From Mr R. Spiteri

It does seem that everyone, namely the government, the Opposition and the General Workers Union, are in agreement that the best route for Malta Shipyards is that it is privatised. In my opinion this process should have been carried out 10 years ago but like most other important matters, which have been pending for many years, – the pre-1995 rent reforms; the liberalization of public transport; the removal of VAT from the vehicle registration tax; the removal of the departure tax – this issue was left on the back burner until now, with our backs to the wall, due to EU requirements regarding subsidies. The rent reform and the public transport liberalization are being tackled through the ministries of John Dalli and Austin Gatt who I’m positive will see them through. The other two hot issues together with the privatisation of Malta Shipyards are the responsibility of the Ministry of Finance, which to date has failed to impress.

The bone of contention that remains to be resolved between the union and the government relates to the fact that the union believes that the workers who do not opt to take the schemes, should be given a guarantee of employment. On the other hand, the government says that the workforce is to be reduced from the present 1700 to a maximum of 700 with no guarantee of continuity of employment at the end of the year. At the same time that this wrangle is going on, it was mentioned that although workers who apply to take the schemes can apply for a job with the new owners, the call for expression of interest made public on 20 August states “it is not mandatory for proponents to offer employment to existing employees of Malta Shipyards”.

Most are of the opinion that the best workers, especially those with readily marketable skills, will apply for the schemes, take the windfall redundancy payments, run laughing all the way to the bank and then they may, if they want to, re-apply to be employed by the new company. Good luck to them. But Malta Shipyards will still have on its books a complement of clerks, security guards, lower-skill workers and a number of workers whose specialty is doing absolutely nothing. No one really knows what this number will be until the applications are received by 15 September, so the government could end up with more than, or less than, the 700 envisaged. In the meantime, the Opposition, whose leaders know this very well, are sitting smugly on the sidelines awaiting developments. Whatever happens they are in a win-win situation.

No matter what the final result is, Malta Shipyards could find itself with a high complement of employees that are non-productive, and therefore unmarketable, on its books. No serious organisation will contemplate taking on such a commitment that will be a millstone around its neck from the word go. No one will give work guarantees to workers they do not need or who are not trained in the trades and skills required. The new companies would find them superfluous to requirements.

But, notwithstanding the above, all that is being said, debated and discussed is controversial for the following reasons:

1. The government wants to reduce the workforce down to 700 in a random and haphazard way. Those who want to stay can stay; those who want to leave are free to go. According to a statement released by the Ministry of Finance and reported in The Malta Independent of 21 August, “neither Minister Fenech nor the government have at any point in time or in any press statement stated that the government had commissioned a report to justify the number of workers who would have to be made redundant prior to privatisation”.

Internal management reports were quoted stating that the workforce had to be reduced further and simply mentioned several overseas shipyards that had carried out this exercise. They did not take into account the actual estimated skill requirements that would be needed to run the ’yards successfully like the ’yards that were mentioned did. What the Ministry fails to realise is that the workers of Lisnave Drydocks in Portugal spent months going to work without receiving any wages from their ailing employer to try to save their shipyard and to safeguard their jobs prior to the final re-structuring.

2. In its call for expression of interest, the government stated that it is not mandatory for proponents to offer employment to existing employees of Malta Shipyards. Meaning those who do not apply for voluntary retirement or who go for the redundancy scheme.

3. The union knows very well that no bidder will want to take on the motley crew that might decide to stay on if the bidder is not satisfied with their performance and suitability.

Both the government and the union know that the above are important facts that will stall the privatisation process one way or another.

So, why are we going to all this hassle of issuing applications in the first place if under the terms of the expression of interest jobs are not guaranteed, and when it is a well known fact that unless we are selling a tangible, productive entity, the privatisation will never succeed. That is unless the bidders are only interested in laying their hands on the valuable real estate footprint of French Creek in our Grand Harbour?

If the above was not enough, it has now come to light that the EU is objecting to the write off of the expected e100 million debt that Malta Shipyards is expected to record in its account books for this year alone. Brussels is maintaining that the cancelling of the company’s losses constitutes direct State aid and might not be legal in accordance with EU competition rules.

This might mean that Malta Shipyards would have to be declared bankrupt and a process of liquidation started. The eventual new owners of the shipyards’ individual entities would have to start afresh by registering new companies, which is the logical thing to do in any case. There is no doubt that the best way to privatise Malta Shipyards is to sell each entity individually to companies specialized in each separate business: ship repair; yacht repair; super yacht services; steel fabrication. Each company will require a specific number of skilled employees in specific trades and services, but it is up to these new companies to decide and determine how many and who to employ.

By declaring Malta Shipyards bankrupt, or by reducing the work force to a random 700 workers, most of whom might not be needed by any interested party and who might find themselves laid off anyway, puts the workers in a quandary, causes the party in government untold damage politically and the union to admit once again that it did not resolve this issue in the best interest of its members.

In a previous article I had suggested that it is up to the new owners to decide whom to employ and in what category, trade or service. It is also up to them to decide on the number of employees they will require under totally new companies, new work contracts, new work practices, flexibility and productivity performance analyses. This will provide any bidder to come forward with their expression of interest and employee requirements and for the government to have 1700 such employees readily available and the new companies can employ their structured workforce according to their requirements. Then and only then can the government come to a final retirement and redundancy scheme agreement with the union for the remaining workers not selected for further employment.

Trying to sell the shipyards with 700 possibly inadequate workers, on top of which employment guarantees have to be given as a result of union demands, is exactly the right mixture for the failure of the privatisation process of Malta Shipyards.

Any professional risk manager or assessor entrusted to advise an interested party on the acquisition of any of the entities will delve very deeply into the availability of suitably trained employees, tangible facilities, development and restructuring requirement, financial records, profit and debt accruals, the political stability of the country as well as union militancy or rationality. Both the government as well as the union would do well to look into the above in a professional manner and to come to a final solution that will be of benefit to all the current employees as well as the whole nation. To date, both parties in this debate (the government as well as the union) have failed miserably in the most elementary of issues pertaining to the successful conclusion of this privatisation.

Reno Spiteri

MARSASCALA