29th June 2008
The Malta Independent on Sunday
The Malta Independent on Sunday
The
government seems to be getting itself geared for serious business after a lull
of some three months during which the political agenda was ceded to Labour’s
internal reformation.
The privatisation of the shipyards is a first test the government is putting to the “new generation” Opposition to force it out of the we-all-love-each-other mode the new Labour leader has adopted since his appointment.
Quite rightly, Labour is not opposing privatisation as a matter of principle. The Maltese taxpayer has a wide representation among the ever-growing uncommitted voter sector, which Labour has to attract its way if it is to become a winning generation, rather than merely a new political season. And the taxpayer has little appetite for carrying further burdens to subsidise our shipyards, which have not rendered a commercial profit since 1981, in spite of various waves of costly re-organisations. Privatisation cannot therefore be ruled out, especially if the default solution in the absence of more subsidies would then be bankruptcy and closure.
There are however privatisations and privatisations and, while accepting the principle, one has to be careful to ensure that it is conducted with due integrity and effectiveness. The Maltese taxpayer has been short-changed for far too long, as it was forced to finance round after round of restructuring and always led to believe that it would deliver financial sufficiency and commercial turnaround, yet always finding out that, like Oliver Twist, the shipyards kept regularly coming back for more. It would be tragic if the Maltese taxpayer were short-changed again in the process of the shipyards privatisation.
Privatising the shipyards is comparable only to the privatisation of the Freeport. It has not much to do with privatisations of banks, Maltacom, Maltapost, MIA and others, which largely operated in the local market and accordingly had a good track record of commercial viability.
Like the Freeport and probably more so, the shipyards have no local market of significance and their major asset is the infrastructure and its human capital, which, if properly managed, can be as efficient and resourceful as their peers in the private sector. Thankfully, unlike the Freeport, the shipyards are free from the dominance of a single client who, in the case of Freeport, found it convenient and possible to shape the process of privatisation its way.
The infrastructure is too precious and strategic to part with on a permanent basis. So privatisation parameters need to be established to define on what terms the government expects private operators to make use of such facilities. The government must also advance some ideas as to what actually is being offered. Is it the whole set-up as is under Malta Shipyards at present, or can it be broken down into components that can be privatised separately? Is Marsa to be lumped with the traditional dockyards or will it be treated separately?
Furthermore, the government must be clear about what obligations, vis-à-vis employees, it expects the winning bidder to assume. Is it expecting the private owner to take over the employees and then shed off labour through voluntary schemes, tying the winning bidder down to a period of no redundancies as was done in the Maltacom’s case? This process would inevitably deflate the privatisation price.
Or does the government intend to downsize the workforce in advance in order to secure a better privatisation price?
What studies has the government undertaken in order to arrive at a commercially feasible size of the workforce, bearing in mind that in the last round of re-organisation we were informed that further downsizing of the workforce would seriously jeopardise its commercial viability because of lack of economies of scale? Where does the truth lie? Has the truth changed or is it being adjusted to suit a pre-determined objective?
The shipyards problem did not surface yesterday. It has been in the making for over two decades. The much hoped for efficiency gains never materialised and the government seems to have accepted that under public ownership they never will. The diversification into growth areas of the marine industry where there was consistent growth (especially the leisure side related to yachts and cruise liners) remained unfulfilled, as for some reason or another our shipyards never teamed up in joint ventures with technical operators who had the expertise to develop these lines of diversification. Even less fulfilled was the ambition to branch out of marine altogether and develop “green energy” products like solar panels and components for wind energy projects.
So before hitting us with newly acquired wisdom (that seems to have been known to all except the unions and the government) that privatisation is the only way forward for our shipyards, the government should publish whatever studies it has about what led to failures of past rounds of restructuring and the best way forward to a successful privatisation, which does justice both to the workforce but certainly, and not least, to the taxpayer. If such studies are not available in spite of the problem being 21 years in the making, then it does not augur well for a privatisation that protects the national interest.
Circumstances like these convince me all the more about the need to remove the apartheid prevailing in our labour markets and start treating all workers threatened with redundancy with equal dignity, irrespective of whether their employer is public or private.
Winning in a globalised world demands labour flexibility not normally acceptable in publicly owned enterprises. This is largely the principal motivator to privatise operations that traditionally were performed in the public sector.
But in the meantime, it is scandalous if we continue to leave redundant workers in the private sector at the complete mercy of market mechanism while we continue to feather bed workers made redundant through privatisations. We should create a common mechanism for both, where the emphasis is on retraining and where organisations discharging employees through redundancies continue to pay part of the salary during the re-training period to ensure that, added to the unemployment social benefits, the employees involved suffer the least possible until they are placed in new productive employment.
Such redundancy mechanism against known and fair rules will render our economic operators more competitive knowing they have a facility to shrink their workforce, without causing social disruption, in order to remain competitive. The ability to shrink a work force is a strong motivator to grow one in the first place.
The privatisation of the shipyards is a first test the government is putting to the “new generation” Opposition to force it out of the we-all-love-each-other mode the new Labour leader has adopted since his appointment.
Quite rightly, Labour is not opposing privatisation as a matter of principle. The Maltese taxpayer has a wide representation among the ever-growing uncommitted voter sector, which Labour has to attract its way if it is to become a winning generation, rather than merely a new political season. And the taxpayer has little appetite for carrying further burdens to subsidise our shipyards, which have not rendered a commercial profit since 1981, in spite of various waves of costly re-organisations. Privatisation cannot therefore be ruled out, especially if the default solution in the absence of more subsidies would then be bankruptcy and closure.
There are however privatisations and privatisations and, while accepting the principle, one has to be careful to ensure that it is conducted with due integrity and effectiveness. The Maltese taxpayer has been short-changed for far too long, as it was forced to finance round after round of restructuring and always led to believe that it would deliver financial sufficiency and commercial turnaround, yet always finding out that, like Oliver Twist, the shipyards kept regularly coming back for more. It would be tragic if the Maltese taxpayer were short-changed again in the process of the shipyards privatisation.
Privatising the shipyards is comparable only to the privatisation of the Freeport. It has not much to do with privatisations of banks, Maltacom, Maltapost, MIA and others, which largely operated in the local market and accordingly had a good track record of commercial viability.
Like the Freeport and probably more so, the shipyards have no local market of significance and their major asset is the infrastructure and its human capital, which, if properly managed, can be as efficient and resourceful as their peers in the private sector. Thankfully, unlike the Freeport, the shipyards are free from the dominance of a single client who, in the case of Freeport, found it convenient and possible to shape the process of privatisation its way.
The infrastructure is too precious and strategic to part with on a permanent basis. So privatisation parameters need to be established to define on what terms the government expects private operators to make use of such facilities. The government must also advance some ideas as to what actually is being offered. Is it the whole set-up as is under Malta Shipyards at present, or can it be broken down into components that can be privatised separately? Is Marsa to be lumped with the traditional dockyards or will it be treated separately?
Furthermore, the government must be clear about what obligations, vis-à-vis employees, it expects the winning bidder to assume. Is it expecting the private owner to take over the employees and then shed off labour through voluntary schemes, tying the winning bidder down to a period of no redundancies as was done in the Maltacom’s case? This process would inevitably deflate the privatisation price.
Or does the government intend to downsize the workforce in advance in order to secure a better privatisation price?
What studies has the government undertaken in order to arrive at a commercially feasible size of the workforce, bearing in mind that in the last round of re-organisation we were informed that further downsizing of the workforce would seriously jeopardise its commercial viability because of lack of economies of scale? Where does the truth lie? Has the truth changed or is it being adjusted to suit a pre-determined objective?
The shipyards problem did not surface yesterday. It has been in the making for over two decades. The much hoped for efficiency gains never materialised and the government seems to have accepted that under public ownership they never will. The diversification into growth areas of the marine industry where there was consistent growth (especially the leisure side related to yachts and cruise liners) remained unfulfilled, as for some reason or another our shipyards never teamed up in joint ventures with technical operators who had the expertise to develop these lines of diversification. Even less fulfilled was the ambition to branch out of marine altogether and develop “green energy” products like solar panels and components for wind energy projects.
So before hitting us with newly acquired wisdom (that seems to have been known to all except the unions and the government) that privatisation is the only way forward for our shipyards, the government should publish whatever studies it has about what led to failures of past rounds of restructuring and the best way forward to a successful privatisation, which does justice both to the workforce but certainly, and not least, to the taxpayer. If such studies are not available in spite of the problem being 21 years in the making, then it does not augur well for a privatisation that protects the national interest.
Circumstances like these convince me all the more about the need to remove the apartheid prevailing in our labour markets and start treating all workers threatened with redundancy with equal dignity, irrespective of whether their employer is public or private.
Winning in a globalised world demands labour flexibility not normally acceptable in publicly owned enterprises. This is largely the principal motivator to privatise operations that traditionally were performed in the public sector.
But in the meantime, it is scandalous if we continue to leave redundant workers in the private sector at the complete mercy of market mechanism while we continue to feather bed workers made redundant through privatisations. We should create a common mechanism for both, where the emphasis is on retraining and where organisations discharging employees through redundancies continue to pay part of the salary during the re-training period to ensure that, added to the unemployment social benefits, the employees involved suffer the least possible until they are placed in new productive employment.
Such redundancy mechanism against known and fair rules will render our economic operators more competitive knowing they have a facility to shrink their workforce, without causing social disruption, in order to remain competitive. The ability to shrink a work force is a strong motivator to grow one in the first place.
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