeguards prior to the implementation of this
Directive in Malta.


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