What’s more important: competitivity, or social well-being? | Josef Bugeja

GWU secretary general JOSEF BUGEJA lambasts the Chamber of Commerce’s claim that next year’s COLA adjustment represents an ‘existential threat’ to Maltese businesses, arguing that local competitivity is actually expected to increase – not decrease – in the near future

General Workers Union secretary-general Josef Bugeja
General Workers Union secretary-general Josef Bugeja

The General Worker’s Union has come out strongly against a recent suggestion, by the Chamber of Commerce, to amend the terms of the Cost of Living Adjustment – COLA – mechanism… at a time when the wage-increase is predicted to be as high as €10. Naturally, as a union you are entitled to protect your members: isn’t it true, however, that the Chamber is equally entitled to protect the interests of its own members… by resisting a massive increase in their overheads, at such an economically-sensitive juncture in time?

Let’s put it all into context first. The agreement we are talking about, was reached on a national level – in fact, it was called the ‘National Agreement of Industrial Relations’; and it was signed almost 32 years ago, in December 1990.

As far as I remember, the signatories were the government; the General Workers Union; the Federation of Industry; and the CMTU. And apart from establishing an Industrial Tribunal, it also specified a wage-increase [COLA] that is tied to inflation; and a mechanism for how that increase is calculated, and given out.

Now: this agreement has always been adhered to, in the past. Does that mean we [trade unions and employers] have always agreed?  No, of course not. For instance, when – in 2015 – the COLA wage-increase worked out at only 58c… I was one of those who argued that this was ‘not enough’.

At the same time, however, that was the amount calculated according to the agreed formula; and the formula itself is monitored by an independent board, which analyses the household budgetary surveys, and the retail price index. As such, there is no choice but to abide by the terms of the agreement.

What I’m saying then, is that… it’s OK to ‘disagree’ with the calculated sum – I myself saw 58c as insufficient, back in 2015. But it’s not OK to challenge the entire agreement, simply because you disagree with its results.

Meanwhile, when you look at how COLA actually worked out, in recent years: you will see that, from 2010 until 2022, the average wage increase was €2.88. In 2022 it was €1.75; In 2020, it was €3.49… and the highest it ever reached was €5.82, in 2010.  But over the years, it averages out at only €2.88: which (let’s face it) is not exactly ‘out of this world’.

And don’t forget that in two of those years (2017/18), there was also a national agreement to raise the minimum wage by €8. Part of this agreement also stipulated that workers earning more than the minimum wage, would get an extra raise – over and above COLA - of €2: one euro for 2017, and one euro for 2018. All those increases are also factored into that average…

Fair enough; but those figures also mean that next year’s COLA will be around five times the national average, for the past 10 years; and almost double the highest amount it has ever been.  Doesn’t the Chamber have a point, then, that this represents an unprecedented ‘axe-blow’ to the survival chances of some Maltese businesses?

As I was just saying: the Chamber has every right to ‘disagree’. I’m not contesting that. And besides: as a union, we are always open to discussing possible revisions to the formula. A few years ago, for instance, there were national discussions, within the MCESD, on whether the COLA mechanism should remain linked only with ‘inflation’; or whether it should also take into account other issues, such as ‘productivity’.

We had no problems participating in those discussions, at the time. And as far as I can remember, it wasn’t because of the trade unions, that they did not result in any decision to actually revise the mechanism.

The fact remains, however, that the mechanism was NOT revised. It remained the same as it has always been, since 1990. So what I object to, is not the fact that the Chamber ‘disagrees’… it’s that they suddenly come out, only now – a mere six weeks before the Budget – with proposals to change the entire agreement itself, from top to bottom.

If, on the other hand, they limited their proposal only to ‘discussing possible future changes’… it would have been a different story. We have no problems entering into further discussions, with a view to possibly amending the agreement in future. In fact, we even said so in our pre-budget document. We are always open to discussion; as a union, we take pride in the fact that we have a healthy social dialogue, in this country.

What we can’t accept, however, is that the agreement itself is changed now – literally, at the eleventh hour – simply because, this time round, it happens to work out to the disadvantage of employers.

Meanwhile, another thing to bear in mind is that the COLA mechanism is retroactive in nature. And this means that - while it is true that the wage-increases will have to be paid out by the employer - it is still money that the employee would already have ‘lost’. Because if the formula establishes that the cost of living has gone up by €10, between 2021 and 2022… the actual €10 wage-increase will only be given out in 2023.

Effectively, then, the workers’ purchasing power will already have been reduced; and the wage-increase is intended to compensate those workers, for money that has already been – so to speak – ‘taken away from them’…

All the same, however: you seem to be talking about ‘employer’s money’ as if it were some kind of ‘infinite resource’. Yet we’ve only just come out of two years of COVID – where nearly all local businesses were at a standstill – and even now, the same businesses have to rely on government’s absorption of energy costs, exacerbated by the Ukraine war. In view of all this: it is even realistic to insist on an agreement, which will only saddle employers with an additional, exorbitant cost?

[Shaking his head pre-emptively] Look: if we’re going to talk about ‘competitivity’, then we also have to ask ourselves a few basic questions. Like, ‘What is more important: competitivity, or the well-being of people?’ Because today, we know with certainty that the cost of living has gone up by €10 a week. This is a statistically proven fact; and it is also a fact that the most affected products involve foodstuffs, and other basic necessities.

So what are we actually suggesting, here? That – in the name of ‘competitivity’ – we should simply allow low-income earners to go hungry? Or that we should change an agreement that has worked well for over 30 years… just like that? Without any discussion whatsoever?

No, no, no. That is absolutely not acceptable to us. We’ve already made it clear to government: we will not budge an inch, from the original agreement. And in fact, the government has since come out with a statement, to the effect that the COLA mechanism will remain as it is, for now.

Besides: in all this talk about ‘competitivity’, nobody is mentioning the fact that it has actually increased, in Malta, over the past few years…

… only because of the government subsidies, though…

Yes. And we agree with that. In fact, one of our most important proposals, in our pre-budget document, is that the government should continue to subsidise the cost of electricity: because that offers stability, to both the commercial sector, and also to domestic households. To us, it is important that employers have the peace of mind of knowing that the price of energy, fuel and cereals – among other things – will remain the same.

And it will help with economic recovery, too. Because if the war does come to an end, and prices do start to stabilise; the fact that businesses were helped during the worst of the crisis, will only contribute towards a faster recovery.

But there is a flipside to all this: the same government subsidies also resulted in a situation whereby – if you compare what is happening here, to the rest of Europe – Maltese businesses are in a much better financial position, today, than elsewhere in the EU.

Here, let me read out a section of the European Economic Forecast for 2021: “According to the latest statistics issued by Eurostat, the real unit-labour cost is predicted to decrease this year, and next year. If real unit-labour costs decrease, then productivity is rising; if it decreases, then productivity is falling.  […] It is predicted that the real unit-labour cost will decrease by 2.5% in 2022, and 3% in 2023…”

Now: the ‘real unit-labour cost’ represents the total amount of money each employee costs the employer: not just in terms of wages; but also in additional expenses tied to productivity, and so on. So if it’s predicted to decrease this year, and next… it means that the competitivity of Maltese businesses is actually increasing: NOT decreasing.

Either way, however: I, for one, am not willing to sacrifice the well-being of all Malta’s workers, in the name of ‘competitivity’. And even less, to change an existing agreement, from one moment to the next, without any discussions whatsoever. Having said this: if the Chamber wants to discuss possible changes AFTER the next budget – so that we come with a new agreement, next year – I have no problem with that, myself.

But not today. Today, we will not budge an inch from that agreement… and that’s non-negotiable.

Moving onto another issue now: the Chamber of Commerce came out with another statement recently: one which describes the recent Air Malta ‘golden handshake’ deal as an ‘obscenity’, which creates ‘two different categories of public sector employee’. The GWU, on the other hand, agrees with this deal. Don’t you see a contradiction, in your own position?

Not really, no. But let me start with this: last January, Finance Minister Clyde Caruana – together with the Air Malta chairman – had announced a restructuring plan for Air Malta, to be discussed with all the relevant trade unions.

Bear in mind that several of the airline’s sectors - the pilots, the cabin-crew, etc. – are represented by their own unions and they all took part in the discussions.

I thought I’d point this out, because – judging by certain comments that were made – people seem to think that it was ‘only the GWU’. Not, mind you, that it bothers me, to be given all the credit… but the fact is that there were four unions – not just one – that took part in those discussions.

But in any case: our own point of departure, as GWU, was the same as it has always been. Our main objectives were that the workers’ employment had to be guaranteed; and that there would be no loss of income.

And we reached an agreement, to that effect. By March, all the trade unions had signed an agreement, that the discarded workforce would be re-absorbed: either by the Public Sector, or by individual government departments... not as members of the Civil Service – because that’s not possible – but through the IPSL  (Institute for the Public Service).

That was the agreement we signed last March. Afterwards, however, a clause was added – mainly because there is a large contingent of those workers who are approaching retirement-age anyway – to also allow for the possibility of an early-retirement scheme.

Effectively, then, those workers were given a choice: either to be re-employed by the government, with the same salary; or else to accept a sum, and retire. And the sum itself was also agreed, by the way, in negotiations involving all the unions, representing all the relevant sectors.

So it’s not as though this agreement – the early retirement scheme – was suddenly ‘invented’ only now, in the last few weeks. It is something that has been planned, and discussed, since last February…

You said it yourself, though: the choice was to be re-employed by the government… ‘with the same salary’. We all know, however, that there is a huge discrepancy, between the salaries paid by Air Malta; and the salaries in every other public entity. So doesn’t this also create – as the Chamber put it – ‘a privileged class’ of public service employee?

I can only speak for the sector represented by GWU: i.e., ground-handling. And what I can tell you is that the salaries in that sector are NOT the ‘phenomenal salaries’ that people out there seem to think.

But another mistake that is being made, is that… the Chamber doesn’t have the same information that we have, as participants in the previous discussions.  This is why, for instance, their estimates of how much this scheme will cost, to the tax-payer, are completely fictitious. The Chamber is assuming that ALL the employees will choose early retirement, over re-employment. But nobody can say that, for certain. The reality is that we have no idea how many will opt for the sum and how many choose the job.

Now: were it up to me – and I’ve said this before – as a trade-unionist, I would always argue in favour of the ‘job’, as opposed to the ‘money’. Because my concern is to represent the interests of workers; as such, I am interested in ‘employment’… not ‘retirement’.

But then, in the case of an Air Malta employee who is only two years away from retirement anyway… and who chooses the ‘sum of money’, over the ‘alternative employment’ that we negotiated on his behalf last February… [shrugs] who am I to argue, at the end of the day?