The closure of Malta Shipyards in March 2010 marked the end of a highly visible enterprise in the Maltese economic and political arena. In the end, the Maltese government and the General Workers’ Union failed to agree on the future of the 59 workers still employed by Malta Shipyards. GWU insisted that these workers should continue working for the new owners of Malta Shipyards rather than being given alternative employment.
Developments leading to closure of Malta Shipyards
The naval dockyard had been the mainstay of the Maltese economy during colonial times. After its conversion into a commercial enterprise, it was appropriated by the Maltese government in 1968, four years after the attainment of political independence, under the name of Malta Drydocks Corporation (MDC). Beset by economic problems, MDC unnerved every successive government. Apart from the six year period 1975–1980, during which it registered a profit, the company has always been in debt and thus its survival had depended on heavy state subsidies.
In 2003, prior to Malta’s accession to the European Union in May 2004, MDC merged with the Malta Shipbuilding Company, another state-owned enterprise, to become Malta Shipyards Ltd. The new company started its operations following a downsizing exercise in which 900 employees were declared redundant. Subsequently, a collective agreement was signed in November 2003 by the government and the General Workers’ Union (GWU). The collective agreement contained clauses prescribing new working time arrangements aimed at cost-cutting and reorganising work practices (MT0312102N). This agreement was part of a multi-restructuring plan agreed between Malta and the EU, which provided substantial support with the aim of restructuring the company into a profitable enterprise by the end of 2008, by which time the Malta-European Accession Agreement stipulated that subsidies would stop.
Despite these substantive and procedural changes, by the middle of 2008 the enterprise had failed to become economically viable. In August 2008, the government started the privatisation process. After considerable conflict, the government and GWU signed an agreement, offering workers an early retirement scheme and severance pay packet. Malta Shipyards was liquidated in March 2010, ending the privatisation process.
Disagreement over fate of 59 workers
In the last phase of this process, a dispute arose between the Maltese government and GWU. The trade union insisted that, according to the agreement reached with the government, the owners who had taken over the operations of the ship repair section were bound to employ the 59 workers, who – having decided not to opt for the early retirement scheme – were still working at the enterprise until its liquidation. These workers were transferred to a state-owned enterprise, Industrial Projects and Services Limited. GWU accused the government of pandering to the wishes of the new owners, Palumbo SPA (the transferee), which wanted to start their operations with a clean slate.
During a parliamentary session of the European Parliament, Professor Edward Scicluna, a Maltese Member of the European Parliament (MEP), pointed out that the decision not to employ these 59 employees goes against the EU Acquired Rights Directive, which binds the transferee company to employ the workers still employed by Industrial Projects and Services Ltd on the day the transfer takes place. The directive states that ‘Member States shall take appropriate measures with a view to preventing misuse of insolvency proceedings in such a way as to deprive employees of the rights provided for in this Directive’ (Council Directive 2001/23/EC, Article 5(4)).
Commentary
Some commentators strongly believe that the closure of Malta Shipyards was inevitable, as all reforms since 1982 had been fruitless. For these commentators, the company’s closure is perceived to be the final chapter of a protracted process. In GWU’s view, the closure marks the demise of the base to which it owes its roots and which has consistently been its bastion of support. GWU maintained that the enterprise had all the ingredients for success, such as a strategic location, good infrastructure and a skilled workforce; the trade union blames its failure on mismanagement. Indeed, GWU maintained that the bulk of the financial loss registered in 2009 was due to a mismanaged contract, which proved to be a loss-making venture before it had begun. According to the auditors’ report, the loss incurred through this venture amounted to €35 million. The trade union claimed that it was higher.
Despite the continuous disputes underway during the privatisation and liquidation process, the government and GWU managed to find amicable solutions over a number of issues. The exception was the dispute related to the 59 workers still in employment on the day of liquidation, whom the trade union is still insisting should be employed by the owner taking over the operations of the ship repair section.
Saviour Rizzo, Centre for Labour Studies