Prime Minister Lawrence Gonzi yesterday announced a recent cabinet decision to launch the privatisation process of the Malta Shipyards, a measure that will include a series of early retirement schemes to downsize the 1,700-strong workforce.

In a news conference held yesterday afternoon, flanked by Finance, the Economy and Investment Minister Tonio Fenech and Communications and National Projects Minister Austin Gatt, Dr Gonzi explained that the cabinet took the decision after a careful analysis of a detailed report about the shipyards.

The decision to go ahead with privatisation, Dr Gonzi said, was based on a number of factors. “The government had committed itself to a restructuring process which included reducing the workforce,” said Dr Gonzi.

Furthermore, he added, from 1 January, 2009 the shipyards will no longer receive any subsidies from the government. However, the country still needs to keep close ties to the maritime sector.

The prime minister pointed out that Malta has to keep up with the global realities and that the shipyards cannot continue working at a loss. However, he said that the decision to privatise affects the interests of hundreds of workers and their families.

Referring to the shipyards’ superyacht and ship repairing facilities, Dr Gonzi described the situation as “buoyant.”

He said the government was approached by a number of international and European companies – “there is a demand for the shipyards”.

Referring to the negative reaction by the General Workers Union (GWU) after a private company had expressed interest in the shipyards last year, Dr Gonzi called out to all the stakeholders not to rule it out as something negative.

“It is fundamental that the private sector be the motor behind the country’s economy,” said the prime minister.

He mentioned a number of successful privatisation decisions, including the Mid-Med Bank, Tug Malta, Bank of Valletta, Maltacom and the Freeport.

The prime minister emphasised that the cabinet’s decision was not profit-based.

“Not only have profits increased tremendously whenever a company was privatised but the working conditions of the employees also improved,” he said.

The government is not motivated to make a profit but wants to give the country, and shareholders, a greater return while improving the economy, said Dr Gonzi.

Privatising the shipyards is a clear example of the government’s electoral promise to increase the number of higher quality jobs, he explained.

The prime minister said that the shipyard’s restructuring process did reach a number of the set aims but it will not reach break even by the end of this year.

However, he refused to point fingers as to why the shipyard is constantly working at a loss and said it was useless to do so. “It is in the country’s interest that the shipyard grows and should be another important economic investment for the country.”

The process will be taken care of by the privatisation unit within Mr Fenech’s ministry.

The Finance, the Economy and Investment ministry will hold discussion meetings with the GWU to initiate a number of early retirement schemes that will reduce the 1,700 employees – a number Dr Gonzi described as “very high.”

The prime minister said he hoped that these discussions with the GWU will be “constructive”.

When asked by this newspaper if the government is preparing to downsize the workforce to a particular number, Dr Gatt explained that the government will have to see what type of employees are needed for the different sectors.

However, 1,700 employees was still too much, he said.

Dr Gatt said that two large companies visited the shipyards last year and pointed out that there are still too many employees. Even if peak rates are charged and demand is always reached, 1,700 employees are still too many.

He went on to say that during the past five years, at least four or five companies expressed their interest – the last one was in April. However, all the details of the privatisation process will be carefully explained to the EU, he added.

Once discussions with the GWU and with the EU are held, then Dr Gonzi will make a statement in parliament, giving the opposition the chance to ask all the questions it wants.

“It is very important that this process is seen in a positive light – privatisation is not something we have to be afraid of – even if the shipyard was earning a profit then we still would have to privatise it,” said Dr Gonzi.

The prime minister called on everyone to pull the same rope and to not convert the issue into a political tool.

In its initial reaction, the Malta Labour Party said the government had ignored the opposition’s offer to collaborate on the future of the shipyards.

The government had called for a national consensus after the decision had been taken, MLP leader Joseph Muscat and spokesman Helena Dalli said in a joint statement.

The MLP continued to insist for a wide consultation process on the issue, and it is detrimental to society that the government had made up its mind without consulting the stakeholders.

During the election campaign, the government had put the shipyards’ workers’ mind at rest, but now it is going against what it had promised.

The government had already decided to downsize the company before it sees the plan to be put forward by those bidding to buy the shipyards, the MLP said.

In a counter statement, the government said it hoped the opposition will collaborate so that the privatization of the shipyards will be a success.

It expressed its surprise at the opposition’s reaction, but once again invited it to take part in the process. If partisan interests are put before the national interest, it is the workers who suffer the most, the government said.

The General Workers’ Union said the government was supposed to be a model employer but in fact it was violating the country’s laws and the EU directive about the right of workers for information and consultation.

It could not agree that when discussions had still to be held about the shipyard, the Prime Minister announces that the government had already decided about the industry’s future and its employees.

The government’s position about the shipyard was not clear and begged many questions which needed to be cleared, including what the government understood by privatisation. The union said that on the other hand, its plan for the shipyard, based principally on a revised Appledore report, was clear and remained relevant in all scenarios which could arise whether the shipyard was a state enterprise, or otherwise.

The union said it was ready to hold talks with the government to find a solution but it would not accept imposition or arrogance. The union’s agenda, it added, covered all the aspects related to the shipyard, not just the labour force.

The union said that at this stage the main and absolute condition which it was making was that it would not accept that any shipyard employee would end without employment. The reason for this was that the shipyard’s problems were due to the management, not to the employees.

The Malta Chamber of Commerce and Enterprise welcomed the announcement that the government will commence the process for the privatisation of Malta Shipyards.

In the past, the Chamber maintained that public funds should be utilised to prepare companies like the shipyards for privatisation, as this was a potential route for the achievement of long-term viability.

It insisted that private enterprise is better positioned and motivated to manage any entity – including the shipyards – and is supporting the process for privatisation to reap the desired results.

In so far as the workforce is involved, the chamber expressed its hope that the process is rendered as smooth as possible for all parties concerned.

It is imperative that in so far as the surplus human resources are concerned adequate re-training is organised by the Employment and Training Corporation in order to ensure that these same employees – once re-trained where training is required – are made available on the labour market. This can also be achieved by the utilisation of EU funds specifically made available via the European Social Fund. Private enterprise will surely benefit from the availability of certain skills, especially in certain areas where skill shortages have been registered.