Malta: Recent Developments in Work Organisation in the EU 27 Member States and Norway

  • Observatory: EurWORK
  • Topic:
  • Published on: 24 Listopad 2011



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Disclaimer: This information is made available as a service to the public but has not been edited by the European Foundation for the Improvement of Living and Working Conditions. The content is the responsibility of the authors.

The main forms of work organisation in Malta are the discretionary learning and the lean production form. Between 2005 and 2010, these types of work organisation increased, as the firms operating in the manufacturing sector continued to decline. Although some forms of work flexibility have been introduced, especially in the discretionary learning organisations, work-life balance and work stress situations did not improve significantly in the recent past. The general perception is that job retention and pay rises are normally given priority over better workplace environment and better work-life balance measures.

Block 1: Existing main sources of information dealing with the issue of work organisation at national level and its relation with working conditions, innovation and productivity

  • Are there national statistical sources (censuses, special surveys, other surveys, etc) that analyse the issue of work organisation or are used for analysing the issue of work organisation in your country? If so, identify them and explain the way work organisation types are defined and asked in these surveys.

There are no official sources of information or specific academic research that focuses on work organisations in Malta and hence, the definition of work organisation is largely missing.

In Malta the issue of work organisation does not feature much on the national agenda; neither is it directly mentioned by the social partners. For the past two years, the safeguarding of jobs was at the centre stage of discussion were government, employers, and employees representatives, tried to minimise the impact of the recession.

  • Are there any other main sources of information published after mid-2000s that may provide valuable information on the issue (i.e. ad-hoc studies, sectoral studies, administrative reports, articles, published case studies, etc)? If so, identify them.

There are no national published studies on work organisations. The only available study that sheds light onto this subject is the Eurofound ‘Working Conditions in the European Union: Work Organisation’ 2009 report which is based on 2005 data. The report provides a macro perspective analysis on the type of work organisations present in Member States. The study outlines work organisation patterns both by NACE (general classification of industry) and occupation. It results that Malta, unlike Mediterranean countries and the Member States that adhered to the European Union in 2004, is more similar to North Western Europe in work structure. The predominant work organisations mainly consist of discretionary learning and lean production and out of total organisations these represent 45.6 and 34.2 per cent respectively. The main limitation arising from the study is that it just provides a general statistical overview of work organisations in Member States. It is more inclined towards cross-sectional comparisons rather than targeting specific working conditions employed by different work organisations.

  • Have there been any innovations introduced/expected in the existing national statistical sources intended to take into account the issue of work organisation in your country?

The National Statistics Office (NSO) does not publish any sort of information concerning work organisations. The only statistical data available, which can be indirectly linked to work organisation, is derived from short-term business statistics which gives information about employment by NACE and by size. Due to the limited human resources at the NSO, there are no plans to conduct any research on work organisation issues in the near future.

Block 2: Identify existing patterns of work organisation at national level and recent evolution in time

  • Describe existing patterns of work organisation at national aggregated level (according to existing used national definitions) and their associated characteristics per pattern, based on the existing information. Provide information on the (quantitative and qualitative) importance of the different forms of these work organisations in the national context. In order to reflect the workplace practices, NCs are also requested to provide information on different work organisation-related-items, based on the national Working Conditions surveys that stress the main changes that have taken place in the last 5-7 years (i.e. higher/lower presence of team work; higher/lower presence of autonomy at work; higher/lower presence of job rotation; higher/lower assistance from colleagues or hierarchy; higher/lower task complexity; higher/lower degree of learning, higher/lower problem solving capacity, etc), stressing existing differences by sectors and enterprise sizes, and identifying the main reasons behind these changes.

In the absence of national literature or surveys is it impossible to comment on such question.

  • Identify (if possible), the recent evolution in time of work organisation patterns in your country (last 5-7 years). Pay special attention to the effects derived from the current economic crisis.

According to the Eurofound report ‘Working conditions in the European Union: Work Organisation’, Malta’s pattern of work organisations is similar to that of Nordic countries. The type of work organisation in 80 per cent of workplaces in Malta is considered to fall under the discretionary learning or lean production form.

In the last five years, Malta has undergone a phase of deindustrialisation and a number of manufacturing firms involved in the textiles, food processing, leather, paper products, furniture and woodworking industries, were winding down. This was largely due to the removal of protectionism in line with European Union regulations. The downsizing exercise resulted in 3,600 (net) jobs losses in the manufacturing sector between 2005 and 2010 (NSO, 2006; NSO, 2010d). Because of the closure of a number of manufacturing firms, one can speculate that, the number of workplaces with Taylorist or traditional structures of work organisation, continued to decline. However, throughout this period in the manufacturing sector, over 1,000 new jobs were created, following numerous investments mainly made by pharmaceutical companies.

The work environment of pharmaceutical companies fulfils most of the lean production characteristics due to the considerable degree of automation, teamwork, high quality management and multi-skilled labour force. In the meantime, the service sectors such as Financial Intermediation, Real Estate and other Business Activities, and Community, Social and Other Personal Services (online-gaming account for a large share of this economic sector) continued to expand. During the five year period the increase in jobs in the mentioned sectors was circa 4,300 (NSO, 2006; NSO, 2010d). It stands to reason that higher activity in these areas contributes to an increase in discretionary learning organisations in line with the work organisation report which points out that at around half of the workplaces in those sectors have such type of work organisation.

The recession of 2008/2009 did not impact the Maltese economy as negatively as it did in other European economies. The impact was further softened because Government forked out €4.9 million in aid to companies that were considering possible closure. The aim behind this scheme was to develop and organise training programmes for employees whose work schedule had been reduced to a 4-day week because of a drop in orders during the recession. The aid was given on condition that companies receiving aid had to invest and restructure their organisations in time for the upswing. The policy proved to be a success as Malta managed to keep the lowest unemployment rates among European Member states. As such, the main outcome of this policy was to preserve the remaining few Taylorist work organisations.

  • Identify existing differences in work organisation patterns accordingly to sector and company size considerations, as well as (if possible) recent changes in these patterns.

In 2009, according to the Business Demographics: 2001-2009 i ssued by NSO (NSO, 2010b), over 97 per cent of firms operating in Malta were considered to be micro, meaning they employ between less than 10 workers. The structure of firms on the island has been always like this, mainly because Malta is geographically small, and human resources are limited. However in relative terms there are specific ‘bigger’ firms in Malta which tend to be more present in certain sectors than in others. These are small organisations (employing between 10-49 people) which make up 2 per cent of business activities and which are mainly found in the hotel industry, wholesale and retail and construction. This means that while discretionary learning may be more present among micro business structures; firms employing more than 10 workers seem to be more inclined to other forms of work organisations.

  • Identify work organisation patterns associated with high performance working environments/enterprises.

The types of work organisation that seem to be related to higher levels of performance were those with a high concentration of discretionary learning and which are service oriented. During the recession of 2009, the NACE category of: ‘Other Community, Social and Personal Services’, was the sector with the highest profits per full-time equivalent time employee (€37,000). This was followed by Real Estate, Renting and Other Business Activities (€27,500). Mining and Quarrying, which is an activity with a high predominance of Taylorist structure, was third sector with highest profits (€21,000), and in the fourth place Financial Intermediation with €14,500.

The three service sectors mentioned above also pay the highest wages compared to the total average wage of the economy; and in fact the wages were between 15-27 per cent higher than the average wage of €14,400 (NSO, 2010d). Wage dispersion tends to be higher, since here, only gross basic wages are taken into consideration and no reference is made to other benefits. High profits and wages are a direct result of high productivity (change in output obtained by a one unit change in inputs). The sector with the highest volume productivity between 2000 and 2009 was ‘Other Community, Social and Personal Services’ because of the increasing presence of remote (online) gaming companies in Malta. Productivity in this sector, on average, increased by a staggering 100 per cent each year between 2000 and 2009, meaning that for each additional employee, gross value added has doubled. In the Financial intermediation and in Real Estate, Renting and Other Business Activities, productivity increased by an annual average of 28 per cent and 14 per cent respectively (NSO, 2002; NSO, 2007; NSO, 2010a; NSO, 2010c). These figures are outstanding when compared to the other big sectors such as hotels and restaurants where productivity declined by 4 per cent annually and the manufacturing sector with a mere productivity increase of 5 per cent.

  • Identify the main drivers for change or barriers to change underpinning these recent developments in work organisation in the country, paying special attention to the effects derived from the current economic crisis.

The Maltese economy is one of the most open economies in the world, hence change and adaptation to new work environments is crucial if organisations seek to be resilient. The resilience of such work organisations is attributed to a high skilled workforce that is continuously exposed to new market ideas and training. Another crucial element that helps organisations to be successful and flourish is the legal framework governing corporate taxation. Advantageous tax rates are frequently cited by financial companies, online-gaming businesses and pharmaceutical companies as one of the most important factors that influences their day- to-day operations. An efficient legislative framework enables trade transparency and sets standards that investors look for before making investment or trading decisions. It is by no coincidence that the Financial Intermediation, Real Estate and Other Business Activities and Other Personal, Social and Community Services continued to grow even during the recession. The annualised growth rate of these sectors was 10.6 percent compared to a contraction of 0.6 per cent for the whole economy (excluding the public sector) (NSO, 2007; NSO, 2010c).

The main barriers to change for certain organisations, remains the lack of innovation, research and development, lack of capital and market accessibility. The firms which were most hard hit by the recession, where those whose product demand is derived from other products such as car parts, home accessories and electronics. In order to limit the number of businesses closing down, the government disbursed financial aid against the promise of capital investment, re-innovation of products and training of workers. To a great extent the policy was a success because the firms operating on a four-day week remained open and re-instated a normal forty hours working week for their employees once the recovery was underway.

The recession was the last event in a series that outlines the importance of research and innovation to firms if they are to remain in the market. The above supports the argument that work organisations which lack discretionary learning and base their production layout on a Taylorist approach, were and continue to be, most at risk of moving out of business.

  • Partners are requested to identify one/the most dynamic national economic sector in terms of work organisation changes and for whom information is available. For this selected economic sector, NCs are requested to provide information on existing predominant work organisation patterns in this sector, as well as recent trends and changes in the last 5-7 years and reasons behind these changes. Also, and in the case the selected economic sector is a non-tertiary one, NCs are requested to provide some general information on recent trends and changes in work organisation patterns in the last 5-7 years and reasons behind these changes in any tertiary sector selected by each NC (i.e. consultancy services, HORECA, consultancy services, call centres, etc).

One of the most dynamic sectors within the Maltese economy is Financial Intermediation. In 2009, during the recession, Financial Intermediation grew by 35 per cent in real terms when compared to 2008 (NSO, 2010c). It was one of the few sectors that maintained in absolute terms, the same level of gainfully employed persons as in 2008. Such working conditions are possible because the financial intermediation is one of the economic sectors with the highest form of discretionary learning organisations (Valeyre et al., 2009). This permits the industry to keep abreast with the continuous evolvement of the sector. The expansion of the financial industry was permissible also because of the sound financial legal frameworks enacted by successive governments and which have enabled Malta to become a hub for financial services in the Mediterranean. This sector is regarded as one of the main pillars of the economy and is likely to continue to flourish. In its Vision 2015 the government aims that 25 per cent of gross value added should arise from financial services.

Block 3: Associated effects of identified different forms of work organisation and work organisation-related items on working conditions

  • Identify associated effects of different existing patterns of work organisation and work organisation-related items on working conditions (i.e. training, skills and employability; health, safety and well-being; working time and work-life balance). Particular elements to be analysed may include stress, job satisfaction, work life balance, workloads and learning

The main employees representatives, that is the General Workers Union (GWU) and the Workers United Union (UHM), pointed out that the worst working conditions exist in the construction sector, in certain manufacturing firms, and in sectors where job outsourcing is common. Immigration in part is also contributing to deteriorating work conditions as unskilled workers face more competition. On the other hand, both unions were in agreement that the best working conditions are found in the ICT sector, health services, and financial services. Training is a condition that both unions try to include in collective agreements such that workers can always improve their performance and also positively contribute towards their workplace. Sectors that regularly give training to their employees are manufacturing firms with high value added products and the IT sector.

  • Identify (possible) changes in working conditions associated to each work organisation pattern in the last 5-7 years, as well as the main reasons underpinning these changes

It is very difficult to identify change in working conditions by work organisation due to the lack of information though an attempt was made to elicit some general conclusions. From 1995 to 2008 the proportion of private sector employees covered by some form of collective bargaining declined to 26.7 per cent, a reduction of 6.2 percentage points. This was due to the decline in the manufacturing sector and the expansion of the services sector (Baldacchino and Gatt, 2009).

In the private sector, the three sectors with the highest negotiated collective agreements are the financial sector (66.1 per cent), the manufacturing (47.1 per cent) and the transport and communication sector (44.4 per cent). As reiterated earlier, employees in the financial sector benefit from better working conditions when compared to other sectors of the economy and the sector performs relatively well. As regards the other two sectors (characterised by high presence of lean production and Taylorist structures), the effort made by unions in the past years was mainly safeguarding jobs rather than improving working conditions. Since Malta is an island where job competition is intense and mobility is limited, workers prefer to forfeit some of their present conditions and if necessary are even prepared to suffer pay cuts as long as their jobs are safeguarded. For example, workers employed by ST Microelectronics, Malta’s largest private employer, preferred giving up some of their conditions when their company was facing problems during the recession. In the absence of collective agreements, working conditions in the rest of companies mainly depend on employer-employee agreements and the firms’ financial stability.

It is also noteworthy to mention that the non-market activities sector (the public sector), which is mainly associated to a discretionary learning environment, without doubt is at the forefront among employers with regards to working conditions. Since joining the European Union (EU), Public authorities in Malta have invested heavily in the training of their employees both locally and abroad since the limited number of human resources and numerous commitments with European Institutions require civil servants to be both highly productive and multi-tasking.

  • Partners are requested to provide information focused on the existing relationship between predominant work organisation patterns and existing working conditions in the economic sector selected in previous section.

Firms operating within the Financial Intermediation sector pay the highest wages compared to other sectors. In addition, such firms also provide their employees with lucrative benefits that are hardly found in other sectors. A survey commissioned by Castille Resources in 2009 among people working in the financial sector indicated the following main benefits in order of preference: flexible working hours, bonuses, health insurance, extra leave, overtime, company car, time off in lieu, parking and child care. The financial sector is the only private sector in which females predominate and in fact in 2009, around 60 per cent of employees were females (NSO, 2010a). Possibly because the majority of employees are females, greater importance was given to flexible working hours over other benefits like bonuses, overtime and company car. This highlights the increasing importance of flexible work arrangements for modern day workers, especially for dual-earner couples. It stands out that relative to other economic sectors, financial firms offer among the best work environments for their employees. Better conditions arise because the pool of available skilled workers for this sector is in short supply, hence competition for human resources is intense. Although life-time job guarantees no longer exist, employment in this sector is quite secure as during the recession the number of jobs increased, contrary to what happened in other domestic sectors and foreign countries.

Block 4: Social partners’ position with regard to the issue of work organisation patterns

  • Attitude/opinion of the social partners in your country on the importance of encouraging changes of work organisation in the national economic context.

The Malta Employers’ Association (MEA) which represents employers from all economic sectors is one of the social partners that continuously advocates for reforms such that cost competiveness is preserved. The GWU and the UHM accept the fact that in order to safeguard and create jobs unions cannot resist change. Proof of this is the fact that in recent years, strikes were rarely staged as instead, unions have resorted to social dialogue to find solutions.

  • Main elements identified by social partners and associated with forms of work organisation, which have an impact on the improvement of working conditions and performance.

All social partners (both employers and employees representatives) noted that where possible and applicable, throughout all forms of work organisations, training is the most crucial element that leads to an improvement in working conditions and performance. Unless workers are equipped with more skills which make them more productive, firms are unwilling to incur any additional costs as this would only put the business in jeopardy.

  • Please distinguish (if possible) different views between trade unions and employers organisations.

In Malta, there is no such divergence of opinion between social partners along work organisation patterns. Social partners to some extent tend to find a point of convergence on most issues, however, during the past recent years conflicts between employers and trade unions have risen about the mechanism that should be adopted in determining wage increases from one year to another.

  • In some countries, agreements have been signed between social partners or initiatives/programmes have been developed by employers and/or trade unions in order to support changes in work organisation for different reasons (e.g. facing the economic crisis, improvement of productivity/performance and/or working conditions). Please, describe one/two relevant agreements or initiatives with the aim of supporting changes in work organisation.

The GWU, which represents the majority of workers in the manufacturing sector (mostly constituted by companies applying lean production or Taylorist systems), commented that during the crisis, it urged government to financially assist a number of companies in order to avoid their closure but at no point in time did the topic of work organisations feature during the discussions. The government in agreement with the employers and employees representatives, agreed to grant such aid in exchange for job retention, further training to workers and product innovation to ensure the long-run viability of the firm. Today, these firms did not only continue to operate and retain workers but also restored their profitability as they engaged into new markets and production processes. Although the firms that received aid remain predominantly classified under the work organisations mentioned above, it stands out that a degree of research and development was necessary for their existence.

Commentary by the NC

Between 2004 and 2009, the share of gross value added of the non-market activities (public administration, education and health and social services), financial intermediation, real estate and other personal, social and community services), rose from 45 per cent to 55 per cent of the GDP (NSO, 2010c). This means, that in Malta, the two dominant types of work organisation, that is the discretionary learning and lean production organisations, are likely to grow further in the near future. The Taylorist structure forms have already lost importance and the same is likely to happen with traditional or simple structure organisations. The hotel and restaurant industry and the wholesale and retail trade sectors will have to embrace internal restructuring if they want to remain competitive, because as their value added decreases, the number of employees in these sectors remains relatively high.

References:

Baldacchino and Gatt. (2009). “Survey examines private sector trade union coverage over 13-year period”. European Industrial Relations Observatory On-line.

Castille Resources. (2009). Financial Survey.

National Statistics Office. (NSO, 2002). “Labour Force Survey: Q4/2001”.

National Statistics Office. (NSO, 2006). “Labour Force Survey: Q2/2006”.

National Statistics Office. (NSO, 2007). “Finalisation of GDP data: 1995-2003”.

National Statistics Office. (NSO, 2010a). “Labour Force Survey: Q4/2009”.

National Statistics Office. (NSO, 2010b). “Business Demographics 2001:2009”.

National Statistics Office. (NSO, 2010c). “Gross Domestic Production: Q2/2010”.

National Statistics Office. (NSO, 2010d). “Labour Force Survey: Q2/2010”.

Valeyre et al. (2009). “Working Conditions in the European Union: Work Organisation”. European Foundation for the Improvement of Living and Working Conditions.

Clyde Caruana and Anna Borg – Centre for Labour Studies – University of Malta.

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