Union collaboration does not result in social pact

In January 2005, Maltese trade unions collaborated to an unprecedented extent in drawing up joint proposals for the contents of a possible national social pact. This initiative did not result in the signature of such a pact, but did indicate to many of those concerned that greater cooperation among unions is possible and desirable.

During 2004, the Maltese social partners and government discussed a possible social pact, aimed at enhancing national competitiveness, though without reaching such a deal by the end of the year (MT0501101N). However, the government encouraged the social partners to continue discussing the proposed accord and declared that it would strongly prefer to launch the measures announced in its 2005 state budget as part of a unanimously agreed social pact. The first weeks of 2005 thus saw high-profile discussions involving various social partners within and outside the Malta Council for Economic and Social Development (MCESD), the country’s highest national tripartite forum.

The most widely publicised point of contention between the social partners was a government proposal to amend the Employment and Industrial Relations Act 2002 (EIRA) so that public holidays falling on a weekend would no longer be added to employees’ annual holiday entitlement. This proposal received extensive criticism from trade unions, which argued that the government should not arbitrarily amend a law that took years of consultation to be drafted. Besides, they argued that such an amendment would adversely affect the collective agreements currently in force, constituting a dangerous precedent undermining the legal stature of these agreements. In response to the unions’ disapproval, the government opted instead for an amendment to the National Holidays Act resulting in the forfeiture of public holidays falling on a weekend. However, as a result of further protests, the government eventually urged the unions to suggest feasible alternatives to the holiday reduction measure that would achieve equivalent results in terms of enhancing Malta’s productivity.

Unions collaborate

Following a proposal by the Malta Union of Teachers (MUT), Malta’s major unions held discussions facilitated by Edward Zammit, chair of the Workers’ Participation Development Centre (WPDC) at the University of Malta. The unions taking part in the discussions included the largest five, namely the General Workers' Union (GWU), the Union of United Workers (Union Haddiema Maghqudin, UHM), the MUT, the Malta Union of Bank Employees (MUBE), and the Malta Union of Midwives and Nurses (MUMN) (MT0404102F). After several hours of discussion, Professor Zammit reportedly declared that 'for the first time ever, [Maltese] unions have agreed on a common strategy.' It was no simple task for the unions to emerge as a unified front, as they represent a diverse range of sectors with different interests. The historic agreement was viewed as a positive step towards the formation of a Trade Union Council that would give trade unions greater power (MT0407102F).

The trade union representatives presented their set of proposals to the MCESD on 20 January 2005. However, the proposals were not acceptable to the employers’ representatives. The unions reportedly claimed that the employers had 'closed the door to the discussions'. The employers’ representatives - the Chamber of Commerce and Enterprise (COC), the Federation of Industry (FOI), the Malta Hotels and Restaurants Association (MHRA), the Chamber of Medium and Small Enterprises (GRTU), and the Malta Employers' Association (MEA) - issued a joint statement saying that the proposals submitted by the unions reopened a number of points that were previously being discussed within the context of a social pact, without any commitment on measures concerning holidays. The employers stated that they would continue to participate in such discussions only if the issue of public holidays is solved first, a proposal that was refused by the unions.

Counter-proposals

In an attempt to overcome the impasse, the Prime Minister handed the social partners represented on MCESD a set of counter-proposals. According to the media, the proposals included a 10-day reduction in holidays over four years and a commitment not to raise income tax or VAT over the same period. Employers were asked to pay MTL 5 per employee every year into a training fund for employees. The government also bound itself to consult with the MCESD before incurring expenses in addition to those established in the state budget. While the employers agreed with the counter-proposals, the unions did not reach a consensus among themselves. GWU was unwilling to make as many concessions as the other unions. There were several points of contention between the government and GWU that remained unresolved. GWU's general secretary reportedly said that 'the main reason why we objected to the pact was because the government's proposals meant workers were going to carry the greatest burdens and that was not acceptable to us as a start'.

As the social partners did not reach a unanimous agreement, the government decided to legislate on the measures announced in the budget. On 9 February, the Maltese parliament amended the Public Holidays Act resulting in a reduction of 15 days in holidays over the next four years. Taking the perspective of the employers’ organisations, the government said that this measure will increase production by half an hour per week over the next four years.

Commentary

Some industrial relations analysts argued that the social pact talks were doomed to fail because not all the negotiating parties had the same interest in reaching a consensus on the pact. The UHM secretary general, Gejtu Vella, commented that the unions’ efforts had been thwarted by politicians.

The failure of the social pact negotiations might have temporarily increased the rift between the two main union blocks, the Confederation of Malta Trade Unions (CMTU) spearheaded by UHM, and GWU. The lack of trust between CMTU and GWU are rooted in their historic formation (MT0404102F). Another unintended consequence of the social pact negotiations was a decision taken by the MUT to suspend its affiliation with the CMTU as it felt that it was not being adequately represented.

However, these negotiations have provided the unions with an unprecedented opportunity to work together, and as several union officials commented, it will encourage other cooperation attempts in the future. (Manwel Debono, Malta Workers' Participation Development Centre)