NEWS | Wednesday, 09 July 2008

Surcharge: “SMEs to suffer the hardest blow” - FOI

Charlot Zahra

The social partners who spoke to Business Today were highly critical of the Government’s decision not to consult with them before announcing the fuel surcharge hike from 50 per cent to 95 per cent last week.
General Workers’ Union (GWU) Secretary General Tony Zarb said: “The fuel surcharge announced unilaterally by government is going to present a huge burden to all the Maltese families. Not only, but it will also have ripple effects on the national economy.”
Asked whether the Union was consulted before the MCESD meeting, Zarb complained: “The GWU was never consulted by the government before its decision to increase the fuel surcharge.
“As a matter of fact, the GWU, like other social partners has condemned the government for deciding unilaterally on such a sensitive and important matter,” he told Business Today.
On his part, Union Haddiema Maghqudin (UHM) Secretary-General Gejtu Vella told Business Today that the 95 per cent price hike in the fuel surcharge “will certainly impact negatively on all families particularly those with low income.
“Notwithstanding that for the first time, Government has awarded in anticipation €2.33 to all workers and pensioners in addition to the €1.16 granted as weekly COLA for the current year, the fuel surcharge will wipe out these increases.
“Workers, pensioners and their dependants will inevitably be adversely hit twice, as one may expect, due to the hefty increases in the surcharge tariff.
“Once through the direct increase in fuel surcharge and another round of negative effects on the standard of living through the services and products price hikes,” he told Business Today.
On the issue of consultation, Vella said: “Regretfully, Government has failed to consult properly on this sensitive issue both with UHM and the other trade unions. The employers’ side has also highlighted this shortcoming during the last MCESD meeting.
“Apart from the lack of proper consultation, the UHM is of the opinion that while fuel surcharge has sky rocketed, no effective alternative energy strategy has been shaped or adopted at national level,” Vella told Business Today.
On the employers’ side, Malta Employers’ Association (MEA) Director-General Joseph Farrugia told Business Today: “The news of the surcharge is definitely bad news to everybody. Although it is a reflection of the global situation, there can be no denying that the sudden increase will be a shock to businesses and families.
“The impact of the surcharge can only be alleviated through careful purchasing of fuel supplies, and through a set of policies that will decrease the chronic dependency on fossil fuels.
“This has been ignored by government and Maltese society in general for too long and now we are paying the price,” Farrugia warned.
The MEA was also critical of the Government’s decision not to consult the social partners before introducing the fuel surcharge.
“Although there is the argument that the government simply adhered to a system of surcharge that was established some years ago, and therefore there was no need for consultation with the social partners, I think that given the extent of the increase and its impact on everybody, consultation at MCESD would have been in order.
“The MEA would have expected a meeting to discuss the situation and to be offered the possibility to present different options. Such a meeting has, in fact, been requested at MCESD and should take place in the coming weeks,” Farrugia told Business Today.
Asked whether the support shown to large enterprises through the capping mechanism created an non-level playing field as SMEs keep taking the plunge, Farrugia said: “The capping to large enterprises is a responsible and necessary measure to safeguard thousands of jobs.
“Many SMEs also depend on the survival of large enterprises for their business so such price discrimination is also in their interest,” the MEA Director-General told Business Today.
On his part, Federation of Industry (FOI) Director-General Ray Muscat told Business Today that prior to the surcharge revision, local industry was already bearing the brunt of additional fuel costs when importing raw materials and exporting finished products.
“The revised surcharge will add to this burden, affecting industry both directly, and indirectly, the latter including increase in transport and material costs, supporting services and potential labour demands.
“This is expected to have a significant impact on all sectors across industry, with thousands of Small and Medium sized enterprises suffering the harshest blow,” Muscat told Business Today.
The FOI Director-General was also critical of the fact that Government did not consult with the social partners before the fuel surcharge was announced. “The Federation did expect to be consulted on this serious issue. The fact that it wasn’t is highly regrettable, since it so strongly affects the many SMEs that are members,” he told Business Today.
The FOI Director-General said that the capping system that has been adopted to date had a positive effect on industry and hotels, which depend on a heavier consumption of electricity.
“Doing away with the capping and increasing of the surcharge would lead to significantly increased costs of operation and thus further erosion of profits of the companies involved,” he insisted.
The Malta Chamber of Commerce and Enterprise (COC) skirted the issue of prior consultation in its replies, insisting that in view of the rising operational costs for its members – due to the increase in the country’s energy bill – at this stage, energy conservation measures are key if the Maltese business community is to maintain its competitiveness.
The Chamber reiterated its stand that “whatever action which needs to be taken, has to seen and inserted in the international context of rising fuel prices, and thus, any claims which do not make this consideration are futile and unrealistic”.
COC President Tancred Tabone told Business Today: “The Chamber is adamant that the discussion taking place within the Malta Council for Economic and Social Development is to focus on the way forward – including the consideration of viable means of conserving energy – and surely not on short-term measures which will eventually come back to haunt us in the near future.”
Moreover, he added that in its regular meetings with Government, the Chamber has been advocating various options which might go beyond the use of solar and wind energy – such as the connection of the island to the European energy grid.
“It is imperative that this issue is discussed and considered from a national perspective and surely not from any sectoral point of view, as this is affecting everyone and not just a particular section of the population,” Tabone told Business Today.

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