The government has announced its intention to abolish the practice of having an employee representative on the board of the Bank of Valletta, of which it is the major shareholder. The abolition of this post, generally referred to as the ‘worker director’, marks the last remnant of employee participation in Malta’s public sector. While the General Workers’ Union expressed its opposition to the decision, the banking trade union seemed to tacitly approve of the move.
Background
The notion of employee participation schemes in Malta was considered a powerful tool in the decolonisation process, as it signified a shift in the industrial relations system from one based on the British oppositional framework to a European model. One of the participation schemes involved the appointment of an employee representative (in addition to government representatives) at board level – generally defined as a ‘worker director’ – in state-owned or run enterprises.
Although the worker director became well established in these enterprises, no legal provision existed for this post. In other words, the worker director’s appointment was at the discretion of the minister under whose portfolio these enterprises fall. The expendability of this post, owing to the lack of a legal framework, has been fully exploited over the last six years: virtually all of the worker director posts have been abolished, either following privatisation processes or on the basis of a unilateral decision taken by the appropriate minister.
Bank of Valletta case
The Maltese government recently announced that it plans to abolish the post of worker director at the Bank of Valletta (BOV), of which the government as a major shareholder has the right to appoint the chairperson. The bank is the only remaining company quoted in the Maltese stock exchange with an employee board-level representative. The government blamed the international financial crisis for the removal of this post. A spokesperson for the Ministry of Finance, the Economy and Investment, which is responsible for the bank’s operations, was quoted as saying that, due to the global financial crisis, the government has considered it necessary to have its own representative on the board in order to safeguard ‘the overarching needs of the bank’.
Reactions to government decision
The Secretary of one of the eight sections within the General Workers’ Union (GWU) – Cory Greenland of the Professionals, Finance and Services Section – appealed to the Minister of Finance, Tonio Fenech, to revise his decision. Mr Greenland stated that the presence of an employee representative at board level has been beneficial both for the shareholders and for the employees who are the main stakeholders of the bank. GWU contended that the present financial crisis calls for more rather than less workers’ participation. The union added that it had never been consulted about this issue and that it had only been informed of the decision by sources close to the bank.
On the other hand, the Malta Union of Bank Employees (MUBE) kept a low profile on this issue. When pressed by a local newspaper to air his views, the President of MUBE, William Portelli, was quoted as saying that since the minister has the right to terminate the post of worker director, there was no need for the union to apply pressure on the government to retain this post. Mr Portelli added that it was reasonable for the government to insist on having its own representative on the board during this financial crisis. During a conference held by the Centre for Labour Studies (CLS) at the University of Malta, MUBE’s president was notable by his absence. As reported in the press, the president felt that he did not have much to say on this issue.
The conference was chaired by a former rector of the university, Peter Serracino Inglott, who has also acted as an advisor to the Nationalist Party (Partit Mazzjonalista, PN), now in office for 20 years. Mr Serracino Inglott unequivocally stated that the government’s decision represented a retrograde step. He even argued that the ‘suppression of the last remnants of workers’ participation runs counter to one of the fundamental principles of the Nationalist Party’. In an article in a local newspaper, the former university rector added that this policy is diametrically opposed to PN’s basic policy statement, and that its reversal is being brought into effect almost surreptitiously, without having been submitted for discussion by any of the appropriate parties.
Commentary
The decision to abolish the post of worker director was implemented at the BOV annual general meeting, held on 17 December 2008. The abolition of this post adds to the long list of other board-level representatives whose posts have been abolished in recent years. In this case, some signs of resistance from the GWU were visible. The lack of any protest from MUBE is difficult to explain, considering that the president of this union is also currently President of the Confederation of Malta Trade Unions (CMTU), which is in turn an affiliate of the European Trade Union Confederation (ETUC). Given that such a decision goes against the principles affirmed by ETUC – which in its memoranda insists that employee board-level representation should feature in the new corporate governance being designed by the European Commission – Mr Portelli’s tacit approval of the government’s decision is rather puzzling.
Saviour Rizzo, Centre for Labour Studies