European Trade Union Institute, ETUI.

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Industrial Relations in Malta – Background Summary

There are 99,067 trade union members in Malta, according to the latest statistics from the Registrar of Trade Unions. With 196,700 people in the labour force as of September 2017 this represents a trade union density of 50.36 %.

It should, however, be noted that this figure is open to contestation as the membership of the two largest Maltese trade unions, namely the GWU and the UĦM include 11,381 who are members of the pensioner sections of the respective unions. If these pensioners were to be deducted from the list of these two unions, on the assumption that most of them are not active in the labour market, actual trade union density would be 44.6%.

Bucking, apparently, the European trend somewhat trade union membership has shown a steady increase over several years. However, this is likely due to the fact that there has been a significant increase in the number of people joining the labour force. The three years up to June 2016 registered an increase of 24,350 full time employees, 90 % of whom work in the private sector. The increase in trade union membership described above does not, therefore, match this higher rate of activity in the labour market. The mismatch may be an indicator of the failure of the Maltese trade unions to recruit members from newly established industries in Malta which are mainly to be found in sectors such as gaming, financial intermediation, personal care, catering, hospitality and construction.

What this implies is that the Maltese trade unions are finding it difficult to widen their constituency, as all the signs indicate that they are still tied to their core membership - which mainly comprises the traditionally highly unionized workers employed in the manufacturing and public sectors.

The Maltese trade union movement is dominated by two large general trade unions. These are:  the General Workers Union (GWU), with about 50% of unionized workers, while the Union Ħaddiema Maghqudin (Voice of the Workers, UHM) union represents just over a quarter of Maltese trade union members. UHM is affiliated with the Confederation of Malta Trade Unions, which represents bank employees and professionals such as pharmacists, psychologists and doctors.

Employees not registered with these two organisations are represented by FORUM, a loose confederation of unions comprising clerical workers and professional employees such as nurses, teachers, architects, engineers and university academic staff. 

Collective bargaining takes place predominantly in the union strongholds of manufacturing and the public sector. Workers in these sectors are very likely to be covered by a collective agreement. Except for the collective agreement signed between the government representatives and the seven unions representing different categories of employees in the public sectors, all other collective bargaining agreements take place at company level. The lack of multi-employer and sectoral collective agreements means that employers’ associations are not directly involved in collective bargaining.

The three social partners have never raised any objections to this decentralised system of collective bargaining. The employers contend that the system ensures that wage increases, and other factors being bargained and agreed upon, will be more in tune with the exigencies of each particular firm and thus ensure flexibility in setting wages.

The Maltese government prioritises maintaining competitiveness in a small, open economy. It regards wage flexibility built into the enterprise-level collective bargaining system as an important means of imposing wage restraint. In the institutional context of a small island sovereign state, with little regional political or economic autonomy, this decentralized collective bargaining system tends, however, to reinforce the strength of the trade unions at company level. Indeed, it is seen as conducive to maintaining healthy social dialogue between the trade union and the management of the firm in instances where the union has won recognition to negotiate and sign a collective agreement.

One effect of bargaining decentralization is that the pay gap between the public and private sectors is widening.  According to national survey data from 2015, 55.8% of active workers are covered by a collective agreement. Public sector employees are covered by a collective agreement which is generally reviewed every five or six years. The last agreement was signed in 2017 and covers a period of eight years.

The key issue in the collective agreements is wage increases over and above the annual statutory wage increase, often referred to as Cost of Living Allowance (COLA) which is given to all employees. However, the collective agreements in the public sector have consistently included family friendly measures. The COLA increase is based on the retail price index. In spite of pressures from employers, often backed by the EU Commission, to do away with COLA the Maltese government, irrespective of which party happened to be in office, has consistently opted to retain it as it is believed to contribute to harmonious industrial relations.

Another factor contributing to industrial harmony is the Malta Council of Economic and Social Development (MCESD), which is the tripartite institution for social dialogue at national level. It was set up 1990 to bring about a higher-level consensus on issues related to employment and industrial relations. In 2001 it was given legal status by the enactment of the MCESD Act which spelled out clearly its composition and defined its advisory and consultative role.

Another tripartite institution consisting of representatives from the social partners is the Employment Relations Board (ERB). It was set up in accordance with the provisions laid down in the Employment and Industrial Relations Act to make recommendations on national standard conditions of employment and to give advice on any matter relating to conditions of employment. The chairperson of this board is appointed by the relevant Minister, while the director responsible for Employment and Industrial Relations acts as a deputy chair person. The Minister appoints three other persons to this board. The representatives of the employers and the unions forming part of this board are nominated by MCESD from amongst the organizations sitting in this council. 

The setting up of these institutions may be seen as part of an exercise to assimilate employment relations in Malta more into the European model. Despite these attempts, the Maltese industrial relations system has retained many elements of the Anglo-Saxon system - a legacy of the 164 years of British rule in Malta.  

Prior to the transposition of Directive 2002/14/EC establishing a general framework for informing and consulting employees, work councils in Malta were non-existent. The general feeling is still that these work councils, if they have been set up according to the law, have kept a very low profile since there have been no reports or references to their operations. Employee Board level representatives used to be present in enterprises owned or run by the state, but all of these posts have been abolished by the minister in charge of these entities. The last post to be abolished in 2007 was the worker director at the Bank of Valletta where the government has a 25% shareholding.

The absence, or low profile, of statutory work-place representation in an industrial relations system based more on the Anglo-Saxon than European model impels shop stewards to play a multiplicity of roles. Indeed, trade union representatives at the workplace level tend to assume the role of an interlocutor between union, workers and management.

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