The Price of Inefficiency

The Malta Independent



I well remember the days when a new Labour Government found that a relatively young state owned company endowed with running a monopoly of postal services (POSTA Ltd) had in fact lost millions in its international operations and had to be liquidated.

The obvious option was reverting postal services to a government department. I was against this idea. Postal services are a commercial operation and if well run they should leave commercial profits leading to a responsible privatisation. As a government department the development of the commercial culture would have been suffocated.

I convinced the responsible Minister and the Prime Minister that the real solution would be the creation of a new commercial organisation in which Malta`s main bank (Mid-Med Bank which I was at the time chairing) would team up with Malta`s national telecom company to form a new organisation in which the government would keep 40% shareholding. That is how Maltapost was created in spring of 1998.

`Corporate leadership was changed to more friendly political faces, the business plan was shelved, work methods stayed as they were and new employees started being engaged. All the tough negotiations made with the unions were nullified. ` In the run up to the start of operations we conducted tough negotiations with the government and the unions to reach agreement on how employees surplus to operational requirement could be offered to revert to their previous job in the public sector, on how work methods had to be changed to bring about the necessary efficiency and on training programmes to render the front office of the company more customer friendly introducing fresh business lines complimentary to the shareholding organisations.

We sought the technical services of the best of the breed, Deutsche Post, after getting other quotations from Swiss Post. Without offering any equity participation and for a very moderate payment Deutsche Post helped us to put together a business plan which started to be implemented within months, only to be interrupted by the on-set of an unexpected election campaign. Amongst other things Deutsche Post helped us to reach an agreement with a German philately specialist organisation that for being given rights to distribute internationally our stamps had to print all our postage stamps free of payment.

`That in essence is what the EU project is all about.` A tool to make up for government`s inability to manage and administer change after 15 years of laissez-faire.` On change of administration the whole project was stalled in its tracks. Corporate leadership was changed to more friendly political faces, the business plan was shelved, work methods stayed as they were and new employees started being engaged. All the tough negotiations made with the unions were nullified. After turning an organisation which made substantial profits in its first 8 months of operation into a loss-making one, the government proudly announced a deal with NZ post. For technical services to be paid at very handsome rates, the Kiwis were given 35% equity and a management agreement which put them in charge of operations. For the first time in history Maltese postal services were being run by expatriates.

We were promised efficiency, growth, increase in employment and attraction of regional and international postal business. A new business plan was approved but never published.

Time makes us all wiser.` Postal rates have been increased. Postal service has shown little if any improvement. The grand move to a new premises is no longer talked about. International business is nowhere to be seen. The business plan of Deutsche Post has been re-activated with a great difference. The company needs to shed off over two hundred workers, we are told. After going on an employment spree when it was clear that the organisation needed re-deployment not additional resources, now the workers have to pay the price for management`s inefficiency. And we pay foreign organisations to do the dirty job and take the profit from the resultant operational cost-cuts.

It is clear this administration cannot bring change without the help of foreign agents. That in essence is what the EU project is all about.` A tool to make up for government`s inability to manage and administer change after 15 years of laissez-faire.