ALL_Dissertation_Final.doc

Developmental changes in Industrial Relations and Industry: their Impact on Human Resources Management Enzo Cachia A dissertation submitted in partial fulfilment of the requirements of the Degree of Work and Human Resources (Honours) Centre for Labour Studies in collaboration with the Faculty of Economics, Management and Accountancy University of Malta May 2015  UNIVERSITY OF MALTA FACULTY/INSTITUTE/CENTRE: Centre for Labour Studies DECLARATION Student’s I.D.: 252769(M) Student’s Name & Surname: Enzo Cachia Course: Bachelor in Work and Human Resources (Honours) Title of Dissertation: Developmental changes in Industrial Relations and Industry: their Impact on Human Resources Management I hereby declare that I am the legitimate author of this Long Essay and that it is my original work. No portion of this work has been submitted in support of an application for another degree or qualification of this or any other university or institution of learning. ______________________ Enzo Cachia Signature of Student Name of Student _____________________ Date Abstract This study highlights changes which have occurred in Malta since the island submitted its application to join the European Union in 1990. Its focus on the transformation of industry serves as a background for a critical evaluation of developments in the industrial relations system, and the changes in attitudes and behaviours of trade unions, employers and workers. Joining the EU was a long process. This research highlights four important flashpoints in Maltese industrial relations scenario. These were influenced by the Maltese political situation, until the island became a full EU member in 2004. To comment on and analyse these developments, a qualitative survey was carried out among ten past and present stakeholders, who at some point in time were either directly or indirectly involved in industrial relations. The data emanating from the survey indicates that participants share the same opinion on a number of issues, such as life-long learning, and the adoption of a different negotiating approach. However, in some cases, interviewees give their own subjective interpretation of how industrial relations have evolved over time, and how the actors started to adopt a more consensual and conciliatory approach. The transformation throughout the past twenty-five years has not been limited to industrial relations. A shift has occurred in the Maltese labour market towards a more high-tech and service-oriented industry. This has led to a number of manufacturing industries, set up as branches of transnational companies, to close down and relocate to countries with a lower labour cost. Today, high-tech industries with smaller workforce have contributed to make union penetration more difficult than was the case a few years ago. This has forced the trade-unions to adopt a more cautious approach. They are aware that relocation, as a result of globalisation, gives the employer more leverage when it comes to negotiations. Another factor, besides globalisation, which has weakened the unions’ bargaining power, is individualism among the workforce. The labour market in the globalised economy makes higher demands for skilled people. This may be one of the reasons why there is more need for retraining and reskilling of workers. This study also emphasises how Malta can reach the European Commission target of having 62.9% of the population in employment by 2020. Among other aspects the study takes into consideration other measures to encourage more women to join the workforce. It also refers to possible shortcomings in the legislation regulating employment and industrial relations, and how they can be addressed. Finally, on the basis of the changes of the past twenty five years a few recommendations are made to trade-unions, employers and employees with the aim of improving human resources management. Acknowledgements I would like to show my deepest gratitude and appreciation to my tutor Mr Saviour Rizzo B.A., M.Ed. for all his patience, time and commitment. I am also grateful to family members and friends, who in some way or another have given me their support throughout this course of study. I would also like to thank all the participants in my qualitative survey for their time and for sharing their experiences with me to be able to conduct this research. The research work disclosed in this publication is funded by the ESF project 4.100- Developing Core Skills in the Public Service. The sponsorship is part-financed by the European Union, from the European Social Fund (ESF) under Operational Programme II – Cohesion Policy 2007-2013, “Empowering People for More Jobs and a Better Quality of Life”. Table of Contents Chapter Introduction 01 Chapter 1: Introduction 02 Chapter 2: Literature Review 02 Chapter 3: Methodology 03 Chapter 4: Results and Analysis 03 Chapter 5: Conclusion 03 Literature Review 04 Background 05 Developments 05 Trade Dispute - What does it stand for? 06 Union recognition- An industrial issue? 08 EU membership and its aftermath 09 Lifelong Learning 10 Female Participation 12 Relevance of Trade Unions today 12 Individualism 13 Legislation (EIRA) 14 Way Forward 15 Methodology 18 Title Chosen 18 Why a Qualitative Survey? 19 Questions 20 Content of interviews 20 Consent Form 21 Results 21 Results and Analysis 22 Unions’ different style of negotiations 22 Legislation 24 Decline in union membership 25 Individualism 27 Individual Contracts 28 Globalisation Challenges 29 Human Resources Management 30 Conclusion 32 Conclusion 35 Discussion 35 Unions’ different style of negotiations 35 Different negotiation style in the private and the public sector 36 Training and Industrial Relations 37 Decline in union membership 38 Individualism 38 Individual Contracts 39 Trade Union’s role as educator 40 Legislation 40 Globalisation 41 Human Resources Management 43 Adopting a life-long learning Strategy 44 Place of Work 45 Summary of Recommendations 45 Trade Unions 45 Government 46 Employers 46 Employees 47 References_______________________________________________________________48 Appendix 1 Interview Guide 54 Appendix 2 Consent Form 57  List of Appendices Appendix 1 Interview Guide 54 Appendix 2 Consent Form 57  1 Introduction Over the past twenty five years the Maltese economy, in its attempt to adjust to the demands of the global market, has undergone drastic changes. Joining the EU meant a cultural change in industry and industrial relations. These changes occurred while the Maltese economy was shifting from the manufacturing industry, very often labour-intensive, towards the high-tech and service industry. Today, eleven years after joining EU, how is the Maltese worker coping with the ongoing changes? How is the Maltese labour force gearing up for future challenges? What is the position of trade unions today? Have they changed their attitude to collective bargaining in order to align themselves with the demands of a highly competitive global market? Changes have also occurred within the workplace as today many employees prefer to bargain on an individual basis. Solidarity among workers, which has been the basis of trade union movement, is declining. How are trade unions reacting to these changes in order to remain relevant? Before the 1990s the economy used to be controlled by the state. The tactics adopted by trade unions at the time seemed to be inclined more towards short term benefits, rather than long term planning. During the past twenty five years Maltese society had grown into a more knowledgeable work force, and the changes in the circumstances which occurred in the Maltese labour market have shifted the parameters of industrial relations and human resource management. Throughout the years, the changing attitudes and orientation of employees, trade unions and employers have affected the development of HR practices and strategies. Naturally, this has also had an effect on collective bargaining. Experience has shown that attempts were made during the last two decades to make industrial relations more consensual. The new skills and competencies in demand in the globalised market might have made some workers redundant. Due to the shift to the services, the labour market is demanding more soft skills such as the ability to communicate and be creative. In what aspects has the attitude of the Maltese worker and employer changed during the past twenty five years? What are their expectations for the future? To what extent has the industrial relations structure in Malta been Europeanised? The question raised by this scenario concerns the trade unions’ and the employers’ new challenges. How are the Maltese stakeholders and policy makers faring in attaining the 2020 target, as set by the European Commission? In Malta these changes have to be contextualised in the political climate dominated by two political parties. The rivalry between these parties sometimes verges on being tribal even though today the level of tolerance has risen noticeably. In this research I shall be attempting to find relevant answers to the above. These questions will be approached over five chapters as follows: Chapter 1: Introduction This first chapter has dealt with the question of what aroused my interest to carry out this research. 1.2 Chapter 2: Literature Review The Literature Review provides a brief account of the scenario of the 1990s by focusing on four important flashpoints in industrial relations, the climate of industrial relations, and the relevant legislation. One particular issue which was solved by a sentence of the Court of Appeal will be highlighted. The shift in industry, the attitude of the employer and the employee, and the trade unions will be the main focus of the debate. Another central element of this discussion will be the process of globalisation that the country underwent while gearing itself towards becoming an EU member. In line with the new globalised economy, the market was slowly being liberalised so that the state was divesting itself of many operations in the labour market. The Literature Review will focus on how prepared the country was then for the upcoming new realities. The participation of women in the labour market, life-long learning, and the target set by the EU Commission for 2020 will also be discussed. 1.3 Chapter 3: Methodology The third chapter, ‘Methodology’, explains the rationale of the qualitative survey. It also gives a profile of the interviewees. An account is also given about how the interviews were conducted. 1.4 Chapter 4: Results and Analysis This chapter will focus on the data deriving from the survey which highlights what stakeholders have in common and how they differ in their opinion. It includes some personal accounts of the interviewees. It has to be noted that I had to be selective and restrict my analysis to data related to unions’ different style of negotiations, legislation, decline in union membership, individualism, individual contracts, globalisation challenges, and human resources management. The responses of the interviewees provided me with a broad picture of what the situation was like in the early 1990s and before. 1.5 Chapter 5: Conclusion The final chapter attempts to bring the various threads of the argument together by relating the data from the survey to the theory expounded in the Literature Review. It concludes with a set of recommendations on these findings. 2 Literature Review The past twenty-five years have seen dramatic changes in Maltese industrial relations and industry. The Maltese economy has witnessed a sharp decline in the manufacturing industry, especially in the textile and garment industry. To compensate for this loss it had to open up to other industries, mainly in the service sector. The shift of focus from one sector to the other marks a shift in the Maltese economy in the sense that the workforce had to adapt to a new set of exigencies and contingencies (Gatt, 2011). As the economy had to adapt to the imperatives of the globalised economy, it naturally became exposed to the influences of international markets. In the wake of new technologies, mainly financial and IT services, the Maltese workforce had to learn new skills. The economy of the Maltese Islands throughout the past years has experienced a decline in low-tech manufacturing industries, which were also labour intensive. This has happened because of relocation and mergers. These industries have been replaced by ‘high value-added manufacturing enterprises’. Two cases in point are the pharmaceutical industry and aircraft maintenance (Debono, 2012). To what extent has the Maltese workforce been prepared to meet these new challenges? The answer to this can be easily linked to Alvin Toffler`s theory in which he states “the illiterate of the 21st century will not be those who cannot read and write, but those who cannot learn, unlearn, and relearn” (Middleton, 2006 p. 154). Very often we tend to embrace the misconception that manufacturing in Malta is on a slippery slope with no possibility of halting it. In 2009, 15% of the working population used to work in the industry. It is worth noting that prior to the 2008 Financial Crisis, manufacturing in Malta had continued to flourish. However, it is widely acknowledged that certain industries experienced decline which had contributed towards relocation (Wait, 2010). The major problem in the local manufacturing sector is that although the Maltese workforce is ‘technically capable and flexible enough to embrace the process of change’ it still needs to gear the local education system towards the emergence of people with scientific, engineering and technical knowledge. The problem is that the supply of these resources does not meet the demand of the manufacturing industry (Wait, 2010). Another aspect which is worth looking at is Industrial Relations. In the context of these changes the question that arises is how have changes in the field of industrial relations evolved to meet the challenges of these changes? To better understand what had actually taken place during these fast-changing years we shall be looking into the major events, which left an indelible mark on industrial relations and had an impact on human resources management. 2.1 Background 1990 had been a remarkable year for Malta not only because the Maltese Government had submitted the formal application for the island to join the European Union in July, but also because it had started with a series of industrial unrest led by the General Workers Union which ended with the closing of the Hotel Phoenicia (Rizzo, 2003). It is worth noting that the Maltese economy was still largely controlled by the state which used to control various aspects of the economy and was also a participant in them. This had been the practice of the previous twenty years or so. Moreover, the general prevailing belief was that the Maltese economy would not be affected by what was taking place in the international competitive market (Rizzo, 2003). 2.2 Developments Another development which occurred in early 1990 was the setting up of the Malta Council for Economic Development. The idea behind it was to have a platform where social partners could sort out their differences (Rizzo, 2003). To be fair with history, it is worth noting that during the tenure of the pre-1987 Labour Government, General Workers Union representatives used to attend cabinet meetings (Falzon, 2014). “The same offer was made to CMTU unions but it was declined” (Zammit, 2003 p. 113). Therefore, the setting up of MCED (today MCESD) was an evolution of trade-union participation in decision-making process at national level. After the issue of the Phoenicia Hotel, it was felt that industrial relations needed to be approached more rationally. The major stakeholders: CMTU, General Workers Union and the Federation of Industries reached an agreement that “wage levels in future were to be determined by an incomes policy that will take into consideration the cost of living index” (Rizzo, 2003 p. 38). Although it is acknowledged that in the 1990s, thanks to this agreement, the number of industrial actions was very limited (Rizzo, 2003) the situation in Malta was far from being in an ideal harmonious state. In fact in 1994 another trade dispute, over the renewal of the collective agreement, was registered at Air Malta. The dispute later shifted onto allowances and interpretation of the collective agreement. The two sides had remained adamant to not move from their position. However, after discussions took place, both sides managed to reach an agreement (Rizzo, 2003). It seems, the interested parties had not yet developed that ideal high level of acumen to enable them solve problems or settle an issue through dialogue. It looked as if the parties could not even solve inter-related disputes as the following example might amply illustrate. 2.3 Trade Dispute - What does it stand for? In November 1997, in the presentation of his first and, so far, only Budget, Leo Brincat, then a Labour Minister of Finance announced that various measures were being proposed for the following financial year. These measures included a rise in the water and electricity tariffs. After several attempts to get the government to reconsider its decisions, in January 1998, the UĦM instructed its members, who were either civil servants or employed in the parastatal organizations, not to answer telephone calls, use fax machines or e-mail (Rizzo, 2003). A few days later the union escalated the directives when Customs Department officers were given a directive “not to process any import export documents and the workers at the Freeport Terminal were directed not to do any work related to containers that were either Malta bound or leaving the island” (Rizzo, 2003 p. 44). With these directives, the employers were irate at the UĦM since they claimed they had no trade dispute with the union and as such this action was illegal and abusive. However, the union made it a point that it was defending the rights of its members (Rizzo, 2003). The issue was becoming more tense and at one point the entrance of the Freeport Terminal had been blocked by containers and the Government had to intervene, using members of the police, to force open the gate. After the government and the union had accused each other of overstepping their limits, the UĦM suspended its actions “since it feared the police actions might lead to serious incidents” (Rizzo, 2003 p. 45). The Freeport Terminal had in the meantime sued UĦM for damages sustained during the industrial action. Although the UĦM had always maintained that it had to resort to industrial actions to safeguard its members’ interests, in court it had failed to prove its “dispute with Government” (Rizzo, 2003 p. 45) was related to the budget measures. The court declared that UĦM had acted in an illegal and abusive manner and the case had to be postponed to “quantify damages caused to the company” (Rizzo, 2003 p. 45). On 30 May 2001, after an appeal had been lodged by UĦM, the court revoked the decision taken three years earlier and stated that since the budget measures were going to leave a negative financial effect on its members “the dispute between UĦM and Government was connected with terms and conditions of employment” (Rizzo, 2003 p. 46). However, the Court did note that the union`s blocking of the Freeport entrance was abusive (Rizzo, 2003). It is worth noting that the decision of the Court of Appeal was very important since the original sentence could have sent the wrong message to employers who rather than using the tools provided in the Industrial Relations Act (today EIRA), could have started suing trade-unions for financial losses. That would have endangered the unions’ actions or even their own existence. However, the local situation still had to mature to understand what an industrial issue really meant. 2.4 Union recognition - an Industrial Issue? In 1995, 250 workers at Malta International Airport voted, with a seventeen-vote majority, for UĦM to represent them in the negotiations for the collective agreement which was eventually signed for a two-year period between 1995 and 1997. In May 1998, 500 workers from the Department of Civil Aviation were transferred to MIA. The General Workers Union claimed recognition since the majority of the workers in the company were members of the General Workers Union. The MIA and Director of Labour accepted the General Workers Union`s claims, but the UĦM contested these decisions since it argued that “DCA employees who had been transferred had not yet renounced their rights to go back to their previous employment” (Rizzo, 2003 p. 51). The union referred the case to the industrial tribunal whose ruling was that since the workers had not yet renounced their right to go back to the original work-place, they could not be considered company employees. When a number of former Department of Civil Aviation employees renounced their right to go back to Civil Aviation, the General Workers Union claimed it represented the majority of the workers and warned MIA management not to negotiate collective agreement with UĦM. MIA referred this matter to the industrial tribunal and was accused by the General Workers Union of using delaying tactics. The union also gave the management an ultimatum until the 13th of August 1999. When the union`s requests were not accepted, the General Workers Union started industrial actions (Rizzo, 2003). In August 1999, the General Workers Union started a partial industrial action in which its members were instructed not to make use of telephones and other communication means. On 21 August the union ordered a six and a half hour strike. The police intervened to ensure operation in the fire section after a dispute arose between the workers who were following industrial action and the others who were not. When the airport authorities sought legal redress, the Civil Court ruled that no union could call an industrial action at the airport over a recognition issue, since there was no dispute with the MIA. A number of workers had in the meantime been arrested by the police, and on their way to the police Head Quarters the bus had been stopped by General Workers Union officials who blocked a major road. The union officials were later arraigned in court. A few months later, the Minister for Social Policy intervened and brought the two sides together by persuading both General Workers Union and UĦM to negotiate a joint collective agreement. Two months after the signing of the agreement, the DCA workers would be asked to say whether they wanted to remain at MIA or not. A secret ballot would be held later to establish which union would represent the MIA employees in the negotiations (Rizzo, 2003). In fact “Malta International Airport (MIA) prior to being privatized signed its collective agreement with both the General Workers Union and UĦM by granting joint recognition” (Greenland, 2012 p.79). The case against General Workers Union officials had been eventually dropped through a presidential pardon (Rizzo, 2003). The above has been a brief history of four important ‘flashpoints’ in local industrial relations prior to Malta’s accession into the EU. 2.5 EU membership and its aftermath In gearing up its momentum to join the EU, Malta had embarked on a number of initiatives, among which we find coordination between the different governing sectors to encourage women to join the labour market. Moreover, the government had also tried to address the employment problem by setting up the Malta College of Arts Science and Technology (Debono, 2004). The million dollar question remains which changes took place and left an impact on human resource management. In reality the Maltese economy has been experiencing a shift from manufacturing industry to service industry. There has been an ongoing debate around the proposals to have a skilled young workforce to meet the labour-market demands to make the local young people more employable and minimise high level unemployment (Gatt, 2011). During the last decade, certain manufacturing sectors have experienced a period of deindustrialisation. The number of manufacturing companies which operate in textiles, food processing, paper products, and furniture has declined. This was mainly the result of the European Union regulations and the removal of protectionism. Between 2005 and 2010 downsizing resulted in 3,600 job losses, whereas only 1,000 jobs had been created following investment by a number of foreign companies, mainly those in the pharmaceutical sectors (Borg and Caruana, 2011). Other service sectors which have continued to expand in the past years are Financial Services, Real Estate and Online-gaming. Higher activity in these sectors plays an important role in the resilience of the Maltese economy and also leads to an increase in discretionary learning organisations (Borg and Caruana, 2011). It is a known fact that both major trade unions in Malta participate in discussions related to the employment situation among young people. Trade Unions have representatives on the union`s administrative bodies, MCESD and National Youth Council (Gatt, 2011). It is also worth noting that UĦM has taken the initiative to propose a series of reforms in the job market to create work through its Jobs Plus project (Malta Today, 2013). Most of these proposals have been included in the National Employment Policy issued by the Ministry of Education and Employment. 2.6 Lifelong Learning Social partners have long felt the need for a shift from unemployment to employability with greater importance focused on lifelong learning and a continuous learning process. In the past “social partners have focused IT-related training to IT-related skills. The challenge is now to combine IT for skill-development particularly for the acquisition of job-related skills and for business education” (Camilleri, 2003 p. 57). Even the ongoing process of technological change in business and the changes in work practices in the ever-growing global market, compels people to adopt a lifelong learning approach to obtain new skills and become more flexible at work (Thake, 2011). Moreover, it is also worth noting that technical career subjects, after secondary education, are not as popular as academic ones. To close this gap one also needs to change society`s perception towards manufacturing. Society has to understand that manufacturers are today working in a dynamic, high-velocity environment which desperately requires workers who offer ‘advanced analytical, technological, and mathematical skills to operate modern manufacturing plants’ (Wait, 2010). This imbalance between vocational and academic training has to be addressed as otherwise a mismatch and/or lack of skills would be the result (Thake, 2011). Even university should be in synch with the industry to give its utmost to incubate future industry through research, innovation and technology (Micallef, 2012). “In the ever-changing world we must forget the idea that a person`s education finishes when, in their youth, they leave the classroom. With the rapid changes in technology, society must understand that skilled jobs require constant training and education” (Bartolo, 2014). Unfortunately, not all the people in the working-age bracket are willing to train themselves to become more employable to meet the challenges in the labour market. In Malta not all training services provide sufficient levels of basic skills. These may include low IT skills; insufficient investment in adult training; and lack of improvement in training methods. Another problem is that people do not value the importance and significance of formal and informal training (Thake, 2011). On a positive note, employers` organisations and trade unions acknowledge that, where possible, different places of work should introduce training as a way to improve working conditions and performance. If employees become more skilled and productive, firms would not be burdened with additional costs (Borg and Caruana, 2011). Jobs would then be more secured. Although training and lifelong dimensions are now also being included in collective agreements (Grech, 2013), one has to keep in mind that, very often, “employment relations issues arise when employees resist training for fear of being made redundant or demoted if they do not obtain the level required from the course offered. Even though trade unions are in favour of learning initiatives, they understand the fear of some employees, especially those with low literacy or who have almost reached retirement age” (Grech, 2013 p. 8). 2.7 Female Participation Another aspect which is worth exploring is the issue of a greater female participation in the labour market. In comparison with other European countries Malta still has low female participation. This can be attributed to lack of child-care facilities. It is a known fact today that child-care is the major problem for a ‘dual-earner’ family (Rizzo, 2009). The European Commission believes that female participation in the labour market at 46.9% is still low. It recommends that, in order to facilitate female-integration at the place of work, women should be offered child-care facilities. This would enable Malta achieve its target of a 62.9% employment rate by 2020 (Mizzi, 2013). The provision of free child care facilities was one of the measures suggested in Jobs Plus and has been implemented. There are issues which are still unsolved and need to be tackled before we can make use of the full potential of female participation in the labour market. In Malta ‘female participation’ is still low and women often follow particular careers related with provision of care, such as nursing and teaching, which tend to be highly feminised occupations. The stereotypical gender images that tend to persist may actually force women to accept inferior working conditions and lower salaries when compared to their male counterparts (Thake, 2011). With all of these pending issues, it is no wonder that in the run up of the 2013 General Elections, child-care was one of the main political issues in the electoral campaign. 2.8 Relevance of Trade Unions today We have already highlighted the major events which dominated industrial relations in the 1990s. The establisment of the Forum Unions Maltin, which is made up of small occupational unions and professional associations (Baldacchino, 2009), has added another dimension, a third force so to speak, to the trade union movement, rather than weakening the other unions. It has established healthy relationships with General Workers Union and they have taken joint initiatives such as organising conferences and seminars. Acknowledging FORUM in the Maltese industrial relations scenario is a ‘higher degree of plurality characteristic of a modern society’ (Rizzo, 2011). In the 1990s major trade unions used to adopt a more adversarial approach in their bargaining and negotiations. There were occasions when this had even resulted in job losses. Besides the issue of Phoenicia Hotel, which had remained closed for more than a year, the UĦM had also had its fair share of failures when it, “refused to concede to terms demanded by Deutsche Welle, a German overseas radio station, only to see the station close down its operations in Malta, with the loss of 35 jobs” (Baldacchino, 2009, p. 29). Today the industrial relations scenario seems to have undergone a change. Over the past five years (see overleaf), cases of an indefinite strike have become fewer. In 2013 there had been no cases of an indefinite strike. The only industrial action during this year was a one-hour-strike, by teachers employed in the Sliema area, ordered by the Malta Union of Teachers. It is to be noted that this industrial action was not taken in furtherance of a dispute with the employer but with the Sliema Local Council over new parking arrangements. The number of industrial actions has declined drastically. In fact in the last three years the number of industrial actions is recorded as follows: In 2009 there were only three strikes involving 12,439 workers; In 2010 there were 28 partial industrial actions; In 2011 there were only three strikes involving 1,323 workers; In 2012 there were only 2 strikes involving around 565 workers; and No strikes were recorded in 2013 (Vella, n.d.). The above indicates that trade-unions today are resorting to industrial action as a last resort. This may be due to a more conciliatory approach by both sides, and maybe mediation services of the DIER. Capital mobility has also weakened the bargaining power of unions so that trade unions in the private sector are adopting a less militant approach so as not to jeopardize the employment of their members. Probably personal commitments, such as repayment of bank loans, are taken into consideration before someone goes out indefinitely on strike. 2.9 Individualism Coupled with this weakening of bargaining power, trade unions are also faced with a constituency which tends to comprise a large group of highly individualistic members. When workers become more concerned with individual and particular issues, union solidarity does not appeal to them. Very often this can be easily applied to workers who are highly skilled and consider trade-unions as a hindrance to their negotiating power (Rizzo, 2002). On the other hand, when you have active unions, members have a particular purpose to work for the collective benefit. The principle of group-work applies here too (Montebello, 2003). “In industrial and employment relationships, the purpose of these groups is to seek the best working conditions as much as possible whilst retaining a harmonious and cooperative relationship” (Montebello, 2003 p.337). However, ‘introduction of HRM practices’ which very often stress the importance of ‘teamwork, flexibility and individual commitment, seem to direct employment relations towards a more individualised pattern (Montebello, 2003). Individualism, by encouraging competition among employees, may undermine workers’ solidarity. There are occasions when this results in ‘weakening of the bargaining power of employees’ and their representatives at the place of work. Employees are being forced to look for conditions of work for their own individual benefit. This is taking place mainly in certain sectors such as IT and banking. However, it is also worth mentioning that trade unions are also being approached by individual-contract employees when they come across difficulties at work (Montebello, 2003). 2.10 Legislation (EIRA) With the process of Malta`s application to the EU gaining momentum, the need was felt to revise the labour legislation. In December 2002, the Employment and Industrial Relations Act came into force (Baldacchino, 2003) or EIRA, as it is more commonly known. This came into force following prolonged discussions ‘among social partners at national level’. This act had practically integrated the previous CERA of 1952 and ERA of 1976. (Rizzo, 2009). However, we have to keep in mind that EIRA came into force when the island was gearing for EU membership and at the same time had to conform with the EU`s Acquis Communitaire (Baldacchino, 2003). In the Employment and Industrial Relations Act, there are ‘ten key transpositions of the EU Social Policy Regime’ among which we find the ‘organisation of working time ceiling’, the issue of maternity leave, parental leave, ‘non-discriminatory provisions against fixed-term contract workers and part-time employees, and sexual harassment’ (Baldacchino, 2003). It is also worth noting that EIRA provides a number of innovations, among which it makes it clear that employees of the fire-fighting section of MIA, those employed with the Assistance and Rescue Force, and Air Traffic controllers are not protected in case they take part in an industrial action. Moreover, it gives more powers to the Industrial Tribunal (Baldacchino, 2003). However, throughout the years certain updates have also been added to the EIRA. A case in point is when the Government imposed that contract workers had to become full-time employees on indefinite contract after four years of employment, whereas the same law did not apply to Government employees. This was updated later (Government Gazette, 2007). An interesting development which occurred in 2011 was the definition of ‘essential services’. The government through a legal notice defined what an essential service is. It is worth noting that, in this legal notice, even public transport bus drivers were defined as essential service (Baldacchino, 2011). 2.11 Way Forward Today in an ever-changing world, we try to anticipate the changes and demands we expect to occur in the labour market. Therefore, we cannot ignore what is happening away from our shores. A case in point is the financial crisis of 2008. Globalisation has dominated lives in various aspects. New Skills for New Jobs agenda emphasises why it is important to anticipate needs related to skill and ensure that everyone is informed about future changes. As part of the strategy for Europe 2020, the publication of “An Agenda for new skills and jobs” is focusing on the need to anticipate matching of skills and labour market needs at EU level (Wilson & Zukersteinova, 2011). Although it is hazardous to make predictions, long-term planning based on monitoring the development of the labour market (a kind of labour barometer) is needed in order to avoid pitfalls. However, it is also worth saying that “most countries acknowledge that methods to anticipate skill needs have to improve” (Wilson & Zukersteinova, 2011 p.7). So far we have mentioned the aspects of Lifelong Learning and the need for greater female participation. The education system should also cater for the new challenges of the future. To have a larger pool of skilled workforce one should also try to tackle the issue of training young people by region. In a census carried out in 2011, it resulted that in Malta there is an education divide between people who live in the North Harbour areas and others who live in the Inner Harbour areas. One of the contrasts is between Swieqi and Marsa. 30% of the Swieqi population have attained a tertiary level of education, whereas only 3% of the Marsa population have reached the same level of education (Debono, 2014). Although one has to keep in mind that tertiary education is not limited to young people only, it is young people who would benefit most from tertiary education, since they have a longer working-life than an adult who has already been part of the labour market for a number of years. The shift in focus of the Maltese economy from manufacturing industry to service industry has opened new exigencies and challenges to policy-makers and those involved in training and human resources. The question that arises is how or whether we have geared up to these new challenges. In other words are there sufficient Human Resources to meet the demand of present and future challenges? How is the Maltese workforce being prepared, educated and trained to meet these challenges? Are employers investing in people to have a more skilled workforce? We are still far away from the targets as set out by the European Union for 2020. There is still much to be done. But has the mentality changed in the past twenty years? These issues will be addressed over the next chapters by focusing on events relevant to these issues. Through my readings, I have tried to understand the culture and mentality of the stakeholders which are still evolving till this very day. Various aspects have been discussed involving occupational and industrial relations which must have had an effect on Human Resources Management in Malta. It is necessary to bear in mind that changes are still ongoing in a highly dynamic labour market. An attempt will be made to comprehend the impact of this change on today`s stakeholders, and what is being done to keep abreast with these changes. 3 Methodology 3.1 Title Chosen The title chosen, ‘Developmental changes in Industrial Relations and Industry: their Impact on Human Resources Management’, refers to the changes which have taken place during the last twenty five years. In this research I sought to focus on a number of factors which might have influenced these changes in the scenario of industrial relations and the operations of the Human Resources Management. This might be new ground, as an analytical discussion about such a topic does not feature in the literature of industrial and employment relations. However, since most of the actors involved are still alive, it was still possible to interview ten of them. Their narrative provides the main data of this study. All these ten actors at some point in time, during the past twenty five years, have either held an official position or still currently occupy an official position within an organisation which is a key player in Maltese industrial relations. The people interviewed are: Anġlu Fenech (former) and Tony Zarb (current), GWU Secretary General; Gejtu Vella (former) and Josef Vella (current) UĦM Secretary General; Michael Mallia former President of the Malta Employers Association; Joe Farrugia, the current Director General of the Malta Employers Association; Louis A. Farrugia former President of Federation of Industries, which has now amalgamated with the Chamber of Commerce under a new name: Malta Chamber of Commerce, Enterprise and Industry; John Scicluna who currently heads the Quality Administration at the Malta Chamber of Commerce and Industry; Emanuel Ellul former Governor of the Central Bank of Malta; and Ray Fenech, director at Tumas Group. 3.2 Why a Qualitative Survey? The balance between former and present office holders was meant to enable me compare past and present perceptions. The aim of the survey was to elicit the views and perceptions that guided their actions and behaviour during their tenure of office. The best way to gather such data is through a qualitative survey, as it enables the respondent to narrate his/her experience and express his/her opinion. There is hardly any quantitative data in such a narration. Besides, the qualitative enables the author to include the real voices of the protagonists of the events as they are the best witnesses of present and past events. The descriptive analysis emanating from the interviews might provide the right context within which the changes that occurred can be analysed. Moreover, a quantitative survey among different categories of workers, would probably not have provided the best results since interviewees would have relied only on their own biased perception, without referring to actual facts. To be fair they could have provided a picture of their situation on their place of work, but it would have been very difficult for them to go beyond that. Trade unions, employers’ associations and entrapreneurs tend to be more aware of what goes on behind the scenes and of issues related to the local and the globalised economy. In fact, almost all the people interviewed, at some point in time have been involved in discussions and negotiations representing either an employer or a trade union during the past twenty-five years. Furthermore, a quantitative survey would have given closed ended answers, whereas a qualitative survey allowed the interviewees to elaborate where necessary as deemed fit. Sometimes they even delved into details which are very unlikely to feature in any documentation. Interviewing participants was not difficult at all. They have all gladly accepted to be interviewed and in a matter of less than three months I managed to interview the ten participants. Another interesting fact is that four out of the ten people I have interviewed, at some point in time, have held official positions in the directorship of public entities, such as Airmalta plc, Public Broadcasting Services and MCAST. It is worth noting, the people who were interviewed for their involvement in the employers’ organisations, or in the private sector, made reference to the negotiation climate in the previous years. 3.3 Questions For all the interviews, I prepared one set of eighteen questions (Appendix 1). Although some interviewees may have opted for shorter answers, all questions were answered and none were avoided. The shortest interview lasted about twenty-seven minutes whereas the longest one about one hour. Some interviewees were very brief in their answers, while others delved into detail which prompted me to ask further questions. All the questions asked during interviews were semi-structured after consulting my tutor. 3.4 Content of interviews Some of the interviewees, especially those who had played a major role in the 1990s, gave me a very detailed description of what the situation was like in those days. Some of them even delved farther into the past and referred to the industrial situation of the 1970s and 1980s. Although it was not relevant to my topic of research, it gave me a broader picture of the background of the industrial relations back then. “One effect of researcher’s involvement is that people have a tendency to change their behaviour when they know they are being studied” (Boeije, 2010, p. 174). However, it is worth noting that almost all participants have acknowledged a change in the attitude of trade-unions, employees and employers when compared to twenty five years ago, although they see it from a different point of view. Because of the consistent replies, I believe interviewees have given me convincing answers and have contributed to have a valid and a reliable survey. 3.5 Consent Form Before the interview, all interviewees, who were digitally recorded, were asked to sign a consent form which explains why the interview is being conducted (Appendix 2). Since the persons interviewed had all been very active in Maltese society, I was not asked to provide an ethics form. Moreover, one has to keep in mind that the interviewees were not asked to disclose any personal information, but rather historical facts from their own perspective or the organisation they have been representing. 3.6 Results In the chapter that follows the data emanating from this qualitative survey will be presented and subjected to a critical analysis. Naturally, since I had to be selective in the presentation of the points raised by respondents, the study can be perceived as being idiosyncratic. This may be one of the limitations of the study. The topics which have been chosen and will be subjected to an analysis are: Unions’ different style of negotiations, Legislation, Decline in union membership, Individualism, Individual contracts, Globalisation challenges, and Human Resources Management. 4 Results and Analysis The focus of this chapter will be an analysis of the interviews carried out with the ten interviewees who have participated in the qualitative survey. Most of the interviewees were involved in the events that arguably changed the industrial relations scenario in Malta. This point is being made to highlight the fact that the judgement of these interviewees is far from being value free. “Although such relations do not necessarily constitute a conflict of interest, the integrity of the field requires disclosure of the possibilities of such potentially distorting influences where they may exist” (American Psychological Association, 2011 p.17). The following are some of the reflections that could be extracted from the interviews carried out with interviewees. 4.1 Unions’ different style of negotiation As a general rule, all interviewees concur that unions have to adopt a different approach from the way they used to negotiate in the 1990s and before. High demands backed by a highly militant policy have led to the closure of the workplace and eventual loss of employment. The Phoenicia case is a very apt example. After this episode the trade unions, by and large, adopted a much more cautionary approach. The spirit of social dialogue has helped to assuage matters. According to Oxford Dictionary the term ‘militancy’ is an “aggressive action in support of a political or social cause” (Trumble, Blaney, Wood, & Jones, 2001, p. 488 ). During interviews both former trade-union leaders, Anġlu Fenech and Gejtu Vella referred to the Phoenicia Case, and both acknowledge that militancy might not be a means to an end. This is probably as a result of the events which led to the closure of the hotel. However, it is worth mentioning that GWU Secretary General, Tony Zarb still believes in militant trade-unions. His interpretation of ‘militancy’ is the ability of the union to prioritise the workers’ interests till the very end: “God forbid the unions would not remain militant. Union militancy is not about organising protests in the streets. Militancy is about how capable you are in promoting workers’ interests till the very end. That is our militancy of the General Workers Union” (T. Zarb, personal communication, September 16, 2014). Through this definition the current Secretary General, who had been involved in trade-unionism at the time of union militancy, might be portraying a milder picture of the term ‘militancy’ without referring to any aggressive form of action. Since the General Workers Union is stronger in the private sector, today its approach has to be different from the way it negotiates in the public sector. The globalised economy characterised by relocations, outsourcing, and sub-contracting compel unions to adopt different styles and attitudes. From the interviews carried out, it transpires that this has weakened the unions’ bargaining power in the private sector. Employers are aware that unions have to be responsible not to risk the livelihood of their own members. Moreover, both employers and unions understand that it all depends on what kind of relationship exists. Gejtu Vella (former UĦM), says, “Trade Unions have to be careful to choose which cards to play. They should seek good relations with HR, It is important to work alongside HR and not to take different paths” (G. Vella, personal communication, July 15, 2014). Anġlu Fenech feels that (former GWU) “it all depends on the individual`s character” (A. Fenech, personal communication, July 10, 2014). Ray Fenech (Tumas Group) believes that “a revolution has taken place. Neither the employers nor the unions look at each other as enemies” (R. Fenech, personal communication, September 23, 2014). Joe Farrugia (MEA) tends to adopt a more placatory tone maybe to emphasise the consensual ethic which he would like to see to prevail in the industrial relations scenario: “Several problems we have with the unions are solved without making them public” (J. Farrugia, personal communication, August 4, 2014). On the other hand, since the public sector falls within the remit of Government, the unions’ approach is totally different in this area. Some interviewees, especially employers, stated political pressure in the public sector is often used as a lever by the unions in order to strike a favourable deal. This is especially the case when a general election starts to loom. Interviewees representing employers, or their associations, who at some point in time had also held executive positions in public entities, also acknowledge that trade-unions’ style of negotiations differ in the public sector, when compared to the private sector. It is worth noting that contrary to what happens in private companies, sometimes the same people representing the same trade-union use more aggressive tactics when negotiating in the public sector. They understand that while in the private sector they have to be more moderate, because a certain aggressive approach could be risky, in the public sector they can be more demanding as they know that the policy makers, or the party that these policy makers represent, are keen to portray a good public image and so may be more willing to give in to the unions’ demands. At one point, former MEA president Michael Mallia, who used to sit on the board of directors at Airmalta, remarked to the same trade union officials, “In the private sector, you do not act this way” (M. Mallia, personal communication, July, 24, 2014). It is much easier for a trade-union to go for an industrial action against an employer in the public sector, than against an employer in the private sector. In the public sector the threat of relocation is totally absent. 4.2 Legislation The Employment and Industrial Relations Act (EIRA), which came into effect in December 2002, made provisions for the operations of trade unions and the basic conditions of work for their members. EIRA puts trade unions into a better position to negotiate. It is widely acknowledged that it is a point of reference. Past and present trade union leaders believe it provides the minimum standards established by law. On the other hand, employers also acknowledge that EIRA is beneficial to both sides. However, an interesting comment from certain employers is that while they appreciate that it has functioned well, it is now time for an update to meet the needs of today’s labour market. In fact, the Malta Employers Association last August, proposed a number of amendments for the Employment and Industrial Relations Act. The aspects of EIRA, which according to Malta Employers Association need an update, are the issues of union recognition, COLA and sick leave (Malta Employers Association, 2014). The Act does not make any provisions about two unions claiming a 50%+1 members at the place of work. There were occasions when a union, claiming to have an absolute majority membership, initiated industrial action against the employer. Very often the Director of Employment and Industrial Relations has to intervene to solve the issue or the case may be referred to the Industrial Tribunal. If anything, this document highlighted the need that EIRA needs an update since there are a number of lacunas which need to be addressed. The employers interviewed, who represent large organisations, stated that they abide strictly to the provisions of the Act. Indeed, on various occasions they even go beyond these provisions. None of the employers pointed to any bias in the Act towards one party or the other. 4.3 Decline in union membership “Trade unions blame restructuring, unemployment, early-retirement schemes, individual contracts of employment and the employers’ intransigent attitude for suffering a decline in their membership” (Micallef, 2005, para. 8). In the last fifteen years, Malta has witnessed the closing down of the dockyard, after which it was sold to a private company. This might have been part of the privatisation policy adopted by the Government as result of which, public corporations, such as the telecommunication service provider, were privatised. These corporations used to be heavily unionised and, in the due course of time, the new employer had downsized its labour force. One has to keep in mind that in the private sector, employers look at profits. In the capitalist system of production firms aim at profit maximisation. In a highly globalised competitive market they tend to be more aggressive in the pursuit of this goal. Moreover, as a result of globalisation, industry, which in the past used to be labour intensive, has been shifting towards services. Large industries, especially textiles, no longer employ a large number of people. Textile industries, which used to employ thousands of unskilled people, are now located in less developed countries where labour costs tend to be very low. Since the workforce today is fragmented into smaller industries, it is much more difficult for unions to penetrate. Industry is no longer dependent on low skilled jobs. The workforce today is more educated and consequently more demanding. Indeed, today trade unions are finding it more difficult to gain legitimacy. More recently there have been occasions when the workers did not approve of collective agreements, after negotiations between the union and the management had been concluded. A case in point was that of Arriva employees (Updated: Arriva workers form house union - 100 resign from GWU - timesofmalta.com, 2012). Joe Farrugia (MEA) also agrees with this. He states, “We are coming across situations, more frequently than before, when members reject the terms, of the collective agreement, agreed between the management and the union” (J. Farrugia, personal communication, August 4, 2014). It is interesting to note that, from the interviews, none of the employers or representatives from their associations ever instigated employees not to join or to leave a trade-union. However, none of them ruled out the possibility of such actions by employers, especially in the case of small businesses. Indeed during his tenure as secretary general of UĦM, Gejtu Vella, had come across at least three occasions when employers had made a condition to their employees that they cannot join a trade union. Job mobility has been on the increase in the past two decades. Seeking better working conditions could also be another factor why people move from one job to another. An interesting question crops up here. If workers are able to find better working conditions by changing jobs, could it be that they have a bargaining power on an individual basis, and this is making them reluctant to join a trade union? 4.4 Individualism The decline of the manufacturing industry has also contributed towards a more specialised workforce for the industry to survive (Camilleri, 2008). The perception of past and present trade union leaders is that a number of highly skilled people tend to be not very keen on building solidarity ties with their colleagues. Individualism is eroding the value of solidarity among workers. Today there is the perception that if an employee negotiates on his own, without the collective support, he/she would get a better package for himself/herself. However, this does not necessarily mean the rest of the employees are getting the same deal. UĦM Secretary General, expresses doubts that individual negotiations are not achieving anything more than what is obtained through total collective bargaining: “If an individual negotiates on his own with the management and manages to obtain €10, and he knows his colleague who does the same kind of work gets €7, he does not enquire whether the two together would be able to get €12 each. He believes he is a good negotiator since got a better deal than his colleague. That is how the system works” (J. Vella, personal communication, August 7, 2014). With hindsight, individualism is not limited only to highly skilled workers. Performance bonuses can also be related to individualism. Workers, whose only concern is to achieve more so they get rewarded at the end of the month, are not considering other possible repercussions such as health and safety issues at the place of work. The end result is that individualism has increased a level of selfishness. This factor may have been detrimental to the solidarity among workers, which has always been the slogan of the trade union movement. Tony Zarb believes that the worker stands to lose: “If you look at our statements, especially my speeches, I always stress the point that the worker will be on the losing end if he keeps on going with this individualist and selfish attitude”(T. Zarb, personal communication, September 16, 2014). On the other hand, employers say that with the cloudburst of new employment opportunities, in IT, I-Gaming, and Financial Services, the idea of having a union at the place of work is no longer vital to the workers as might have been the case before. However, one has to bear in mind that such employment opportunities are mainly applicable to people who are highly-skilled/qualified and therefore have bargaining power. In the traditional manufacturing sector, such a knowledgeable workforce is at a premium. This factor puts highly skilled workers at an advantage to negotiate on their own. Many of these workers manage to negotiate a very high salary. One cannot exclude this global tendency. Nowadays, with the decline in union loyalty, trade unions had to adapt to this new reality. A case in point is that trade unions are accepting concepts of individualism, even in collective agreements, such as performance related pay. 4.5 Individual contracts Since the job for life concept is declining there is an emerging mentality, in highly skilled people, of taking definite period contracts. They work from one project to another. However, their job is not guaranteed indefinitely. Employers believe definite contracts create different elements. Not all the people are willing to take a definite contract. It involves certain attitudes from people who are willing to take that kind of employment, such as those who prefer to be mobile in their job hunting. However, individual contract employees are given benefits which are not given to others through collective bargaining. For example, a project manager can be employed on a temporary basis until the completion of the project. Joe Farrugia (MEA) states, “Definite contracts are more accepted among a certain category of employees. They believe they work from one project onto another. Naturally they receive a premium for that. They expect more, and in most cases they have superior conditions of work” (J. Farrugia, personal communication, August 4, 2014). Ray Fenech (Tumas Group) observes a different attitude by contract workers employees. “An employee without a collective contract is more responsible, since he has an individual contract. That employee is aware of the benefits and conditions of the contract, because it is his own contract not everyone`s contract” (R. Fenech, personal communication, September 23, 2014). For some employers this makes the individual employee more loyal towards the organisation he/she is working for. However, UĦM Secretary General, Josef Vella expressed a different opinion. “We have people whose place of work is not covered by a collective agreement, and ask the union for advice before he signs the contract. Moreover, individual contract workers still resort to trade unions when an issue crops up” (J.Vella, personal communication, August 7, 2014). The employers I spoke to, who at some point in time held executive positions in large organisations, maintained that individual contract employees were the exception not the rule. Normally, only highly qualified people were employed on individual contracts. 4.6 Globalisation Challenges Union representatives understand that nowadays we are no longer given protection by a state-driven economy. Today’s realities have to be met by continuous updates so that the unions remain abreast with the changes the world economy is going through. Since globalisation is affecting our country more than ever, unions have to find new avenues to remain relevant. Unions are nowadays offering services of retraining, even in collaboration with the management at the place of work, and other professional services such as career guidance and development. It is worth noting that unions have come across employees who were concerned with retraining and reskilling since they were not sure whether they would manage adequately to adapt to the new technologies. Employers believe they have to invest in new technology, new ways of doing things, in order to compete on a level playing field. They also recognise the need of retraining their workforce. If an organisation is investing in new technology, it has to train people. Nowadays this is widely accepted across the board. Moreover, employers have to be on the lookout for what is taking place globally. Joe Farrugia maintains that nowadays the problem is no longer limited to a foreign investor looking for suitable conditions to open a business here, but a local investor would also be willing to open abroad where the conditions would more favourable (personal communication, August 4, 2014). One has to see how to go about globalisation, and how to be proactive. 4.7 Human Resources Management Unions believe in Human Resource Management (HRM). The HR Manager personality plays a very important role. So it is important that neither the unions nor the management overstep their limits. The position of HR has evolved in the past twenty years from what used to be the Personnel, where the person used to be in charge of leave, sick leave and absence from work to HRM. The Personnel Manager hardly ever used to discuss the possibility of employee training and development. Even the relations between the Management and the union tended to be more adversarial and confrontational. Nowadays with the introduction of Human Resource Management, there is a higher level of trust relationship. However, one has to appreciate that trust has to be built over a period of time. From the interviews, it is evident that personalities on both sides also play a vital role. Even employers believe in Human Resource Management. They consider it a vital part of the organisation. It has to deal with training, retraining, refreshers, enlightened policies, and so on. The major difference between personnel and HR is that in the past nobody would enquire about people’s needs. HR has given employees a more human aspect. It identifies individual employee’s abilities and finds ways and means to utilise them better within the organisation. It is through Human Resource Management that employees are provided with the necessary training for further development. Since the introduction of HRM, relations between management and unions have also improved. It is one of the ingredients which has led to the social dialogue. Although the general perception is that HRM does not put one side at an advantage, Anġlu Fenech, former GWU Secretary General, said that it had also affected the role of the trade union: “Of course it affects the role of the trade union. If you have an HR Manager who wants to get along well with the unions, it is one thing. But if you have an HR manager whose intentions are to move the organisation forward, but at the back of his mind intends to break the union, it is another. Yes in my opinion the role of the trade union has declined” (A. Fenech personal communication, July 10, 2014). However, on the whole, interviewees from the field of trade-unionism acknowledge that Human Resource Management has been a great benefit to the workers. The most successful companies are those which give importance to Human Resource Management. Training and reskilling are two important aspects of human resources. If organisations train people, even if their employees move from one job to another, the labour market would be able to offer more skilled people to our industry. So it is would also be beneficial to our economy. All interviewees insisted that education is the means towards success. One has to bear in mind that the introduction of new systems of technology requires retraining and reskilling of employees. It is through education that the organisation and the workforce would meet their needs. Since the European Union has set a target that 62.9% of the Maltese population has to be in employment by 2020 (European Commission, 2013), this can only be achieved by implementing policies which encourage women to join the labour market. So apart from retraining and reskilling these resources, Human Resource Management, has to introduce more family-friendly measures so that more women are able to work with more flexibility. Joe Farrugia, from the Malta Employers Association, is confident that the target will be achieved by 2020. Another issue which cropped out from these interviews is the importance to implement such measures, because employee turnover and recruitment are more expensive: “...the companies which remain competitive and efficient are those which give importance to Human Resource Management. Even if we take costs. Let us take a small aspect for example, reducing turnover of employees. Recruitment is very expensive. You have human resources managers who know the labour market much more than others” (J. Farrugia, personal communication, August 4, 2013). The function of Human Resource Management is to look at the individual at the place of work not just as an employee, but as a person with all that is affecting his/her daily life. It is through good Human Resource Management that employees are motivated to perform better, not only to their own benefit, but also their employer’s benefit. 4.8 Conclusion The changes that have occurred and the ongoing process of this change in industry have had a devastating effect on employment and industrial relations. What the foregoing entails is that employers, unions and workers have to be aware of the new developments caused by this change and adopt an approach which is constant with the exigencies of this new scenario. The qualitative data emanating from interviews indicate that this level of awareness and alertness seems to be present in the members of the Maltese trade union movement, the industrialists, and managers. This awareness has of course to be translated into new approaches to deal adequately with the imperatives of the liberalised market which has become a feature of the globalised economy. The slogan that no one owes us a living has become highly relevant to the actors involved in the labour market and they need to take heed of it. It is obvious that the trade unions somehow had to adopt a different approach when dealing with employers. However, even today, the unions’ approach is different when negotiating with an employer in the private sector than with an employer in the public sector who is backed by the Government. Legislation today provides the minimum established by law. In an organisation where there is no collective agreement, EIRA provides the basic conditions of work. However, although it does not seem biased towards one side or another, it needs an update. With a smaller labour-intensive industry, and a reduced workforce, union penetration is much more difficult than before. No wonder union-membership has gone down. Today, there is a fragmentation in the workforce, and more skilled workers are required to meet the demands of the industry. Highly skilled people do not seem interested in joining a trade union since they believe they can get a better deal if they negotiate individually. Despite unions’ fear of individualism at the place of work, today they accept performance bonuses in collective agreements. A case in point is the bonus related to performance at MEPA, where all employees are awarded a performance bonus according to whether, ‘above target levels of task objectives’ have been achieved (Collective Agreement, MEPA and UĦM, 2013). On the other hand, although contract workers negotiate a different deal, it is worth noting that unions have experienced individual-contract workers seeking assistance when an issue crops up. During the interviews, both employers and trade unions have acknowledged the importance of retraining and re-skilling of employees so that organisations remain competitive in the global market. Globalisation has made relocations easier with the eventual result of more possible unemployment. While both sides acknowledge each others’ interests, unions believe that Human Resource Management should not overstep their limits. However, unions also understand a problem should first be solved through HR before the trade union enters discussions. Finally, the issues of women joining the workforce and the retraining of employees are two important factors which need to be looked into to reach the 2020 employment target. In the next chapter, we shall be looking at a number of ways how to make the workforce more knowledgeable and how to achieve the EU 2020 target. 5 Conclusion 5.1 Discussion The focus of this study has been the ongoing transformation process in industry, highlighting the changes it has gone through in the past twenty five years by commenting on how changes have influenced industrial relations and also Human Resources Management in various ways. The issues highlighted in the previous chapter may have indicated how such changes have developed and how those involved had to adjust to be able to function given the new realities of the past twenty five years. 5.2 Unions’ different style of negotiations A comparative analysis of the methods adopted by unions in their bargaining and negotiations shows a drastic change in their attitude. For example they rarely resort to industrial action. Indeed, the number of strike actions has decreased drastically during the last twenty years. The figures concerning industrial action, when analysed, show a substantial decrease in the number of strike action over the last twenty years. From the interviews, it is obvious that today trade unions understand that the best way forward is through social dialogue. The ‘us and them’ dichotomy which may have formed part of the discourse of trade unions has slowly given way to a more consensual ethic. Nowadays unions and employers meet regularly and discuss issues at national level, at MCESD, and at other conferences and fora. Rather than flexing their muscles, trade unions have shown a preference to sitting around a table to discuss issues. This does not mean that there is more trust. However, in spite of this lack of trust, generated by what Marx terms as the inevitable conflict between capital and labour, there have been several serious attempts to seek consensus. Mutual understanding among different social sectors was given a big boost by the workers’ participation experiment of the 1970s and 1980s. Industrial relations are characterised by institutions of social dialogue at national level. The three top institutions of social dialogue are: Malta Council for Economic and Social Development; Employment Relations Board; and Occupational Health Safety Authority. Today this has evolved into an established forum where social partners are even considered Government’s consultees. 5.3 Different negotiation style in the private and the public sector This consensual ethic seems to be more so in the private sector. In the public sector unions tend to be much more vociferous in their claims and more vocal in their appeals to workers to take industrial action. Interviews reveal that unions representing workers employed in the public sector are still more disposed to take industrial action than private sector employees. Both Tony Zarb (GWU) and Gejtu Vella (former UĦM) share this opinion: “I think it is easier to negotiate with the Government. The reason is, for example, the Government, unlike the private sector, does not seek profits for the company. You will then (in the private sector) base the bargaining power on the profit the company is going to register” (T. Zarb, personal communication, September 16, 2014). “…in the private sector, industrial actions, even minimal ones, are very limited. On the other hand, as a general rule, in the public sector, industrial actions or a threat of an industrial action, take place once a week. If not a union, another…” (G. Vella, personal communication, 15 July, 2014). Nevertheless, however militant trade unions might be in the public sector, strike action is still at a premium. Although the structures of Workers’ participation, set up in 1970s and 1980s, have been dismantled, they might have left a residual effect, in the sense that a spirit of compromise among trade unions and employers seems to be much more the order of the day. This may be due to the fact that today it is more difficult for trade unions to mobilise their members. Workers today, have much more commitments than was the case a few years ago. These commitments, such as long term mortgages, tend to make workers more wary of the consequences of industrial action. Trade union leaders are cognizant of this phenomenon. Today in Malta we have a culture where “93.2 per cent of the Maltese population believe owning a home is important as an investment and to save on rent” ("Most Maltese attach importance to home ownership – survey - timesofmalta.com," 2014). On the other hand, private sector companies tend to have much more leverage than the government to confront trade unions. The threat of relocation or off-shoring can force unions to adopt a cautious approach. There have been a number of cases of such relocations during the last ten years. Cases in point are: V F Malta Ltd, Pack Print and Plastic Processing, Bortex and Menrad. 5.4 Training and Industrial Relations Trade unions have become aware that their members, who are ultimately part of the workforce, have to be prepared to meet today’s challenges. In their collective bargaining, trade unions are not focusing only on substantive issues such as pay rise and leave. This can be confirmed in the following quote: “Training and lifelong learning parameters are often included in collective agreements, with the focus being on the rights and obligations attached to development and training of employees. This concept is more prevalent in collective agreements involving the public sector and large companies” (Grech, 2014). Trade unions have also become more sensitive to issues related to education. GWU Secretary General, expressed his concern that a number of young people are leaving the education system without the basic qualifications and skills to join the work-force. “We want to see an improvement in education, especially at secondary level” (T. Zarb, personal communication, September 16, 2014). Improving our secondary education system is a very important factor, especially if this issue is addressed from a regional point of view. In the Literature Review, reference was made to an interesting result from a census carried out in 2011 which can be an eye-opener. This census highlights the fact that the number of graduates living in the Inner Harbour areas is very low when compared to that of the North Harbour areas. Giving a higher priority to the educational needs of regions which suffer from deficiency of a culture that is amenable to schooling might go a long way in reaching a desirable level of equity. Such a policy can be part of the target set by the European Union for 2020. 5.5 Decline in union membership The decline in manufacturing and increase in service industry have changed the profile of trade union members. Union membership is less homogenous. As has already been stated, trade union membership is much stronger in the public sector than in the private sector. However, one must note that the private sector no longer employs masses of unskilled workers. Industry has been shifting from labour-intensive towards high-tech. Since these industries no longer employ a large number of people, union penetration has become more difficult. Another case which is worth looking at is the Malta Drydocks. When it was still a Government entity employing thousands of people, union membership was very strong, whereas today, since it had been privatised with a reduced workforce, union membership at Palumbo is very low or practically non-existent. “Now since the Dockyard has closed down its doors, and Palumbo took over, the union has been attempting to organise itself once again there.” (A. Fenech, personal communication, July 2014). 5.6 Individualism Moreover, one should also take note that with the increase of a specialised workforce, for example in I-Gaming, these employees are not so keen on trade unionism as the traditional workers in the manufacturing sector and the Drydocks. Some of them believe they have enough bargaining power to negotiate on their own. This results in more individualism at work. Both GWU and UĦM Secretary Generals have expressed their concern about this phenomenon. They tend to concur with the view that individualism is detrimental to the workers themselves. Besides having to deal with a membership that is more heterogeneous and with members that have higher aspirations to affluence, trade unions also have to face the problem of individualism. Today there are quite a number of workers who think that they have enough bargaining power to negotiate with management or directors, on their own. This individualism may be encouraged by employers in order to undermine the principle of solidarity of trade unionism. This individualism may be one of the factors of a knowledge-based economy. An emergent phenomenon is that we are heading towards a specialised work-force which is leading towards the belief that individual negotiations would yield more benefits than collective bargaining. This is a new challenge to the trade unions. They should therefore seek new avenues to combat individualism among workers, and once again instill a new culture of solidarity. The 2008 financial crisis has shown that workers still need to show solidarity to each other more than ever. If one looks at what is happening in other countries within the eurozone, one realizes that nowadays job security has become very elusive. Even government employees are not immune to this lack of security. In the case of Air Malta, the Government had to get the green light from the European Commission to be able to subsidise the national airline to make it financially viable (Dalli, 2014). 5.7 Individual Contracts Another category of workers who are unlikely to become trade union members are those workers on a definite contract. The number of these workers has been increasing during the last twenty years. They are not only found among low status employees working for a contractor who has managed to be awarded a contract of work. The workers with a definite contract are also found among workers in the higher echelons of the hierarchy. Their high level of employability induces them to take such a risk. In contrast, those workers in the lower levels of the job hierarchy very often have to be content with precarious employment. The trade unions have shown a high level of sensitivity to this increase of precarious employment. Indeed, over the past few years they have conducted a vociferous campaign against precarious work. Through this campaign trade unions have shown that their rationale is not simply to defend the vested interest of their members, but also to act as a shield of justice. They might be assuming the role of a social movement. 5.8 Trade Union’s role as educator Trade unions should update prospective employees about their rights and duties at work. Prospective employees should be given information about the provisions in the Employment and Industrial Relations Act. Unfortunately, a number of new entrants in the labour market have to accept jobs without knowing their rights and obligations, especially in places of work where there is no union representation. Teaching the workforce about their rights, and the roles of the trade unions, are other possible areas where unions can reach out to workers and possibly recruit new members. From the interviews, it also emerged that contract workers approach a trade union when faced by a complex problem. This highlights an urgent need for unions to provide more information to workers about their rights and duties. Trade unions should launch informative campaigns to draw the attention of workers about their rights, and the kind of contracts they should sign or accept when they take a job. 5.9 Legislation The Employment and Industrial Relations Act, which came into effect in December 2002, has served to align the local legislation “with EU legislation in preparation for Malta’s entry into the EU in 2004” (MEA, 2014, p. 01). However, ten years into EU membership, there are certain flaws in the Act which need to be addressed. One of these is the issue of union recognition, and union membership. The Malta Employers Association has expressed its opinion about this some months ago (Malta Employers Association, 2014). Among other proposals, the MEA, as an employers’ organisation, has suggested that the law should include a clear definition of what a ‘trade union member’ is. According to the association, a trade union member is a person who has an updated membership fee. According to MEA, this would “help facilitate a number of issues and understandings which arise from time to time in relation to union recognition.” (Malta Employers Association, 2014, p.4) Another proposal in the same document is the introduction of ‘sexual orientation’ and ‘gender identity’ to be included in the definition of Discriminatory Treatment. The Malta Employers Association, is proposing there should be a definition to the term discrimination: “discriminatory treatment means any distinction, exclusion or restriction which is not justifiable in democratic society including discrimination made on the basis of marital status, pregnancy or potential pregnancy, sex gender identity, colour disability, religious conviction, age and sexual orientation, political opinion or membership in a trade union or in an employers` association” (Malta Employers Association, 2014, p.4). Although the same document has made recommendations which are controversial and contentious, such as ‘Self-Inflicted Illnesses’ and the ‘COLA Mechanism’, the MEA proposals highlight the fact that ten years down the line into the European Union, employers are still hankering for a more harmonious atmosphere in the employer-union inter-relationship. The reduction in industrial action must not be interpreted as a sign that conflict has been defused. If anything MEA’s document, highlights the need that eleven years after the island has joined the European Union, the Employment and Industrial Relations Act needs to be reformed. 5.10 Globalisation Another challenge, which the actors involved in industrial relations have had to face in recent years, has been the process of globalisation. Indeed the debate about globalisation centres on the issue of how much it is transforming our lives, and how much of the old structures remain intact. In this debate, the role of the state is very topical as globalisation is very often based on the premise that it will ultimately bring about the demise of the state. This line of argument, however, does not appear to be very valid, for the state is still the focal point of regulation and is likely to maintain this status for many years to come. Indeed, the state has shown every sign of keeping its status as a major framework of social solidarity. This does not, however, mean that globalisation has not prompted changes in various spheres of the state. It has, for instance, encouraged the emergence of greater pluralism in society and introduced new forms of production. Its belief in unregulated market and free competition may make the implementation of egalitarian principles more problematic. This is happening at a time when a culture of ‘entitlementalism’ has become more embedded in society wherein individuals, as citizens, stress in a rather assertive manner, whatever they believe they have a right to receive or to expect from society. The voices on the protest stage have become more vociferous. Few legitimate governments could dare or afford to abandon egalitarian projects, even if they come at a cost. In the meantime, a new political ideology has established itself with an emphasis on consumer interest and demand for quality. Survival of industry depends on its response to these new exigencies. Developments in industrial relations have to be viewed within such a framework. The need for brokerage of trade-offs between different interests and agendas has thus become more pronounced in the new economic scenario. Globalisation, therefore, is not likely to force governments to abandon the social market model based on a belief that there should be room for debate between the social actors involved in labour relations. The need for joint solutions with long term positive results for all sides has become more imperative at a time when deep transformations are taking place. Bargained solutions will still be the key contribution to solutions of complex problems that would otherwise be very costly to solve. The EU, through the directives and the policies it adopts, has continuously stressed the need for a broad political consensus throughout Europe. The perennial problem remains of striking a balance between social and economic interests. In the globalised economy state, capital and labour do not simply have to find a modus vivendi to maintain order and peace, but, through a consensual ethic, try to provide a policy innovation forum to solve the pressing needs of an intense competitive market. 5.11 Human Resources Management In this globalised scenario employees should be on the alert for possible eventualities at work. Employability, which has become the new buzzword in the parlance of employment relations, entails the need for retraining and reskilling. The liberalisation of the market in this globalised economy has brought an influx of immigrants to Malta. One of the problems encountered in Malta by employers is the lack of specialised workers. Anġlu Fenech, a former GWU Secretary General, said that last year, half of the 5000 jobs created by the Government were taken by foreigners. He believes in the retraining of workers. However, today, as a director at Employment and Training Corporation, he knows that there are a number of unskilled people who are currently registering for work. “Today’s challenges are that the worker has to accept that today he is working here and tomorrow somewhere else. And if need arises he should be retrained” (A. Fenech, 2014, personal communication, 2014). Rather than trying to attract foreign workers, and maybe also offering them other fringe benefits; it would be cheaper to employ Maltese workers, who are already trained. An organisation which recruits Maltese personnel locally does not have a language barrier, and training would be much easier. Moreover, the Maltese workers would be closer to their homes and families, easily within reach, and there would be no need to offer them accomodation, which is sometimes very expensive. 5.12 Adopting a Life-Long Learning Strategy Reskilling and retraining have become buzzwords. These are vital concepts in employment retention. In the past, there have been organisations which invested heavily in training, namely Central Bank of Malta, Farsons and others (Ellul, 2014). The accelerated change, which has resulted in the transformation of technology, compelled employees to keep abreast of such changes by reskilling and retraining themselves. Nowadays, the need to retrain and reskill people who are already in employment is a necessity. Globalisation, technology, and free movement of labour supply, make this need more pressing. Besides the present needs of the labour market, which requires new and specialised skills, Education Minister Evarist Bartolo, sees other benefits: “Learning to do refers to the acquisition of practical skills, but also to an aptitude for teamwork and initiative, and a readiness to take risks. As such, this pillar is about the competence of putting what we have learned into practice so as to act creatively on our environment. A variety of situations, often unforeseeable, is bound to arise. When this happens, learning to do enables us to turn our knowledge into effective innovations” (Bartolo, 2015). All interviewees in this research acknowledged the need for people to be retrained to be able to meet the future needs which often tend to be unpredictable. The target set by the EU, that by 2020, 62.9% of the Maltese population has to be in employment is only reachable if the Maltese workers are well prepared to meet these challenges. The idea of having one job for life, with probably only one skill only, has to be changed. To meet these challenges, the Maltese work force must possess communication skills, and have a sufficient ability to use the latest technology. Organisations have to take heed of this need as otherwise their firm may not be economically viable. A quote by Alvin Toffler is quite apt in this regard. “Tomorrow`s illiterate will not be the man who can’t read; he will be the man who has not learned how to learn.” (Toffler, 1970, p. 375) Toffler had foreseen the upcoming changes forty years ago. Experience has shown us that training, reskilling and relearning are a continuous process which will never stop throughout people’s entire working-life. 5.13 Place of work The role of the trade union in this context is very important. As a representative of employees it can voice its concerns to management. Today human resources management prefer to work hand in hand with trade unions. The employers I have interviewed acknowledge that a trade union provides them with stability, a point of communication, and a shop-floor point of view. This assertion is being made on the basis of a qualitative data gathered in the empirical study. It has, however, to be noted that the employers interviewed operate in a firm where the workforce is unionised. 5.14 Summary of Recommendations On the basis of the data emanating from my qualitative survey among different stakeholders, I would dare make the following recommendations to trade unions, Government, employers and people in employment. One has to acknowledge that certain positive developments have already taken place, but I believe we have to do more to be able to reach the target set by the European Commission for 2020. 5.15 Trade Unions Trade unions should be involved in career-related events by providing information to prospective employees about the role and the services offered by a trade union. This may be part of their strategy to combat individualism. They should also put more pressure on the Government to ensure that every employee who is not a trade union member contributes towards a training fund. Employees who opt not to be union members would somehow be contributing towards a collective benefit. 5.16 Government Apart from reviewing and updating the education system from time to time, the Government should look closer into what is going on in specific regions. Special attention should be focused on the Inner Harbour areas where a high number of pupils are not making it to tertiary education. In my opinion, EIRA, which has been the piece of legislation that has regulated employment and industrial relations, needs to be reformed. Inter-trade union disputes about recognition at the place of work have lately become too numerous. The law should provide clearer guidelines and provisions to enable the actors involved in industrial relations solve such issues in an amicable way. Moreover, the introduction of the Civil Unions Act, may give rise to some issues. A case in point is health insurance cover offered by the employer to employees and their families. Do employers and trade unions take into consideration civil partnerships and their children? Is the Employment and Industrial Relations Act in line with the introduction of this Act? How are the interests of civil partners, and possibly their children, protected in collective agreements when it comes to fringe benefits like health insurances? A revision, in this regard, of the Employment and Industrial Relations Act is needed in order to eliminate any possible lacunas in the current legislation. 5.17 Employers The slogan, that education is an investment not a cost, should also apply to the employers. Training and reskilling should be part of the responsibility of the employees. Even training in education programmes about skills and competencies, which are not job specific, should form part of the education of the employees. To be employable workers need to be in possession of an array of skills. 5.18 Employees People in employment, should consider retraining and reskilling as an opportunity not a threat, whatever their age may be. Besides, it is important to keep themselves abreast with the changes taking place at their place of work. They should also bear in mind that when they reach pensionable age towards their mid-sixties, they might still be in employment. There is an emerging trend that a number of elderly workers may still hold on to their jobs; even if on a part-time basis. But to remain in employment they have to remain employable. This dictum applies to younger workers as nowadays the job for life concept is no longer the norm. It is, therefore, important to accept any training program on offer. 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Retrieved June 26, 2014, from http://www.timesofmalta.com/articles/view/20100717/opinion/the-beauty-of-manufacturing.318201 Wilson , R., & Zukersteinova, A. (2011, May). Anticipating changing skill needs: A Master Class. Retrieved March 9, 2014, from http://www.newskillsnetwork.eu/doc/868?download=false Appendices Appendix 1 – Interview Guide In the past twenty years drastic changes have occured in the labour market. We have seen the decline of the manufacturing industry and the closure of the dockyard. Traditionally these sectors used to be heavily unionised. Employers: Do you believe any attempts have been made by the employers to weaken the presence of trade-unions; or trade union representation at the place of work has declined because the workers felt its need was no longer necessary? Do you see a difference between an industry which is unionised and another one where there is no union representation? Trade Unionists: How did the unions react to these changes in order to strengthen their presence at the place of work? Employers: In view the services sector had expanded and employed a number of people who were not unionised, did you notice any difference in the strategy and policies the unions had to adopt? Trade Unionists: In view the services sector had expanded and employed a number of workers who were not unionised, did the unions change their policy or strategy? Do you believe that with the effects of the international recession together with closing down and relocation of companies, the bargaining power of trade unions has weakened? Are we correct to say that in the private sector trade unions are more willing to give in and be moderate in their claims? How real is the threat of competition in the global market? Do you think the wages in Malta had increased because of lack of flexibility (COLA, minimum wage, maternity leave, contributions in the social security) or was it the result of how the industry had developed? Do you believe the labour market should be allowed to operate in a more liberalised manner? Trade Unions today are stronger in the public sector. With the privatisation process, which started in the early ninetees, this sector had started to shrink. Do you think this phenomenon has affected the negotiating process and the talks around the table? Do you believe workers today are becoming more individualistic? Do you believe there were employers who had promoted this idea among certain category of workers? Did you notice any changes in the attitudes of employees with individual contracts? When we talk about practices of Human Resource Management we understand the importance of teamwork, flexibility and committment who seem to be taking the workers towards individualism. How true is it that with individual contracts, and without a union representation, the workers are performing better? How do you perceive Human Resource Management? What comes to mind today when flexibility, retraining, restructuring etc are mentioned? Employers: How are they being received by the employer? What are the problems an employer would encounter? Trade Unionists: Do unions make any attempts to train workers more? Do you ever encounter members who express their concern when such changes are mentioned? Do you believe talented workers should be given a smoother process to move up their career ladder? How possible is it today? Do you think legislation (EIRA) can strengthen or weaken your position on the bargaining table? Today with HRM how is the climate in industrial relations between the parties concerned? How do you perceive the opposing party? Is there an element of trust when one compares the current situation to the past? Does Human Resource Management give any advantage to the employer or to the employee? Do you think that because of HRM, there is a better utitility of the resources available? Do you believe that the presence of Human Resource Management is felt on the negotiation table? Is it active and strong and keeps a strong presence; Does it leave everything for the management to take decisions; or It does its utmost to find the best With hindsight, how do you perceive the development in industrial relations? The parties are now willing to concede some of their demands; Trade unions are still militant like before; or They have adopted a more rational and practical approach so that both sides would make an effort towards a solution. When an industrial dispute crops up today what comes to mind? Statistics indicate industrial actions have been minimised next to nothing. According to you what were the reasons why industrial actions have been minimised? What are you doing to meet these challenges today? How do you perceive proctection, once offered by the Government visavis the strong competition of globalisation? The European Commission has set a target that 62.9% of the population in Malta should be in employment by 2020. In your opinion what has been achieved so far, and where we need to improve? Appendix 2- Consent Form Informed Consent Form I am a student reading for a Degree (Hons) in Work and Human Resources the University of Malta. I am currently in the process of preparing my dissertation with the title ‘Changes in Industry and Industrial Relation; the Impact on Human Resources’. As a stakeholder, I would like you to participate in an interview with regards to this topic as a part of my assignment. The only purpose of this interview is solely for academic reasons and the findings will be used for assessment only, and will not be disclosed to third persons. Your participation will involve a short interview. This interview will be digitally recorded for later analyses. Direct quotes from you may be used in final draft. You may choose to withdraw from the study at any point in time, and may also request that any data collected from you be destroyed and not used in the study. By signing below you agree that you have read and understood the above information, and you are also interested in participating in this study. Name of Interview Signature of Interview Date Name of Interviewer Signature of Interviewer Date PAGE \* MERGEFORMAT viii PAGE \* MERGEFORMAT i PAGE \* MERGEFORMAT 57