OPENING SPEECH BY THE HON. LAWRENCE GONZI, AT THE HCIMA ANNUAL CONFERENCE ? MALTA?S TOURISM SECTOR AND THE EU'S SOCIAL POLICY

Ladies and Gentlemen, good morning.

The subject chosen for today's conference presents us with a unique opportunity to discuss the interface between Malta's tourism sector and the European Union's social policy agenda. As Malta's bid for EU membership moves forward and as the global economy gradually transforms itself into a more tangible reality for us all, it becomes increasingly imperative for the various economic sectors to take stock of the challenges and opportunities ahead and to devise a way forward. As such, today's conference is a commendable initiative and I feel I must congratulate the HCIMA for spearheading this debate and for providing a forum of constructive dialogue and interaction between the major players in the respective fields.

As Minister responsible for Social Policy, however, the topic tabled for discussion today possesses a particular significance. It indicates a willingness to integrate social sustainability into a sector which is the major contributor to Malta's economic growth. From a social policy perspective this is very encouraging as it provides an opportunity to strike the right balance between the country's economic and social success. Furthermore, it denotes a realisation of a common responsibility to manage effectively the core relationship between economic and social progress in this important industry. I have no doubt that this concern stems from a common understanding that as much as it would be suicidal for the tourism industry in Malta not to pursue its path to competitiveness and growth, it would likewise be catastrophic for our economy to abandon its social dimension. There are bound to be divergent interests and these must be clearly identified and addressed. But surely there are points of convergence too and it is here that synergies should be channelled if we want both agendas to work together for the mutual benefit of the respective players and the country's overall performance.

This is indeed a formidable challenge not only for the stakeholders in the tourism industry and the social partners who have the primary responsibility to forge a workable and successful relationship on this front, but also for the country as a whole. Tourism is

an activity which affects our society in many different ways. It has a profound impact on our social, cultural and economic life and as such affects a wide range of areas: employment, education, environment, consumer protection, health, safety, culture, new technology, transport, finance and taxation to name only a few. As such, each and every one of us has a responsibility to contribute towards this goal.

It is in this context, ladies and gentlemen, that I would like to offer my contribution.

In an increasingly globalised economy, there is a growing public awareness that growth and success can no longer be guaranteed. The key to further growth lies in maintaining competitiveness and the faster we learn the ropes the better the chances for success. More so in the industries considered to be the main pillars of our domestic economy, foremost amongst which is tourism. Over the years, tourism has kept its place as the main contributor to Malta's economic growth, in terms of Gross National Product (24.3%), its contribution to Government income (LM 109 million in 1998), foreign exchange earnings (LM 347 million in 1999), increased employment (41,000 jobs) and the development in the country's infrastructure.

In the European Union too, tourism is an economic stronghold. It is estimated that tourism directly employs 9 million people in the Union, representing 6% of total employment and accounting for at least 5.5% of GDP and 30% of total trade in services. Tourism is seen as a major source of job creation over the coming years, in particular in less developed and peripheral regions. Some sources estimate that travel and tourism jobs will increase by 2 million by the end of the next decade and will represent over 9% of total employment in the European Union.

Yet these success stories are susceptible to current trends in today's global markets: stronger competition from neighbouring and distant destinations, changing consumer demographics, attitudes and lifestyles, more demanding visitors, a greater concern about environmental and safety issues, the new technologies and tools available through the Information Society, political and social stability in the region, and better and more affordable means of transport which in turn generate greater tourist flows. In addition, as Malta draws closer to the European Union, the need to improve product quality and service standards increases.

It is against all these factors and more that the competitiveness of Malta's tourism industry will be measured in the current global scenario. Tourism's potential for maximising economic dividends must be maximised, yes, but its sustainability today depends on how far it manages to integrate other prominent factors in the competitiveness equation. The National Plan for the Adoption of the Acquis underscores the importance of the development of tourism in Malta "within the parameters of environmental, social and economic sustainability". This calls for a more comprehensive and integrated approach towards tourism, not least in the social policy field.

I am thinking here of a symbiotic relationship:

On the one hand, the tourism industry, in its drive to boost its competitiveness, must not neglect social policy initiatives and objectives. The adoption of the European Union's social legislation in the tourism industry often instils fear amongst stakeholders that their product would become uncompetitive due to higher labour costs. This would be true if Malta's tourism strategy could afford to be built exclusively on price competitiveness. For the reasons I have already outlined, in today's demanding scenario this strategy is likely to fail. As it is indeed acknowledged in the Malta Tourism Authority Strategic Plan for 2000-2002, Malta's tourism "must seek to depart from the successful strategy built exclusively on price competitiveness to a more holistic strategy built on value and customer satisfaction, focusing mainly on the unique value proposition of the product".

Tourism has much to gain if it strives to improve the quality of employment in tourism-related activities, thereby increasing its capital investment in human resources - a vital component of the tourism industry and the hallmark of a quality product. Rather than hampering the competitiveness of the industry, the improvement of labour conditions and workers' rights in the field will go a long way in developing, upgrading and maintaining the very lifeblood of the existing tourism product.

On the other hand, the social partners should explore means and conditions for maximising the contribution of tourism to employment, and to encourage the implementation of positive measures to ensure that this potential will be realised. This could be facilitated through granting greater recognition to the importance of the industry, and through a greater integration of relevant policies, including social policy itself.

There are several reasons why tourism could be an effective partner in the development of a sound national employment policy, namely:

1. the favourable current and forecast prospects for growth in tourist demand, encouraging the development of new businesses, new products and services, and new jobs, notably in relation to the integration of environmental concerns into tourism development practices;

2. the nature and structure of tourism businesses, the easy access to the market for newcomers, and the prospects for creating new niche markets, encouraging new business activity;

3. the wide range of activities which come together to satisfy tourist consumption are an integral part of the economic, social and administrative fabric;

4. the flexible working environment in tourism services facilitating the access of young people and particularly women to the labour market, and the opportunity for ensuring continuous training.

It is our collective responsibility to create the right environment for this relationship to come to fruition.

Can the European Union help in any way? Tourism in the European Union is based on the "united yet diverse" principle and there is no legal basis in the Treaty to formulate a common tourism policy. This reflects a respect for the diversity and complexity of the tourism sector. However, EU institutions, notably the Commission, believe that there is much to be said for the establishment of one single interface as this would help overcome differences and divergences within the industry. As such, it would like to intensify the dialogue as well as create a better structured interface with the tourism industry at large, without eliminating sectoral federations. Its interest is to give the tourism industry a much stronger visibility and therefore an enhanced political recognition. However, it is leaving it up to the tourism organisations to decide whether and how they should move ahead.

This is not to say that the European Union has been dormant vis a vis the tourism sector. The Tourism Unit of the Directorate General Enterprise plays a co-ordinating role within the European Commission, aiming to ensure that the interests of tourism are fully taken into account into the preparation of legislation and in the operation of programmes and policies which are not in themselves conceived in terms of tourism objectives. Last year four working groups were set up to (a.) facilitate the exchange and dissemination of information, particularly through new technologies, (b.) improve training in order to upgrade skills in the tourism industry, (c.) improve the quality of tourist products, and (d.) promote environmental protection and sustainable development in tourism.

Despite the absence of a specific tourism budget for direct tourism activities, numerous tourism initiatives have received support from other EU programmes, such as the Structural Funds with a budgetary contribution of 4.7 billion Euro between 1994-1999. Tourism has also benefited from other actions and programmes in various policy fields, such as environment, training, research and development and the promotion of cultural heritage. Furthermore, given that the European tourism industry is an SME-dominated sector, the European Commission established information networks, data bases and initiatives promoting transnational co-operation in order to support the improvement of their competitiveness, meet their information needs and foster their overall development within the internal market.

The EU has also developed regulatory provisions and supporting instruments designed to meet the need for a more employment friendly environment from which tourism could benefit. These include taxation, labour-market transparency, transnational recognition of qualifications and training, and social dialogue between tourism industry partners.

Ladies and gentlemen:

the future of Malta's tourism industry lies in its improved contribution to a balanced, sustainable development of the country's economy. This can be attained through better exploitation of synergies on a corporate, social and environmental level. The need now is for the development of an innovative strategy for ensuring that all stakeholders will be able to make their respective contributions though a system which would allow for open discussion on common objectives, the exchange of knowledge, encouragement of innovation and greater transparency and quality in planning and legislation.

I hope that today's conference will prove useful in this respect.

Thank you for your attention.