EMCC European Monitoring Centre on Change

Malta: ERM comparative analytical report on Public support instruments to support self-employment and job creation in one-person and micro enterprises

  • Observatory: EMCC
  • Topic:
  • Published on: 12 January 2012



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Christine Farrugia
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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.

Over the past years, the Maltese government has been promoting self-employment as a means of increasing the overall employment levels in Malta. More recently, government has implemented several different measures meant to promote business creation. Many measures, managed by Malta Enterprise (ME) and the Employment and Training Corporation (ETC), have been introduced to improve the existing regulation and business support structure. This report covers in detail three good practices, mainly the Kordin Business Incubation Centre, the Investment Aid Scheme and the Small and Medium Enterprises (SMEs) Development Grant.

QUESTIONNAIRE

Part 1: Overall policy context

This section aims at giving a brief overview of the general development and status quo of the policy discussion and thereof resulting instruments, measures or initiatives in the field of fostering self-employment and job creation in one-person and micro enterprises (less than 10 employees). Focus is mainly on the developments during the last decade, that is before the global recession. In addition we are asking for your indication of change of policy focus since the recession.

1. General policy approach in the area of self-employment, one-person and micro enterprises at the national level


1.1. Has there been a policy focus/debate on the specific challenges facing entrepreneurship as tool for job creation before the global recession? If so, since when and for how long?

Table 1: Presence of policy focus/debate on entrepreneurship as facilitation for job creation before the crisis
 

Yes, continuously since 2002

Yes, on and off in the last 10 years

(Please indicate ‘X’ where it applies)

Yes, has been in focus, but since xx it is no longer part of the policy focus (Please indicate year)

No, it has never had policy focus before the recession

(Please indicate ‘X’ where it applies)

Self-employment

X

     
Hiring the first employee  

X

   
Hiring additional employees/creating additional jobs in micro enterprises  

X

   

*


1.2. What is the main focus in policy documents or strategies in relation to public or social partner based support instruments for fostering self-employment or job creation in one-person and micro enterprises? (Please indicate ‘X’, multiple answers possible)

Table 2: Main focus in the policy documents or strategies
 

Entrepreneurship (Business development in general)

Job creation (Employment)

Growth (Competitiveness)

Others (please specify)

Self-employment

X

X

X

 
Hiring the first employee  

X

X

 
Hiring additional employees/creating additional jobs in micro enterprises    

X

 

*1.3. Please elaborate on the answer given above (with a focus on those developments aimed at employment creation and growth) and indicate if the financial recession has caused a change of focus:

Job creation and growth have always featured high on Government’s agenda. Given the size of the island, around 316 square kilometres and a population of around 420,000, in the Maltese economy, in line with the EU, SMEs comprise approximately 99% of all firms out of which 95% are micro companies, employing not more than ten employees. The financial recession appears to have affected self-employment considerably, which decreased by about 7 % between the last quarter of 2008 and the last quarter of 2009 (NSO, 2009). The wholesale and retail trade were the two areas particularly hit during the crisis. A number of policy documents and measures have been introduced by Government, through Malta Enterprise (ME) the government agency responsible for investment, and the Employment and Training Corporation (ETC), Malta’s public employment service. ME has the objective of assisting local enterprises, particularly SMEs, in their start-up process, their growth strategy by expanding their operations abroad and much more. The Minister of Finance, the Economy and Investment, stated that 728 companies and self-employed persons, employing less than 10 persons had applied for Malta Enterprise schemes since 2008. An ETC project aimed explicitly at encouraging women to set up their own business was launched in 2007. This seeks to promote an entrepreneurial culture among women and to increase the rate of females starting and managing their own businesses. Malta has also this year become a member of the Eurostars programme, a pan-European initiative spread across 33 countries aimed at stimulating companies, particularly SMEs, to lead international collaborative research projects by easing access to support and funding. There has not been much change of focus due to the financial recession.

Table 3: The policy content and significance of the financial recession
Self-employment
Elaboration of content (please describe and also indicate whether it is treated explicitly/implicitly)

Government have constantly focused on the self-employed, aiming to encourage new business and support existing ones to grow. In 2007, the Parliamentary Secretary for Small Business and Self-Employed reported that business activity was going strong in Malta, however he reported that this was a fragile sector and there was no room for complacency or resting on one's laurels. Indeed, both in order to address the recession and to continue to boost the sector, the Government has introduced new measures and incentives. In 2007, an ETC project aimed at encouraging women to set up their own business was launched by Parliamentary Secretary for Small Business and the Self-Employed. Apart from increasing the self-employed, the project promoted an entrepreneurial culture among women and increased the rate of females starting and managing their own businesses. In the fourth quarter of 2009 there were about 21,137 self- employed persons in Malta, 68 % of whom were without employees, (NSO, 2010). In 2008, the Government has launched specific schemes intended to stimulate the self-employed, which incorporated in them a series of mission statements and initiatives to help the sector face up to increasing competition, including research and innovation, business advisors and development of business networks, due to the recession. In 2010, the Minister of Finance, the Economy and Investment reported that a number of self-employed persons, employing less than 10 persons had applied for Malta Enterprise schemes since their introduction in 2008.

Change due to the financial recession

Please tick:

Yes: X

No: □

If ‘Yes’, please elaborate:

Over the past years, the Maltese government has been promoting self-employment as a means of increasing the overall employment levels in Malta and decreasing the size of the public sector. During the crisis, more emphasis was set to the promotion of self-employment, especially to encourage people to start up their own business, in order to create jobs.

Hiring the first employee
Elaboration of content (please describe and also indicate whether it is treated explicitly/implicitly)

Government’s efforts towards encouraging self-employed to hire their first employee have not been as ongoing as the efforts directed towards self-employment. However, there were still a number of initiatives introduced. Indeed, ETC have a number of new incentives designed to support enterprises in recruiting new staff. Through the Employment Aid Programme, ETC offers a number of measures to encourage employers to recruit, such as re-imbursement of wages for a defined period. This is done implicitly as the Programme address all employers, including SMEs.

Change due to the financial recession

Please tick:

Yes: X

No: □

If ‘Yes’, please elaborate:

As a consequence of the effects of the financial recession, the ETC introduced new training incentives to assist employees in retaining their employment and also specific training programmes to increase one’s employability, thereby assisting the workforce to enter new jobs. Although the incentive did not address directly self-employed to encourage them hire employees, it was assisting the workforce to be more skilled and hence employable. In particular, during the recession, those enterprises which shifted to a four day week to safeguard jobs, were being assisted by both ETC and ME, in order to attend to training delivered by the Corporation, while ME was paying them the Minimum Wage for that fifth day. Training covered different skills such as IT, learning languages etc.

Hiring additional employees/creating additional jobs in micro enterprises
Elaboration of content (please describe and also indicate whether it is treated explicitly/implicitly)

Government has over the years introduced tax incentives designed to help entrepreneurs expand their business and increase their employees. In January 2010, the Micro Invest scheme was launched by ME. This consists of a 40 % tax credit given to self-employed persons and enterprises employing 10 persons or less, who in the successive two years, will refurbish, upgrade or invest in premises, machinery and technology or will create new jobs. This tax credit increased to 60% for those traders operating in Gozo. (Gozo, a small island with an area one third the size of Malta and one tenth of the total Maltese population forms part of the Maltese Archipelago).

Change due to the financial recession

Please tick:

Yes: □

No: X

If ‘Yes’, please elaborate:

Not applicable

2. Disincentives for self-employment and job creation

The following two questions will investigate whether there has been a change in the political agenda which has forced new political initiatives that may result in disincentives for job creation and business development (e.g. considerations regarding public budget).


2.1 Have public measures (e.g. with the aim to increase public revenue or cut public spending) led to disincentives for self-employment or job creation in one-person or micro enterprises before the financial recession? (Please briefly describe the major developments/initiatives (max. 300 words)

Yes, according to the representatives of ME, ETC and the General Retailers and Trailers Union – Malta Chambers of SMEs (GRTU), prior to the financial recession, certain public measures could be described as being a disincentive for self-employment or for job creation. For example, in 2005, Government introduced changes to the VAT legislation that enabled the VAT commissioner to hypothec property, if VAT was not paid. This was describes as an exaggerated deterrent giving disproportionate powers to the VAT Commissioner. The Malta Employers Association (MEA) was concerned that this measure could negatively affect the operation of the business community, including SMEs and micro enterprises, in their dealings with the banks. Banks were asking for extra guarantees to safeguard against such measures thereby rendering further restrictions to businesses, a disincentive for entrepreneurship and the expansion of the economy in general.

Increased energy prices were also seen as a disincentive for job growth and creation. In reaction to this, the MEA suggested an immediate reduction of electricity rates to households and business to reflect current international oil prices, as these measures were resulting in considerable increases in costs for employers. Government proposed that the introduced capping of utility charges to large enterprises should be maintained, as it was safeguarding thousands of jobs both in large enterprises and also indirectly in smaller enterprises whose business may depend, directly and indirectly, on the survival and growth of the larger enterprises.

The compensatory adjustment in the cost of living increase, based on the Cost of Living Adjustment (COLA), an adjustment made to Social Security and supplemental security income in order to adjust benefits to counteract the effects of inflation, in the years before the international recession, was also seen as a disincentive. MEA stated that many firms were not able to afford to pay for the higher rates, cost of living supplement and collective agreement increases. Furthermore, MEA suggested that any increases above that for inflation announced in the national budget will be incorporated as part of the collective agreement increases.


2.2 Have public measures (e.g. with the aim to increase public revenue or cut public spending) led to disincentives for self-employment or job creation in one-person or micro enterprises as a result of the financial recession? (Please describe – max. 300 words)

Yes, as a result of the financial recession and government’s efforts to reduce the deficit, certain public measures could be seen as being a disincentive for self-employment and/or job creation. As indicated earlier, utility charges which were raised before the recession continued to have negative effects.

The results of a survey, conducted with a sample of 120 enterprises, including 27 SMEs, by MEA and Malta Hotels & Restaurants Association (MHRA), reveals that employers are feeling the brunt of the international recession. 88% of respondents replied that they have either been mildly or strongly affected by the recession. Furthermore, 74% of the respondents replied that they were not in a position to absorb a COLA increase of between €5 and €7 for 2010. Employers are concerned about the impact of inflation on their organisations, since this is hitting them through the COLA and also through other cost items like the utility charges.

During 2009, a number of budget measures were being proposed to the Government by employers including: Freeze or lower water and electricity tariffs; Revision of tax bands/reduce income tax (operationally addressed by the government; improvements were recorded); Reduce VAT; Reduce bureaucratic hurdles and costs to businesses; Cut Corporate taxes; Control tax evasion and embark on a wide ranging capital expenditure programme.

3. Representation of/lobbying for self-employed and micro enterprises


Are self-employed and micro enterprises in your national context explicitly or implicitly (e.g. entrepreneurs or SMEs in general) represented by the following types of organisations (e.g. for lobbying, defending their interest etc.)?

Table 4: Representation of self-employed and micro enterprises
 

Self-employed

Micro enterprises

Employers’ organisations

Yes explicitly – GRTU; MEA; Malta Chamber of Commerce, Enterprise and Industry

Yes implicitly – Malta Hotels & Restaurants Association (MHRA)

Yes explicitly – GRTU; MEA; Malta Chamber of Commerce, Enterprise and Industry

Yes implicitly – Malta Hotels & Restaurants Association (MHRA)

Employees’ organisation

Not applicable

Not applicable

Not-for-profit organisations

Not applicable

Not applicable

Others

Not applicable

Not applicable

Part 2: Identification and description of relevant recent support instruments

The following section asks for the identification of public or social partner based support instruments initiated during or after the recent economic crisis (that is, 2008 onwards). These measures might have, but must not necessarily have been triggered by the recession. Measures may also have been initiated earlier, but changed in order to adapt to the recession or other recent developments. Rather than a comprehensive list of all instruments available at national, regional or local level, the most important, most innovative, most interesting and most effective tools are to be described. Thereof, a selection of up to three ‘Good Practices’ to be described in more detail is to be made.

1. Selection of region(s) when total coverage of the entire regional and local level is too comprehensive

When providing the brief overview and the three ‘Good Practices’ in this section of the questionnaire, measures and instruments at national level have to be included. We would in addition ask you to include regional and local level initiatives where relevant. Nonetheless, a complete coverage of regional and local levels may not be possible for all countries (e.g. because of a high degree of decentralisation resulting in a wide range of respective measures characterised by considerably heterogeneity). At the same time, it can be assumed that for instruments targeting at supporting self-employment and the creation of employment in one-person and micro enterprises the local administrative level is of considerable importance. If so, such measures will be designed to fit to the local characteristics and needs, resulting in a wide variety of different approaches. In this case, one or few local areas or regions may be selected to be covered in this report. Details on the selection are given in table 5.

Table 5: Administrative level/region(s) covered for the following research (max. 50 words per region)

Administrative level relevant for the rest of the questionnaire

Given the size of Malta (around 316 square kilometres), the three ‘Good Practices’ covered hereunder are at national level.

If a specific regional/local are is selected, please provide the following information

Name of region

Not applicable

Motivation for selecting this region

Not applicable

Facts about the region e.g.

- Geographic location

- No. of inhabitants

- Business structure (sector, size)

- Labour market

- Specific characteristics if applicable

Not applicable

2. Brief overview of recent instruments to foster self-employment or job creation in one-person and micro enterprises


2.1. Please provide a brief description (max. 800 words) of public or social partner based instruments recently initiated (2008 onwards) to support self-employment and job creation in one-person or micro enterprises.

Measures covered by the European Employment Observatory Review on self-employment 2010, European Commission, Directorate-General for Employment, Social Affairs and Equal Opportunities are to be omitted to avoid duplication (see Part 3 of this questionnaire).

During the last couple of years, the Government has focused on introducing measures to support self-employment, job growth and job creation, in its efforts to improve the fiscal position and in order to reduce unemployment. The provision of more and better jobs is one of the key priorities in the current Maltese administration. The Government in partnership with ME launched a number of initiatives aimed at stimulating private investment, particularly among local investors in the SME sector. These include tax credit schemes tied to employment and investment, funds to help businesses in their product development, ease access to export markets, training and consultancy programmes and investment in industrial parks.

The Kordin Business Incubation Centre (KBIC) managed by ME is a mixed technology oriented type incubator designed to accelerate the growth and success of entrepreneurial start-up efforts, with the aim to improve the rate of survival and growth of small ventures. This Incubation Centre will be revamped with a view to introduce new and improved services in order to attract and facilitate the setting up of more innovative start-up businesses in Malta. It is expected that the measure will assist at least 10 innovative start-ups by the end of 2011. This project which started in October 2010 will end in March 2011.

In addition, ME will continue to implement European Regional Development Fund (ERDF) funded grant schemes until 2013, including the implementation of seven ERDF schemes which focus on the promotion of R&D, innovation, eco-innovation, ICT, energy, start-ups and growth through the tapping of new markets. It is expected that 450 SMEs will benefit from these grants, with €42 million being disbursed, €35.7 million from EU Funds and €6.3 million from Malta Funds.

During the past years, the Government reviewed the existing taxation framework in order for taxation policy to encourage work and productivity (within the framework of sustainable public finances), including a tax credit for women returning to employment, where women will benefit from a tax credit of €1,631 subject to certain conditions. Mothers returning to work may opt for one year's tax credit up to a maximum of €5,000 for every child, if the income is from self-employment. Furthermore, self-employed women working on a part-time basis will have the option to pay a 15-percent pro-rata contribution on their income (tax) instead of the minimum contribution, which at present amounts to €26.37 per week. A particular effort was and is being made to attract more people into the labour market, particularly women. In addition to this, paid maternity leave has been increased from 13 to 14 weeks (also self-employed women are eligible).

Another measure being promoted so as to increase the employment rate is the promotion of new business start-ups. ETC launched the Ibda in-Negozju Tieghek (INT) scheme. INT is a one stop entrepreneurial programme aimed at promoting as enterprise culture among those interested in self-employment. New businesses which used the INT Scheme included diving schools, artworks and retailing, importation and sale of collectible and antique firearms, electrical handyperson services, and holiday letting.

Following the international recession a number of initiatives were introduced to further improve the regulatory environment by simplifying legislation by introducing systematic impact assessments and effective one-stop-shops for business start-ups. Government is committed to create a business-friendly environment and to remove unnecessary bureaucracy and burdens to business. The Malta Financial Services Association (MFSA) acts as the official one-stop shop for setting up limited liability companies. Through the MFSA, individuals are able to set up limited liability companies in as little as one working day as long as the necessary documentation is available.

The Small Business Act currently under consultation is also expected to enhance private investment in the sector. Various other proposals deal with reducing bureaucracy, improving access to on-line government services, the setting up of an entrepreneurship training fund, and the removal of registration obligations for small businesses whose turnover does not exceed €7,000.

Table 6: List of recent instruments

Title

The Kordin Business Incubation Centre (KBIC)

Aim/objective

The Centre, which is a mixed technology oriented type incubator, is designed to accelerate the growth and success of entrepreneurial start-up efforts. The main aim is to improve the rate of survival and growth of small ventures.

Description of support

The Centre provides an array of business resources and services with a focus on the development of entrepreneurs. KBIC provides a cost-effective business environment with managerial expertise specialised for the needs of small businesses.

Target group

Engineering design and machinery development; Renewable energy resources and Biotech projects and other innovative projects.

Initiator and other actors involved

Malta Enterprise (ME)

Duration (please also indicate whether the measures has been initiated due to the recession)

Launched in January 2003 and still ongoing

Title

Bank Of Valletta (BOV) Joint European Resources for Micro to Medium Enterprises (JEREMIE) Financial Package for SMEs (including Micro Credit)

Aim/objective

Its purpose is to support local SMEs to reduce their difficulties in accessing finance through a limited provision of credit risk protection. Hence, under the JEREMIE, business proposals may be considered at a much lower percentage of collateral (security) then is normally requested. The programme aims to support start-ups and foster growth, by promoting increased access to finance.

Description of support

The programme offers reduced collateral requirements, reduced pricing and higher accessibility to micro SMEs and start-ups despite their inherent higher credit risk.

Target group SMEs and Micro SMEs
Initiator and other actors involved

Joint initiative of the European Commission with European Investment Fund (EIF) and European Investment Bank (EIB), entrusted to the Bank of Valletta (BOV)

Duration (please also indicate whether the measures has been initiated due to the recession)

Launched in April 2011 up to 2014. Measure can be considered as being initiated to face up to the challenges of the recession.

Title

Traineeship Scheme

Aim/objective

To provide job seekers with initial vocational training that will help them obtain the knowledge, skills and competence required for securing their employment and to facilitate measures for employers to hire additional staff.

Description of support

For each trainee that an employer takes up, ETC pays a training allowance equivalent to 20% of the National Minimum Wage (NMW) to the employer. Throughout the traineeship, ETC also pays each trainee a training subsidy of 80% of the weekly NMW for the duration of the training period.

Target group

All employers including SMEs and Micro-enterprises and the unemployed.

Initiator and other actors involved

Initiated by the ETC together with the support of the ESF.

Duration (please also indicate whether the measures has been initiated due to the recession)

Scheme launched in 2010 (no information about end date available). The minimum duration is 10 consecutive weeks and the maximum is 39 weeks, based on a 40-hour week. Duration varies according to the traineeships. Measure can be considered as being initiated to face up to the challenges of the recession.

Title

Proposed Small Business Act

Aim/objective

The intention of the Act is to address the particular realities of the small and micro enterprises while putting in practice the ‘Think Small First’ principle in policymaking and in promoting the growth of SMEs. Aim is to establish a comprehensive framework of common principles and legislative and policy measures with a view to improving the overall policy approach to entrepreneurship.

Description of support

Ensuring a more user friendly legislation particularly where this requires compliance from businesses; setting up a dedicated consultative body to assist government in the formulation and implementation of enterprise policy and centralising online business information.

Target group

SMEs and micro enterprises

Initiator and other actors involved

Government of Malta, Ministry of Finance, the Economy and Investment and the Social Partners.

Duration (please also indicate whether the measures has been initiated due to the recession)

Discussion started since 2008. In 2010, the white paper for this Act was presented. This was aimed at addressing challenges linked to the financial and economic crisis in the key areas of access to finance.

Title

Tax Credits for Creative Enterprises

Aim/objective

To support creative businesses whose economic performance is directly linked to the creative talent of the individual or individuals involved in the business. Support is provided to help the development of creative communities in artistic zones (identified places where talent is performed such as the Sunday market in the capital city Valletta) thus sustaining their development.

Description of support

The benefit through this incentive is in the form of a tax credit. ME may approve a tax credit equivalent to 60% of the eligible expenditure, capped at €25,000.

Target group

Self-employed and enterprises engaged in the creative industry such audiovisual productions, crafts, music, design and performing arts.

Initiator and other actors involved

Malta Enterprise

Duration (please also indicate whether the measures has been initiated due to the recession)

This incentive runs for three years commenced on 1st January 2010. Applications accepted until 31st March 2013. Incentive not introduced due to recession.

Title

ERDF Small Start-Up Grant Scheme

Aim/objective

To support the growth of new enterprises having less than 50 employees

Description of support

The scheme will reimburse 25% of the wage costs, rent, water & electricity bills and advisory services for start-ups that have been operating for less than 3 years.

Target group

SMEs

Initiator and other actors involved

Malta Enterprise

Duration (please also indicate whether the measures has been initiated due to the recession)

Launched in 2008 up to 2013. Measure was not initiated to address the recession specifically.

Title

ERDF International Competitiveness Grant Scheme

Aim/objective

To support enterprises to expand into new international markets.

Description of support

This scheme will reimburse 50% of the market development costs, engagement of a Business Development Manager, and participation in international promotional events as part of a specified internationalisation project.

Target group

SMEs

Initiator and other actors involved

Malta Enterprise

Duration (please also indicate whether the measures has been initiated due to the recession)

Launched in 2008 up to 2013. Measure was not initiated to address the recession specifically.

Title

ERDF e-Business Development Grant Scheme

Aim/objective

To support SMEs to invest in Information and Communication Technology (ICT) projects that integrate business functions, streamline workflows and enhance interactions with clients and suppliers.

Description of support

The scheme will cofinance ICT consultancy costs, ICT hardware costs and ICT software costs.

Target group

SMEs

Initiator and other actors involved

Malta Enterprise

Duration (please also indicate whether the measures has been initiated due to the recession)

Launched in 2008 up to 2013. Measure was not initiated to address the recession specifically.

Title

ERDF Research and Development Grant Scheme

Aim/objective

The Scheme is designed to help enterprises meet today’s business challenges by supporting them to carry out R&D projects leading to new products, processes and services.

Description of support

The scheme will cofinance the costs of wages, equipment, materials and contractual research specifically incurred as part of the research project.

Target group

SMEs

Initiator and other actors involved

Malta Enterprise

Duration (please also indicate whether the measures has been initiated due to the recession)

Launched in 2008 up to 2013. Measure was not initiated to address the recession specifically.

Title

ERDF Innovation Actions Grant Scheme (Environment)

Aim/objective

The scheme supports SMEs who will invest in projects designed to improve their environmental performance through eco-innovations.

Description of support

The scheme will cofinance environmental consultancy costs, plant, machinery and equipment costs together with licensing & certification costs.

Target group

SMEs

Initiator and other actors involved

Malta Enterprise

Duration (please also indicate whether the measures has been initiated due to the recession)

Launched in 2008 up to 2013. Measure was not initiated to address the recession specifically.

Title

ERDF Innovation Actions Grant Scheme (Innovation)

Aim/objective

The Scheme (Innovation) seeks to help Small and Medium-sized Enterprises (SMEs) who will invest in projects that stimulate innovative processes, products and services to meet today’s business challenges.

Description of support

The scheme will cofinance consultancy costs and investment costs in tangible and intangible assets as part of a holistic innovative project.

Target group

SMEs

Initiator and other actors involved

Malta Enterprise

Duration (please also indicate whether the measures has been initiated due to the recession)

Launched in 2008 up to 2013. Measure was not initiated to address the recession specifically.

Title

Investment Aid Scheme

Aim/objective

Investment Aid Tax Credits support enterprises in investment and job creation. The scheme is mainly focused on attracting new investment projects and promoting expansion or diversification of existing enterprises.

Description of support

Enterprises benefit from tax credits calculated as a percentage of the value which is set according to the enterprise size. Tax credits are computed as a percentage of either the value of capital investment or the value of wages for 24 months covering new jobs created as a result of an investment project. The tax credits which are not utilised during a particular year are carried forward to subsequent years.

Target group

The principle beneficiaries are enterprises engaged in manufacturing, ICT development activities, call centres, pharmaceuticals, biotechnology, filming and audio-visual industries.

Initiator and other actors involved

Malta Enterprise

Duration (please also indicate whether the measures has been initiated due to the recession)

Launched in January 2008 up to December 2013. Scheme was not introduced to address the recession. However, this scheme was revamped during the recession to offer assistance to enterprises that were mostly affected.

Title

SME Development Grant

Aim/objective

The main aim of the incentive is to support Small and Medium–sized Enterprises (SMEs) to develop and diversify their activities, penetrate new markets, increase competitiveness, develop new products and services, and consolidate their existing market share.

Description of support

Through this incentive Malta Enterprise may provide SMEs with part financing for the first time participation in an international business trade fairs and for subcontracting external experts in relation to new development projects.

Target group

SMEs

Initiator and other actors involved

Malta Enterprise

Duration (please also indicate whether the measures has been initiated due to the recession)

Launched April 2001 available till 31st December 2013. Measure was introduced to address the challenges linked to the financial recession.

Title

Capacity Building for Equipping and Representing Micro Business Employers CB4MicBEs

Aim/objective

To increase knowledge and training opportunities for Micro Businesses regarding different aspects such as legislation, effective leadership styles.

Description of support

This project will facilitate micro enterprises to have access to knowledge about labour market issues such as employment and occupational health and safety legislation through informational material which will be distributed. It facilitates participation in focused training sessions on human resources topics and enterprises may benefit from the services of the MEA, the entity responsible of this project.

Target group

Micro Businesses Employers

Initiator and other actors involved

MEA together with ETC, the Ministry of Finance, the Economy & Investment and RKW the German Centre for Productivity and Innovation.

Duration (please also indicate whether the measures has been initiated due to the recession)

Launched in 2010 and offered up to September 2012. Measure not initiated due to the recession.


2.2. In-depth description of ‘Good Practices’

Please choose up to three examples from the above list that can be considered as ‘Good Practice’ (e.g. because of their effectiveness, innovative character or beneficial cooperation among different stakeholders) and describe them in detail.

Table 7: Description of ‘Good Practice’ examples of recent support instruments

Name of the programme/instrument

Ibda n-Negozju Tieghek (INT) Scheme (Start Your Own Buisness)

Is the instrument explicitly addressing any of the following:

Self-employment

Hiring the first employee

Hiring additional employees/creating additional jobs in micro enterprises

Please ‘X’ and/or describe if relevant

X

   

Operational level

Local

Regional

National

Please ‘X’ and/or describe if relevant

   

X

Rationale/motivation for the instrument

(please describe)

This is a one stop entrepreneurship programme aimed at promoting an enterprise culture among those people who are interested in taking up self-employment by starting their own small business. The instrument, launched by ETC was motivated by the fact that the self-employment sector has diverse issues and challenges that need to be addressed. Furthermore, the ETC wanted to offer its unemployed and inactive clients a further choice to their career path. Whereas before, unemployed could only register for work with the Corporation, now they can decide to start-up their own employment.

Purpose and aims for the instrument (please describe)

The scheme aims to educate those interested in starting up their own business. It provides advice and consultancy, training, mentoring and finance to prospective entrepreneurs. The scheme aims to equip these people with the skills and experiences needed to operate satisfactorily in this sector. After this programme, individuals will be in a better position to make good decisions that will hopefully lead to a satisfactory business.

Initiator
Please ‘X’      
Other stakeholders actively involved in implementation (please name them and describe their roles)

Malta Enterprise is an active participator in this Scheme.

Target groups        
Please describe the target groups (sector, age, level of education, gender)

The scheme targets in general the unemployed and inactive. In particular it focuses on unemployed persons aged 40 and over; those who already have redundancy notices; women who seek to re-enter the labour market; university graduates; vocational graduates, and other individuals participating on other programmes offered by ETC.

Funding        
Please describe the funding of the instrument/programme (national and European sources, budget available)

All funding is Government funding, with a small contribution from ESF when it comes to training.

Activities    
Please describe the activities of the programme or institutional initiative as detailed as possible

This scheme is divided in four major activities. First, those interested in the scheme are given advice and consultancy, before actually applying. A detailed explanation is provided regarding the diverse issues and requirements involved when one is to set-up his/her own business. The benefits and assistance of the scheme are explained and this assists clients in making decisions based on factual information. The consultancy service is offered throughout the whole programme. Secondly, one starts receiving training based on creativity and an effective way to operate, including negotiating skills, managing time and change, business planning and legal aspects for SMEs. Following training, the client is offered the service of a personal mentor with experience and expertise in the same field, for a period of six months. Finally, a grant of €2, 329.37 is given to those unemployed participants, who provide a business plan, the required licence and a VAT registration.

Results (Effectiveness)      
Please describe the results e.g. number of beneficiaries, advised enterprises

There have been 17 groups of intakes, amounting to around 500 persons. However, after the advice and consultancy programme not all decide to start-up their own business. Till May 2011), 97 persons successfully started their own business, in diverse sectors, including hairdressers, confectionery, stationery, tile layers and beauty therapists.

Challenges in order to reach the objectives e.g. for the organisation offering the instrument, the entrepreneurs (Please describe); and if available how these have been overcome

The most reported challenges both for ETC and for scheme members were limited funds and bureaucracy. Both reported that one of the major stumbling blocks to start-up the business is the acquisition of a license from the responsible authorities. However, GRTU have been working to eliminate this bureaucracy.

Assessments of the effectiveness e.g. investments made in order to reach the objectives of the programme (outcome vs. investment) (Please base this assessment on evaluations when possible)

The assessment of the scheme’s effectiveness is the number of successful business start-ups, a 19.4% success rate.

Outcomes (Efficiency)  
Increasing self-employment, growth and employment e.g. number of start-up and/or jobs created etc. (please describe, preferably based on evaluations, otherwise on experts’ assessment)

The scheme is a successful one in increasing self-employment, as already quoted above, 97 businesses were successfully set-up through the scheme.

Please provide link to evaluation documents if possible

Not available

Example 2:

Name of the programme/instrument

Investment Aid Scheme

Is the instrument explicitly addressing any of the following:

Self-employment

Hiring the first employee

Hiring additional employees/creating additional jobs in micro enterprises

Please ‘X’ and/or describe if relevant

Operational level

Local

Regional

National

Please ‘X’ and/or describe if relevant

   

Rationale/motivation for the instrument

(please describe)

The scheme is designed to assist in Malta’s development by supporting investment and job creation. This aid promotes the expansion and diversification of undertakings located in Malta and to encourage other entities to set up new establishments.

Purpose and aims for the instrument (please describe)

The purpose of this incentive is to provide tax credits expressed as a percentage of the investment in qualifying expenditure. Investment Aid aims to award qualifying companies in respect to an initial investment project in relation to qualifying expenditure.

Initiator Social partners Public authorities Non-for-profit Others
Please ‘X’      
Other stakeholders actively involved in implementation (please name them and describe their roles)

No other stakeholders involved.

Target groups        
Please describe the target groups (sector, age, level of education, gender)

Manufacturing; Information and Communication Technology; Research, Development and Innovation; Eco-innovation, waste treatment and environmental solutions; Biotechnology; Facilities for filming and Audiovisual productions; Provision of tertiary education in the fields of science and technology; Provision of private health care services and Logistics operations by large undertakings.

Funding        
Please describe the funding of the instrument/programme (national and European sources, budget available)

National/Government funding and European Funding. The total amount of investment aid that may be awarded for a given investment project shall be: in the case of a company which qualifies as a ‘Small’ enterprise, never exceed 50% of the eligible expenditure; in the case of a company which qualifies as a ‘Medium’ enterprise, never exceed 40% of the eligible expenditure.

Activities    
Please describe the activities of the programme or institutional initiative as detailed as possible

The scheme supports enterprises in activities relating to an initial investment project comprising of any of the following: the setting up of a new establishment; extension of an existing establishment; diversification of the output of an establishment into new, additional products; a fundamental change in the overall production process of an existing establishment; the acquisition by an independent qualifying company of capital assets directly linked to an establishment which has closed or which would have closed had it not been purchased. Investment aid (tax credit expressed as percentage of investment) is calculated either in reference to tangible and intangible investment costs resulting from the initial investment project or to the value of wage costs for jobs directly created by the initial investment project.

Results (Effectiveness)      
Please describe the results e.g. number of beneficiaries, advised enterprises

Approximately 230 companies benefited from this scheme, including various enterprises such as Electronics, Aviation, Pharmaceuticals, Fabricated Metals and Electrical machinery.

Challenges in order to reach the objectives e.g. for the organisation offering the instrument, the entrepreneurs (Please describe); and if available how these have been overcome

To obtain the required documentation. GRTU has been working on eliminating this bureaucracy and ME itself through its introduction of the Business Centre.

Assessments of the effectiveness e.g. investments made in order to reach the objectives of the programme (outcome vs. investment) (Please base this assessment on evaluations when possible)

The relationship manager from ME stated that the greatest satisfaction of the effectiveness of this scheme was that, particularly during the difficult times of the financial recession, a good number of jobs were safeguarded.

Outcomes (Efficiency)  
Increasing self-employment, growth and employment e.g. number of start-up and/or jobs created etc. (please describe, preferably based on evaluations, otherwise on experts’ assessment)

No records available

Please provide link to evaluation documents if possible

Not available

Example 3:

Name of the programme/instrument

SME Development Grant

Is the instrument explicitly addressing any of the following:

Self-employment

Hiring the first employee

Hiring additional employees/creating additional jobs in micro enterprises

Please ‘X’ and/or describe if relevant

Operational level

Local

Regional

National

Please ‘X’ and/or describe if relevant

   

Rationale/motivation for the instrument

(please describe)

The main aim of the incentive is to support SMEs to develop and diversify their activities, penetrate new markets, increase competitiveness, develop new products and services, and consolidate their existing market share. Through this incentive ME may provide SMEs with part financing for the first time participation in an international business trade fairs and for subcontracting external experts in relation to new development projects.

Purpose and aims for the instrument (please describe)

This incentive aims to support Micro, Small and Medium-sized enterprises in acquiring expert advice on issues that are not of a routine nature and in participating as an exhibitor, for the first time or to exhibit a new product in a particular international trade event.

Initiator Social partners Public authorities Non-for-profit Others
Please ‘X’      
Other stakeholders actively involved in implementation (please name them and describe their roles)

No other stakeholders are involved.

Target groups        
Please describe the target groups (sector, age, level of education, gender)

All Micro, Small and Medium-sized Enterprises (SMEs) engaged in one or more of the following activities are eligible to apply for aid under this incentive: Manufacturing; Maintenance, Repair and Overhaul (M.R.O.) of: equipment, engines, plant and machinery, pleasure crafts and yachts, heavy equipment, aircraft; Rendering of industrial services directly related to (i) and (ii) above; ICT development activities, software development, and ICT enabled services but excluding enterprises engaged in gaming and telecommunications; R&D and Innovation; Waste Treatment, Environmental solutions and eco-innovations; Biotechnology; Other start-up enterprises proposing innovative products, services and process development, which are typically more advanced than those prevailing in their respective industry, in terms of technology, know-how and skills, shall be considered for aid under this incentive.

Funding        
Please describe the funding of the instrument/programme (national and European sources, budget available)

National/Government funding and European Funding. Under this incentive undertakings can benefit from a maximum of € 10,000 in one calendar year.

Activities    
Please describe the activities of the programme or institutional initiative as detailed as possible

The main activities of the scheme involve: Expert support - Part-financing of up to 50% of cost covering the services provided by external experts. Provided that such services are not acquired by the beneficiary to cover services which are of a continuous nature or are provided periodically and relate to the undertaking’s usual operating expenditure, such as routine consultancy services, advertising, regular legal services and business plans. First time participation in international fairs as an exhibitor, part-financing of up to 50% of costs directly related to renting, setting up and running a stand in respect to an enterprise’s first time participation as an exhibitor in a particular fair or exhibition and the first time an enterprise is exhibiting a new product at a particular fair or exhibition. All complete applications that meet the terms and conditions set in these guidelines will be assessed by Malta Enterprise. Applicants will be considered for funding if the requested funding should lead to: increase in employment or increase in the number of knowledge workers employed; innovative processes, products or services; increased investment and improved market positioning or the development of new markets.

Results (Effectiveness)      
Please describe the results e.g. number of beneficiaries, advised enterprises

Approximately 45 companies benefited from this scheme.

Challenges in order to reach the objectives e.g. for the organisation offering the instrument, the entrepreneurs (Please describe); and if available how these have been overcome

Not available

Assessments of the effectiveness e.g. investments made in order to reach the objectives of the programme (outcome vs. investment) (Please base this assessment on evaluations when possible)

Not available

Outcomes (Efficiency)  
Increasing self-employment, growth and employment e.g. number of start-up and/or jobs created etc. (please describe, preferably based on evaluations, otherwise on experts’ assessment)

Approximately 45 companies benefited from this scheme, including various enterprises such as Electronics, Aviation, Pharmaceuticals, Fabricated Metals and Electrical machinery. Some of the companies benefitted more than once under the same scheme

Please provide link to evaluation documents if possible

Not available

Part 3: Annex: Update on recent self-employment study

The recent European Employment Observatory Review on self-employment 2010, European Commission, Directorate-General for Employment, Social Affairs and Equal Opportunities provides insight into support instruments for self-employment. To avoid duplication of this information, we ask you as National Correspondent to omit these measures already covered in your research (Part 2 of this questionnaire), and only update or add any additional details or measures that exceed the information already provided in this report.

Table 8: Additional information on specific instruments to the EEO national report on self-employment:

Title of the instrument

The Business Support Centre (BSC)

Additional information

The project is still underway; however the staff of Malta Enterprise, the Corporation responsible for this Centre, underwent intensive training. By end of 2011, the Centre should be up and running.

Table 9: Please add any other comments to the EEO national report on self-employment:

Self-employment is likely to continue to receive prominence in Government’s agenda, since self-employed individuals form the backbone of our economy. In order to incentivise growth of this sector and provide assistance to self-employed individuals, ME will continue to offer specialised tax credit schemes to encourage individuals to innovate, expand, invest and develop their operations. Government aims to continue to revise and extend training and support for jobseekers wishing to take up self-employment.

Table 10: Please indicate ‘X’ if you have no additional information to the EEO national report on self-employment:

Please indicate ‘X’ if you have no additional information to provide

 

Commentary

Christine Farrugia, Centre for Labour Studies

The most common form of entrepreneurship in Malta is the one person, self-employed type of enterprise. Public and/or social partner based support instruments to support self-employment and job creation in one-person and micro enterprises' are likely to continue to feature high on the Government’s agenda. Malta’s economy is still facing the effects of the international recession, mostly because of the drop in tourism arrivals and the difficulties that have been experienced by exporting manufacturing companies. The Maltese Government has embarked on a number of measures and reforms with a view to mitigate the impact of these challenges whilst at the same time ensuring that Malta improves its attractiveness to foreign investors. In its efforts, the Government is focusing on introducing and encouraging entrepreneurship. Training in entrepreneurship is becoming more common in higher education institutions such as the University of Malta and the Malta College of Arts, Science and Technology (MCAST). Economists argue that besides continuing with individually-structured aid packages, Government would be wise to cut down on its recurrent budget and spend even more on infrastructural job-creating projects

* Interviews held:

Ms Orietta Mallia – Senior Executive - Relationship Management Malta Enterprise

Mr Joe Bezzina – Senior Executive - Training Services Division ETC

Ms Abigail Mamo – Head EU Desk -GRTU Chamber of SMEs



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