So Malta’s General Workers Union, in seeking to obtain recognition from Malta Freeport that it represents the majority of the terminal’s workers, has ordered industrial action, been hit by a demand from the Freeport for damages, and is now threatening to get its sister unions in other countries to boycott CGM CMA (the Freeport operator) and to blockade the port.
It all sounds like someone’s good idea gone bad. Recognition is not a dispute with the employer: it is the result of a mundane headcount run by the Registrar of Unions based upon verified, reported membership lists. If there is any scope for a dispute, it is with the Registrar or, at a stretch, with any other union seeking recognition.
This is the basis for the Freeport’s action against the GWU. It is not an attack on trade unionism: it is defence against misdirected union action.
Unions and collective negotiation are good for employees and good for employers. Yes, there are sometimes disputes – but imagine any HR department having to renegotiate the same contract three, four, five hundred times with each individual employee. Tedious, time wasting, boring – and unlikely to create good will.
From the employee’s point of view, joining in a collective imparts the necessary counterbalance to the employers’ power, putting the negotiations on a reasonably balanced foundation. But when collective power is misdirected it erodes this balance.
Much of the reporting on the issue in Malta has focussed on the economic damage a blockade or extended strike would cause. Yes, it would, but if the dispute were justified then so be it. The end point would be a better, stronger and more equitable situation.
But if the action is in support of a non-dispute, if it is seriously misdirected as in this case, then the damage done is to the whole concept of collective action and organised labour. It is damaging to trade unionism itself – and this is probably much more long-term damage.
And the damage is being done by the union – not by the Freeport, which in one sense is trying to save trade unionism by calling the GWU back from the brink.
Indications are that turnout at the upcoming elections to the European Parliament in June are going to set a new record: the highest level of abstention ever. Not good!
The EU is a huge project. It is, in many ways, the prerogative of the states to set its agenda – but not unfettered. There is a strong democratic strand running through it. That is the European Parliament, the only directly elected institution the Union has.
It does have quite a say in the way the Union is run and what sort of regulations it can impose. So far, that is restricted to reviewing the directives proposed by the Commission and Council, and that is already valuable.
The Lisbon Treaty, if of course it is ratified by the Irish, will extend its reach, opening more areas up to the so-called co-decision procedure (the EU has spawned a lot of jargon..) and, crucially, giving the European Parliament the right to initiate proceedings as well.
So to ensure the EU remains solidly democratic and close to the 450 million people in Europe, Parliament needs to be supported. Which means going out to vote.
An abstention may, in certain circumstances, be a positive, constructive choice. Here, it seems to be no more than an abdication from the whole scope of democracy. To put it another way, if you do not vote, you cannot then complain that the EU is not democratic.
With a low turnout, it won’t be. But for one reason only: that is what the masses of eligible voters who chose specifically not to participate have said, clearly, that they do not want democracy.
Can we afford to let governments and bureaucrats decide, uncontrolled and unmonitored, just what sort of a world we live in? No: that’s why we elect representatives to Parliament. So let’s do it!
The recent series of pirate attacks of the Somali coast have brought the issue to the forefront again. It is not surprising: after months of relative quiet, it is now rare for a day to go by without reports of yet another hijacking attempt, successful or not.
Military patrols of the admittedly pretty large patch of sea the pirates hunt for their victims in had been credited with the lull; unfortunately, this seems to have been misplaced. The weather, it seems, had more to do with it. And this should come as no surprise.
There are some 16 warships patrolling the shipping lanes off Somalia. But note: they come from 10 or more countries, there is only minimal coordination between them, and they are trying to defend against small boats in a vast area. A military solution, clearly, can’t do the trick on its own.
There is another problem here. Piracy is a crime. Dealing with it is police work, not a military operation. This is not a war. And this is not, very definitely, terrorism. Crews may be terrorized, but that’s not the point.
Pirates are after cash. And so far, the way they’ve got it has been through ransom. This has meant that till recently, the modern Somali take on piracy has been a lot more benign than the 17th Century variant.
There have so far been no crew members killed, though some have been injured. Crews being held have reported been treated well – other than finding themselves stuck on a ship a few miles offshore, unable to go anywhere. This makes sense: you do not collect ransom on dead people.
But this seems to be changing; people have now been killed, ironically during rescue operations. The French killed pirates and one hostage when they went in to get the passengers off the yacht Tannit, and the American Navy killed three of the pirates holding the captain of the Maersk Alabama in a lifeboat.
That changes the dynamic, making for a much more dangerous situation. It may be too much to say the pirates have been co-opted into some sort of terrorist conflict, but the risk is now that they will be more violent, more willing to shed blood.
Ships avoiding the Suez Canal pose a threat to Malta’s transshipment business.
I have been told by executives in a number of shipping companies that more and more of the Asia/Europe trade is being routed round the Cape of Good Hope, taking the long route round Africa rather than the shorter Suez route. This is intriguing: it is, in effect, a reversal of all trends since Suez was reopened.
The logic for the shift is impeccable. First, piracy. Somalia has no stable government and few opportunites to earn a living: Somalis have taken to piracy in a big way in response. You can’t be surprised: ransom for a large, high profile ship can run into the millions of dollars.
Now Somalia is strategically placed: on the Horn of Africa, it dominates the approach to the Red Sea and the Suez Canal. The problem becomes clear now: if you avoid the Somali coast, then Suez is out of reach.
With high oil prices, the cost of the longer journey was prohibitive. But then oil – and with it the bunker prices for the fuel ships actually used – collapsed. The longer route now became viable.
Note that some shipping lines, in an effort to keep their ships moving with less cargo to carry, chose to slow their ships down. Longer rotations means the same number of ships carry less freight. This does not apply to the majors, as far as I know. But still.
As an executive of one shipping line told me, one of the reactions to the high cost of fuel was to slow ships down. The trend had been to get freighters (for which read bulk carriers, container vessels, tankers, et cetera) to move faster and faster. But a lot of cargo is not necessarily time sensitive: slow it down, you make considerable savings on fuel and many of the shipping industry’s clients proved willing to wait if it saved them money.
Piracy is now being tackled, with military escorts through a corridor in the straits between Yemen and Somalia and patrols in the western reaches of the Indian Ocean. As events over the past few days have shown, this has not stopped it. Piracy is still a threat, but not as much as it used to be.
The second reason is stranger. I have been told by shipping executives in Malta that the transit rates through the Suez have been raised. This, they say, is driving ships away and onto the long, circumafrican route.
It would, I suppose. There is one problem: I can find no reference to this on the Suez Canal Authority’s website, and have as yet had no answer to an email to them. There is, of course, the statement the Authority made, committing itself to not raising rates this year.
The truth remains that traffic through the canal has dropped, and the main reason for that is not piracy or the price of oil, or even the rates: there is simply less trade to go round!
However this plays out, though, less traffic through the Suez is bad news for Malta. We live on trade, and have leveraged our position – astride the main shipping lanes from Suez to Gibraltar – to establish a tidy transshipment business. But if the main East-West lines start bypassing the Med, that is at risk. And with it, the favourable rates Maltese importers and exporters obtained by piggybacking on this high-volume traffic.
The new regulatory regime for insurance promises to make capital requirements more responsive to actual risk but the question arises: how much will it cost? And how will SPVs be introduced to Malta? They can be dangerous!
The MFSA is preparing to introduce so-called Special Purpose Vehicles (SPVs) and incorporated cell companies (ICCs) to the Malta as risk management tools, Joe Bannister, MFSA Chairman announced in his overview of the Maltese insurance market for the Malta Insurance Rendezvous held on 4 and 5 March 2009.
Discussing insurance
Since the first Rendezvous in November 2007, there have been substantial changes in the sector in Malta. There are now three protected cell companies, from the first one, Atlas Insurance PCC which had only just completed its conversion to the innovative structure. What is more, there are now 10 licensed cells in operation. The number of managed insurers has grown substantially, from fewer than 20 to more than 30 now – with more in the process of obtaining their licenses.
But some things have not changed: most of the insurers are direct writers, not pure captives as in other captive insurance jurisdictions. That is, they cover risks for organisations and people who are not their owners or parent.
One other thing had not changed: the new regulatory regime governing an insurer’s capital requirements, Solvency II, continues to command a lot of attention. This represents a risk-based approach to the determination of the capital an insurer needs to cover the risks it has underwritten, modeled on the Basel II capital regime now being applied to banks.
Like Basel II, Solvency II works on three pillars: the core quantitative requirements, a second strand of qualitative requirements related to internal control and management and a third pillar focused on reporting and disclosure.
The system was explained in detail by Dr Marisa Attard, Director of Insurance at the MFSA and Michaela Koller, the Director General at CEA, the organisation representing the European insurance and reinsurance industry. Solvency II is not, however, a carbon copy of Basel II. It does pick up some of the same principles, seeking to accurately value each risk covered and taking into account a variety of organisational and environmental risks that may affect an insurer. This calculation will work through three basic modes: a standardised approach taking the industry average as its baseline, a fully internal model developed for a specific insurer and an intermediate model. This is, again, similar to Basel II, subject to the proviso that risks in insurance are very different to those faced by banks.
The processes Solvency II will demand of insurers are complex and potentially expensive, a point made by the third person speaking during the Solvency II session, Jeanette Rödbro, Executive Manager of ECIROA, representing European captive insurance owners. Part of the solution lies in simplifications that smaller insurers can apply to the core Solvency II requirements; this is one of the issues being negotiated furiously at the moment, according to Ms Koller.The other is the treatment of multinational group reporting.
The framework directive paving the way for Solvency II to be in place by 2013 must be approved by the European Parliament before it stops work for the European Elections. That was just 15 days away – and the price of failure, the real possibility that the entire framework would need review by the new Parliament.
Ms Rödbro pointed out a number of issues captive insurers have with the Solvency II regime. Many of these apply equally to Europe’s smaller insurers, representing some 80% of the market and including Malta’s insurance companies. Organisational changes could be necessary. But the cost of compliance in itself could be steep.
In preparation for Solvency II and to test the various structures and provisions, a series of quantitative impact studies (QIS) have been carried out. The latest was QIS4, and Europe’s insurers have participated strongly, certainly more than Europe’s banks did during the equivalent phase for Basel II. According to Ms Rödbro, completing the QIS4 reporting cost somewhere between €4,000 and €20,000 and took two weeks. A number of Malta’s leading insurers, talking after the
Malcolm Cutts Watson explains the use of SPVs in risk management
presentation, expressed surprise: they had spent much more, despite sharing the cost by jointly securing the services of specialised consultant for the purpose. While wary of the potential costs, they were broadly in favour of the new regime: it has the potential to improve risk management and to better match capital requirements to the actual risks carried. This, in turn should reduce the cost of capital and allow keener pricing of risk and thus of the premiums due. Good for the insurer, but also for the insured.
In the current economic climate, a number of speakers made the case for captive insurance and other so-called alternative risk transfer (ART) tools. And Malcolm Cutts Watson and Dominic Wheatly, both from Willis, illustrated how the SPVs Prof Bannister spoke about in his presentation could, through securitisation, be used to effectively cede insurance based risk to the capital markets and spread more widely.
The 33rd Americas Cup will be a two-boat affair. At least it’s back on the water – but one hopes that with the delay, the other challenges aren’t forced to drop out.
So the New York court has eventually decided to ensure that the Golden Gate Yacht Club challenges Alinghi for the 33rd Americas Cup. About time: the place for a yachting trophy is on the water!
Admittedly, the probable format is unlikely to be as interesting as a multi-challenge format. It will be just two boats on the water, and two multihulled monsters at that in just one series. But it will be a test of sailing skill, not of legal wrangling.
What will be interesting is how the remaining challenges will take this. There are some very young ones there – Shosholoza from South Africa, for example. There is also the first British challenge for quite a while.
It would be unfortunate if these teams had to pull out of the following 34th challenge, disheartened by the delay and unable to meet the costs it will inevitably involve.
