Update 4 | Education ministry says GWU’s profits from jobless scheme ‘far less’

The Education Ministry has rebutted reports that the General Workers’ Union (GWU) will rake in €3,000 a year in profit per 600 formerly unemployed individuals who were moved to the union’s foundation, arguing that the profit is “far less”.

The ministry’s statement was made in reaction to a report by The Sunday Times of Malta which claimed that a government scheme to employ nearly 600 jobless people will be earning the GWU more than €8.5 million over five years.

According to the details of the contract signed between the government and the GWU, the scheme saw the transfer of 600 long-term unemployed individuals transferred from the Community Work scheme of the Jobs Plus agency – formerly the Employment and Training Corporation (ETC) – to a foundation run by the GWU.

In return, the foundation receives an ‘operational fee’ of around €980 a month for each employee, while the new full-time employees earn the standard minimum wage of around €700 per month, the report states.

The GWU foundation will in turn be “raking in €3,000 a year on each ‘jobless person assigned under the scheme – amounting to a profit of €1.7 million a year,” the report claimed.

GWU will earn €8.5m from MG jobless scheme https://t.co/yxtyGNctTr: Shameful that a Workers' Union earn €300/month on each worker. Justice?

— Bishop CJ Scicluna (@BishopScicluna) November 27, 2016

The workers – who in the meantime have been struck off the unemployment register – are being paid from public funds, and are categorised as under private sector employment.

However, in a reaction, the education ministry said the ‘profit’ is by far less than the mentioned €3,000.

“The author is conspicuously omitting the employers’ social security contributions and the mandatory bonus paid to employees which in all amount to almost €1,400. The article does not mention either that the rate is fixed for five years or that the employer must absorb the annual cost-of-living adjustment. In addition, no consideration is given to the management and overheads incurred in the management of such initiative,” the ministry said.

The ministry also sought to dismiss any claims of favouritism or nepotism, arguing that the tender was awarded according to public procurement procedures and that the GWU’s offer for the running of the scheme was the cheapest amongst the three offers.

. @BishopScicluna the profit margins quoted for GWU are far from the truth. Tender was public, and other trade unions won similar tenders.

— Kurt Farrugia (@KurtFarrugia) November 27, 2016

“The offer submitted by the GWU was the most competitive at €980 per month per employee. The highest offer received was 20% higher than the cheapest offer. The tender stipulated that the prospective employer should pay all workers the minimum wage,” it said.

The scheme was heavily criticised by PN leader Simon Busuttil who described as “obscene” as well as Archbishop Charles Scicluna, with the latter arguing that it was “shameful” that the GWU was making a €300 profit every month on each worker.

What followed was a series of tweets by Kurt Farrugia, the prime minister’s spokesman, who in a reaction said that Scicluna’s comments were “ill-informed” and that he ought to have checked the facts before commenting.

State sponsored, PL sanctioned exploitation of the meek screams 2 high heaven, whilst PL feathers the nests of millionaires. @SimonBusuttil https://t.co/5ANmIaO32o

— Jason Azzopardi (@AzzopardiJason) November 27, 2016

The scheme was also heavily criticised by former PN leadership hopeful Ray Bugeja and Nationalist MP Jason Azzopardi, with the latter claiming that the "state-sponsored, Labour-Party-sanctioned" scheme was fostering the "exploitation of the meek." 

“Thanks to this initiative, 600 individuals who were doing 30 hours of work a week while remaining dependent on benefits, and hence not benefitting from any employment related benefits, now have their position regularised.  Between 2009 and 2015, individuals participating in the former Community Work Scheme received only 75% of the minimum wage without benefitting from any leave or sick leave,” the ministry continued.