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“This government is listening. This government is intent on ensuring that the right business
environment is there in Gibraltar for business to prosper,”
Rt Hon Fabian Picardo MP QC, Chief Minister of Gibraltar, November 2014
The current cost of living crisis, hard though it is, does not just affect workers. It is affecting
employers too. The costs of operating a business in Gibraltar, as well as in the UK, have
increased significantly over the last 18 months. The war in Ukraine has led to increases in
energy costs, the prices of basic commodities such as flour and cooking oil and successive
increases in interest rates have made it more costly for businesses to borrow to fund their
operations. This has had a knock-on effect of delaying investment decisions.
Added to the these unwelcome changes is the continued uncertainty on the outcome of the
negotiations over Gibraltar’s future relations with the EU.
Currently, Gibraltar is facing possibly its biggest economic challenge since the full re-opening
of the frontier in 1985. The structural adjustments which Gibraltar businesses, as well as the
public sector, will need to make due to the outcome of the treaty discussions should not be
underestimated.
For this reason, the Government should be listening to Gibraltar’s business leaders now more
than ever. Unfortunately, there is little evidence of this. In recent years the Government had
tied itself too closely to doing the bidding of the unions at the expense of employers so that
the interests of Gibraltar’s business community, its entrepreneurs, its investors, risk takers
and income generators have increasingly been taken for granted. The private sector has
become regarded as a reliable but passive source of income to fund the Government’s annual
expenditure, which has increased significantly over the years and with little effort to reduce
this through efficiencies and the elimination of waste. This cannot go on.
Gibraltar’s business environment, such as it is, is considered by many business owners not
so much as a place to prosper, but has become a market where they are just trying to survive.
Most costs have risen way ahead of inflation, unregulated competition in a number of sectors
goes unchecked, free market principles are applied to some sectors yet protectionism reigns
in others, to the detriment of the wider economy. Seemingly arbitrary changes to rules and
requirements of government departments from customs to employment are introduced at very
short notice, often with little or sometimes no explanation.
Forcing through legislation to make the recognition of trade unions mandatory without
meaningful consultation with the business community is not business-friendly either. The
Government has bent over backwards for the Unions and for the civil service at the expense
of the private sector.
How is this creating an environment for businesses to prosper?
Parity, surely not?
The Chamber wrote about this in a previous issue of Gibraltar Business (Autumn 2020). It is
worth looking at this again in light of the current Union demands for some of its members
to be paid the same as workers in the UK. Most sectors in Gibraltar do not compete with UK
businesses. They compete with businesses in other jurisdictions and with businesses across
the border where the cost base is much lower. UK residents pay for many things which we
don’t have here in Gibraltar like higher commuting costs, council tax, higher rents, higher
energy costs, higher income taxes. In contrast, employees in Gibraltar pay lower income tax,
have longer holidays and enjoy subsidised energy costs compared to their UK counterparts.
The thousands of cross-frontier workers employed in Gibraltar, especially those in the retail
sector, don’t bang on about parity with wages in Spain. For good reason, they have a job and
one which pays more than they would earn in Spain.
Why then does the Union keep raising the issue of parity of wages with the UK? They ignored
parity when it came to trade union recognition. In Gibraltar this is now mandatory whereas
it is voluntary in the UK. Secondary picketing is now outlawed in the UK but permitted in
Gibraltar. It seems that the Union only wants UK conditions which benefit workers and not the
responsibilities that come with them. Parity should be firmly relegated to history as Gibraltar
has moved on from those days.
Constantly raising pay without improvements in productivity only increases the burden on
employers. At some point, employers will simply take the view that it is not worth remaining
in business because of the ever-increasing costs imposed by the Government. These include
above inflation increases in the minimum wage, social insurance, electricity, rates, licence
fees and more besides. This does not “ensure that the right business environment is there in
Gibraltar for businesses to prosper”. Far from it.