Wednesday, October 8, 2014

Shop Opening Hours – public consultation

Recently the Government issued a public consultation document on the Shop Opening Hours proposing a reform.  I have already dealt with some issues in my inewsmalta.com blog (BBBinews blog) particularly regarding the proposed opening hours. However, there are other aspects that caught my attention.

Though the suggestions take only one page, the document’s structure facilitates analysis as it has got a background of the current legislation, the exemptions, the shortcomings of the current legislation and annexes, the most interesting of which is the list pointing to 25 different licenses.

Going through the document one is amazed by the hoch poch approach this issue was tackled over the years and the bureaucracy it created. 
 
Principle
The main principle behind all the legislation was that of restricting the shop opening hours.  This shows that this legislation took only in consideration the business interests.  The idea behind the restriction of shop hours was to restrict business to those hours which most suited certain business and restrict competition.  The main principle was that if it does not suit me to work on a particular hour, nobody should.  It should be remembered that most of this legislation developed before the 1990’s when parallel importation was restricted and thus up to a certain extent each product had a monopolistic market. 

I like to emphasise that the interests of the employees in this sector were not considered as otherwise this would have dictated the number of hours that employees should have.  As I had pointed out in my inewsmalta article, the opening hours of a business entity does not influence the conditions of work.  The fact that a factory operates on a 24/7 basis does not mean that the workers operate on the same basis.  The employees of such an entity work on a shift basis where the work/rest balance is respected.

Neither were the interests of consumers the basis of this legislation as otherwise the principle would have been the minimum closing time and not the maximum opening hours permitted.  The consumer is concerned when shops are closed and not when they are open.  One example is pharmacies.  Consumers are concerned that most pharmacies do not open on Sunday.  The present system is one where not all localities have a pharmacy open on Sunday and even those which open on this day do not open all day as if there aren’t consumers who need to buy medicines during hours where pharmacies are closed.  The interest of consumers is to have the maximum number of hours of pharmacy service. 

Bureaucracy or red tape
The document gives an overview of the present regulation and points at the differentiation that the legislation makes regarding shop opening hours.  There seems to be two main parameters which form the basis of this differentiation – locality and the items predominantly sold.  Through these two factors it lists not less than 14 differentiations which permit shops to have their opening hours from total closure to 24hrs service on Sundays and Public holidays. 

This legislation does not recognize the convergence that had occurred throughout time regarding the ware that shops sell and the localities.  If we take the first factor, one notices that all shop owners today realize that specialisation in what they sell can be detrimental to their turnover because of the restricted market size that Malta can provide.  Thus the way forward for most is to try to create a one stop shop for most.  This can be seen in the case of pharmacies where nowadays all pharmacies have only a part of the pharmacy which specialises in medicine.  The rest is dedicated to cosmetics, perfumes and you name it.  Once this is recognized, then all shops should be treated the same. 

The same goes with locality.  Previously one could identify the main shopping centres around the Island.  However, today, retail outlets have mushroomed everywhere with the spread of the population to previously mainly agricultural land in either new localities or newly built outskirts of existing localities.  Thus whereas previously it may have made sense to differentiate between localities, nowadays such differentiation brings only confusion and bureaucracy. 

As I had already pointed out, one is amazed by the maze of legislation in this sector.  One understands that this set of legislation really is a disincentive to the setting up of new retail outlets.  Simplification through less bureaucracy is not only essential but possible.

Enforcement
This document for many does not have any meaning as they know that reality has already decided what the shop opening hours are.  They depend on the market of the particular sector and locality and no legislation will be able to arrest this development. 

There are two reasons for this.  First, this new reality serves the interests of both business and consumers and thus both together constitute a very strong force.  The second reason is enforcement or the lack of it.  One characteristic of our administration is the lack of enforcement.  All authorities prefer a softer and less troublesome approach of ‘education’.  This approach not only leads to a more peaceful life to our public officers but gives also more publicity.  Another benefit is that there are no quantifiable results that are expected especially in the short run.  Thus there is no accountability or transparency.

The problem with enforcement is that it tries to change the behaviour of people.  Many studies today show that enforcement is a very difficult process and many a time it is bound to fail.  However, it does not mean that we should not enforce legislation.  The reasons for this are explained above.

What this reality leads us to is that legislation should be designed so as to be simple and also use behavioural forces of those concerned to lead to more conformity with what is being sought to be achieved.  In fact that is why many governments nowadays use behavioural experts to help design legislation which is more effective and less burdensome both on the actors and on the administration.  This is because this type of legislation is more in line with people’s behaviour and thus needs less enforcement.

One possible way out, especially when a piece of legislation has been amended several times over time is to go back to the basics and ask the question of what is trying to be achieved for the benefit of society. In this respect we need to know what such legislation is intended to achieve.  The document points to this as it argues that if all regulation were to be removed, ‘there will be those who abuse, to the detriment, mainly, of the employees and those living in the proximity of the shops’.

Thus the legislation is intended to control these abuses.  But will it do so?  Will this aim be achieved through controlling shop opening hours?  I seriously doubt it.  If controlling opening hours will do it, then at present there are no abuses in these areas.  Everybody knows there is because there is no enforcement and it is impossible to ensure conformity on all retail outlets. 

As I wrote, conditions of work will only be achieved once the workers are organised while protecting those in proximity of shops can be achieved through controlling the hours of distributions as they presently are in Valletta. 

Licenses
Licenses had a purpose in the old days.  One could not open a shop without a license and one would not obtain a license unless his shop is in conformity with all the legislation.  Thus it was justified that the government would cover some of the costs involved.  It was a long process and one open to abuse especially in restricting new entrants in the market.  With the changes that occurred once Malta joined the EU, it became the responsibility of the owner to ensure conformity with the legislation.  Thus at present, the license serves nothing but as a source of government revenue. 

If one considers the above, then one finds no justification in restricting shop opening hours.



Wednesday, May 7, 2014



Election Holiday

The European Parliament’s election is just round the corner.  Votes are already being distributed while arrangements are being made for Maltese living abroad to come to vote in Malta.

The later arrangement makes me sick as this is nothing but giving a cheap holiday in Malta to those Maltese who are living abroad.  The problem is that indirectly it is you and me who are subsidizing this holiday.  I do not know who is paying for this subsidy, whether it is the government of Malta or Air Malta.  For me it is just the same as the Government of Malta pays out of the taxation I pay while if it is Air Malta, I will be paying this subsidy through higher prices Air Malta charges.

But does this mean that we should deny those Maltese living abroad the right to vote?  Definitely not.  A simple arrangement would be to provide voting facilities to these Maltese in the Malta Embassies.  If the political parties feel that they should monitor the voting in these locations there would be nothing to stop the political parties to have representatives as long as they pay for their stay. 

In this way, the rights of all – local taxpayers, Maltese living abroad and the political parties – would have their right secured.


Thursday, April 24, 2014

Business Hours



The discussion regarding business hours for retail outlets have been going on for years.  I do not think that there is anything new to be told.  So, why raise the issue?

Really the issue has been raised by a statement by the GRTU, during a visit by the Minister responsible for the Economy, Investment and Small Businesses, that most of the retail owners believe that business hours should be regulated by them directly.  

This statement shows the time lag that it takes small businesses to realize that change is needed and that the business environment has radically changed.  The GRTU is to be remembered of its campaign against liberal shopping hours when Bay Street shopping centre opened at St Julians.  At that time the owners of this shopping centre started opening also on Sunday.  The GRTU brought about all sorts of arguments including the argument that it goes against the Catholic religion to work on Sunday etc. etc.  Then the situation was diffused especially when Bay Street started collecting signatures to push for a referendum on shopping hours by granting exception to Bay Street.  

The government then started to turn a blind eye on those who contravened the existing regulations by opening whenever they thought to do so. 
 
One may ask why the government sought to appease the GRTU.  The reason is the affinity that exists between the business sector and the political class in Malta.  Though political parties depend on ‘donations’ of big business, the election candidates depend on small business especially through ‘donations’ in kind.  Though there have been quite a lot of rhetoric regarding the need for new legislation on political parties funding, we are still waiting to see the Bill come to light.   I sincerely hope that it would be a breakthrough.