The Language Studio has been teaching Spanish to people from different countries since 2003. Many of these people either live or work in Gibraltar. Learning a language is not as difficult as it seems and as well as being fun, it can also make your life easier and more interesting here in southern Europe.

We use a mixture of communication and grammar teaching techniques with experienced native Spanish teachers. This makes it a perfect way of enabling people to communicate effectively and confidently in Spanish whether it is from a standing start or to brush up and improve the knowledge they already have.

The Language Studio provides both office tuition and private home tuition. Our qualified and experienced teachers will come directly to your premises, either at work or home. We also make it easier for you as we are very flexible about the time and duration of the lessons.

Chamber members who are interested in offering their staff the opportunity of improving or learning Spanish should contact The Language Studio at: thelanguagestudio@yahoo.co.uk or 0034 658685072. Be sure to mention that you read about this offer in the Chamber’s B2B magazine.

The introduction of mandatory Private Sector Pensions remains firmly on the political horizon and the expectation is that when a new Government is sworn-in, following the elections, we will see the start of a consultation process which will likely have only one outcome.

It is anticipated that the party manifesto’s will indicate the need to address the issue. It would be a mistake however if the debate is limited to the social benefit of having, or not having, work pensions for all employees. There is no argument with the merits of having a work pension. The political question however should be: do the advantages that employees derive from a work pension sufficiently outweigh the disadvantages, namely the long term risks of adopting additional costs, to entitle our legislature to make the practice mandatory? The temptation to interfere is strong but the economic sclerosis that follows interventionist practices have deterred previous administrations.

Mandatory or otherwise there are a number of Private Sector companies which have already introduced pension provisions for their employees. These pension schemes fall into two distinct categories, and the lessons learnt from the experience of both deserves close scrutiny. The two classes of pensions are termed “defined benefits” and “defined contributions”. The first class, which has now largely been superseded by the second, is designed to pay out a sum equal (to say) 2/3 rds final salary. The second class ‘defined contributions’ have been more successful. The employer (and the employee) pay into a retirement scheme which pays out based on the schemes performance in a typical ‘defined contribution, pension the employer contributes between 5 % / 7½ % of basic salary and the employee is free to contribute in whatever proportion chosen. The tax benefits only apply to the employee’s personal contribution. The employers’ contribution is deemed a ‘benefit in kind’. Most frequently these are personal pensions: personal to the employee who can transfer the pension to another company in the event of a change of employment. In brief ‘defined benefits’ have proved to be unsustainable. Especially in a Private Sector, which is required to remain competitive, and which operates on ‘open market’ basis.

Regardless of whether the pension schemes are ‘defined benefits’ or ‘defined contributions’ the Private Sector has shown that it is unwilling to enter into mandatory pension commitments, which could eventually threaten the long-term future of the company. To underline the need for caution one should look to those companies with pension schemes for employees who have paid dearly for their generosity to one generation of employees when the accumulated commitments prove unsustainable. Ford is just the latest example of a once successful company, which finds itself over-burdened at a time, when the company is facing difficulties and needs to shed overhead costs to regain flexibility and maintain its competitive edge. Current analysis of Ford’s financial predicament points strongly at the company’s pension obligations as the black hole’ which is consuming its resources. The problem extends equally to the Public Sector, although, its effects remain hidden for longer. In Gibraltar the Public Sector pensions have been structured on the 2/3rd final salary formula albeit the cost may be unsustainable going forward. This actuarial predicament applies equally to the United Kingdom and the recent Turner Report has served to spell out the risks associated with a Government policy that is based on ducking hard decisions and leaving the problem to accumulate to the disadvantage of future generations.

It may be that the Private Sector will concede the need to introduce pension schemes but for Government to hold the moral high ground it would be as well to see a radical overhaul of the Public Sector pensions scheme to ensure that civil servants of less that 5 years standing and all future entrants are placed on a ‘defined contribution’ scheme which is sustainable on an actuarial basis.

Currently those Private Sector companies that choose to introduce a pension schemes are very limited in the options available to them. In theory a company may apply to the Income Tax Department for approval of a specific investment scheme but in reality the Income Tax Department is not yet resourced to discharge this function. The only remaining alternative therefore is Provident No 3. A pension investment scheme administered by the Crown Agents. Provident No 3 has performed adequately to date but does not meet the requirements for flexibility and diversity, which may attract local companies looking for a pension solution, which meets additional objectives. In particular being able to achieve two goals at once, for example buying a property in the name of the pension scheme and renting the property to the company. Investing in property in Gibraltar is also a benefit to the Gibraltar economy as a whole and there should be sufficient discretion in the Government department responsible for approving individual pension schemes to take into account both the needs of the company and the benefit to the Gibraltar economy. Pension schemes for the Private Sector should not be limited for the benefit of employees only but also for the retiring directors. Currently the legislation prohibits owner/managers who own 20%+ of a company from being a member of a pension scheme in Gibraltar. Not only is this discriminatory but if mandatory pensions were to be introduced such legislation would need to be amended. (see George Olivera letter to CM Edward to write up). These measures, if introduced, should further increase the number of companies entering into Pension Schemes on a voluntary basis.

Assuming that flexibility and diversity are introduced into the Pension formula, the question still remains whether the Private Sector, as a whole can afford to meet the cost of mandatory pensions? Not all branches of the Private sector are buoyant, for example: retail is in the doldrums and hotels are struggling. It is not a good time to add additional costs to their infrastructure. In fact there is unlikely to be a time when the economy is proving equally strong for all branches of the Private Sector. Additionally for existing business their financial models are based on the current cost of doing business in Gibraltar today. The models take into account the considerable tax burden, which we have inherited from the closed frontier and the enlarged Public Sector that ensued. It would seem therefore that there is little room for manoeuvre to allow business to take on pension obligations other than on a voluntary basis, which in turn can be encouraged by a more consumer conscious government able to supervise ‘a la carte’ pension schemes.

There is however one major opportunity ahead: the prospect of reduced corporation taxes pursuant to a favourable ruling from the European Union on our ability to have our own tax laws. This could provide for a reduction in existing overheads, which could be re directed for the benefit of employees without the spectre of unsustainability. This means therefore that where Government introduce substantive tax reductions equal to approximately 5% of turnover this saving could be applied by the company to fund a Pension Scheme for its employees. It would be more encouraging however to the Private Sector to see the issue of Pensions being tackled across the board and to see Government showing a lead by ending the practice of offering Public Sector employees ‘defined benefits’ pensions and giving a strong indication that long term Government spending commitments are structured on a sustainable basis and are not a time bomb waiting to happen. In this scenario the prospects of mandatory Pension requirements for the Private Sector might gain the support of employers without whose consent a mandatory scheme would be politically irresponsible.

The first in a series of articles about how managing information can help your business.

Business Intelligence, Management Information and Data Warehousing. These are all terms that have been embraced by large companies over the past decade in an attempt to gain strategic insight into customer behaviour and steal that all important market advantage away from the competition. But what do all of these terms really mean and are they relevant for small to medium businesses typical of those found in Gibraltar?

A study of Fortune 100 companies undertaken in 2005 by Wirthlin Worldwide on behalf of Accenture, a leading consultancy, found that 90 per cent of senior executives within these companies saw Business Intelligence capability as the most influential benefit for a company’s prosperity.

In the 2006 annual Gartner survey of over 1400 Chief Information Officers of leading organisations from over 30 countries, Business Intelligence capability came out as the top technical priority.

So what is all the fuss about? In order to understand exactly what all of the concepts mean and the benefits they provide, it helps to start by looking at the problem that these principles address; primarily the ability of a company to analyse and report consolidated business information.

Many companies run several operational computer systems, each one addressing a particular business process such as stock ordering, sales processing or account management. These systems usually serve their primary operational tasks well and to some extent may even exchange information. However, when managers try to consolidate the wealth of disparate system data to aid the strategic decision making process, it seems like they are trying to extract the proverbial “blood from a stone”.

This is where Business Intelligence (BI) solutions provide the key. Businesses are typically data rich but information poor. Operational systems hold a wealth of data, but to unlock the potential of this data it needs to be transformed into information. This is exactly what a Business Intelligence solution provides. A good BI solution should deliver some or all of the following benefits:
• Consolidated historical and topical information about sales and customer behaviour
• Key Performance Indicator (KPI) reports
• Conduct What if scenarios: perform market segmentation and understand better how to win new business without losing existing customers
• Analyse growth trends, model the impact of changes in influential parameters and predict sales trends or customer behaviour
• A single version of the truth where business performance is concerned
• Manage growth proactively not reactively

Solutions do not have to be costly or complicated to install. In fact a good BI solution should simplify the business manager’s interaction with IT and for that reason BI solutions should be business led initiatives rather than IT led ones. The technology employed need not be complicated either and whilst BI for the large organisation may require a generous amount of computing power, the small to medium business can achieve a lot with very little. The key resource is the human one, ensuring that the right questions are asked and that the insight provided is acted upon.

The next article will look at Data Warehousing and Strategic Management Information.

www.bis.gi

Highlights
• 86 per cent of those responding felt that the Cordoba Agreement would be good for business. Just 1 per cent thought it would not be good for business and 13 per cent had no view.
• Two thirds of those responding had experienced some difficulty with telephone made calls to Gibraltar since the telephone restrictions were lifted in mid-February.
• 88 per cent said that they would support a park and ride scheme from the frontier to Casemates.
• Staff recruitment and retention was the issue which respondents thought most likely to affect their business over the next 12 months, followed by increased business costs and increased competition from Spain.

Business Climate
Just over half of those responding (52%) reported an increase in sales in 2006 compared to 2005. However, one fifth said that they had seen a decrease in sales over the same period (29% saw a decrease the previous year). This implies that the business climate actually continued to improve through 2006. As with last year the majority of those businesses seeing a decline in sales were in the retail and wholesale sectors. A quarter of those responding said that there had been no change in conditions between 2005 and 2006

When asked about the outlook beyond 2006 the picture was more mixed. Just over half (57%) thought that trading would remain the same as 2006, but as with last year’s survey, a third of those respondents, particularly in professional services, thought that business would improve.

Just 10 per cent of respondents thought that trading would deteriorate during 2007. These respondents were from the retail, wholesale and transport sectors. Trading remained good across most sectors although some businesses in retail and wholesale sectors experienced sales declines. It is unclear as to the reasons for these declines but they reflect a continuing trend of the vulnerability of certain parts of the retail and wholesale sectors.

Beyond 2006 the picture was understandably more uncertain with a quarter of respondents not giving any view on the trading environment. However, just under two thirds of those responding (60%), thought that trading would be the same or better than 2006.

Business Costs
In last year’s survey we asked members whether they had noticed the increases in the costs of utilities (electricity, rates & water) in 2005. More than three quarter of those responding (77%) said that these costs had increased noticeably during 2005. This year we asked members to give indications of other business costs as a percentage of their overall costs (not including stocks).

The responses varied widely depending upon the sector, but the average of the costs paid by each sector appears in the table below.

No surprise that wages form the biggest cost for all businesses with it forming an average of around half of total costs for all respondents. However, the proportion varied widely across sectors. Interestingly they represented a higher proportion of overall costs in Legal services (65%), Insurance (60%), Banks (57.5%). Although the Wholesale, Construction and Maritime sectors all scored high averages the samples in these three sectors were insufficient for them to be considered truly representative.

Rent and Rates together did not appear to form an overly significant proportion of business expenses on average although it did for Retail, Legal services and Hotel & Catering sectors as might be expected. Anecdotal comments given by respondents would imply that rental increases were causing some retailers to consider the continued viability of their businesses in Main Street.

Cordoba Issues
There was overwhelming support for the Cordoba Agreement with 86% of respondents saying that they thought the Agreement would be good for Gibraltar’s business community. Just 1% thought it would be bad and 13% held no view as to the impact of the Agreement.

Two thirds of those responding said that they had experienced either some or significant disruption to their telephone connections since the lifting of restrictions in mid-February.

Somewhat surprisingly three quarters of respondents said that the freer-flowing frontier had had no noticeable impact on their business, although a quarter said that they thought it had had a positive impact on their business. Again anecdotal comments indicate that numbers of visitors to tourist sites are up sharply on last year. This is attributed to people not having to endure long queues to enter Gibraltar and so it is thought that they are more predisposed to spend money once they are here.

In an attempt to reduce traffic congestion 88% of respondents supported the idea of a park and ride shuttle bus between the frontier and Casemates. This question was proposed before the recent announcement by the Government of its intention to introduce this scheme once the completion of the new airport terminal and associated link roads have been completed.

Issues likely to affect business in the future. As with last year the issues which respondents thought likely to affect their business the most were staff recruitment and retention (24% of respondents put this as the most important issue which they thought likely to affect their business.) After this came increased business costs (19% of respondents) followed by increased competition from Spain (10% of respondents).

Of the most important factors affecting business over the next 24 months there were a variety of responses across all sectors.

The principal concerns are summarised in the table below.

As with last year the survey provided a lot of useful information. This will be used by the Board over the coming months to formulate policy and lobby Government for changes that will benefit members.

If you have any questions about the survey or the results please contact the Chamber on 78376 or email on info@gibraltarchamberofcommerce.com

Monday the 18th of June saw Anglo Wines opened its doors at the Centro Comercial Sotovila IV.

Anglo Wines is offering its customers a great selection of Wines as well as accessories including Screwpull corkscrews and glassware from Schott Zwiesel. “Our aim is to offer a comprehensive selection of wines from all over the world to the residents of Sotogrande” said, shop Manager Tony Hernandez.

Tony has a wealth of knowledge on wine and is happy to give advice should it be required. Anglo Wines offers its clients a free delivery service covering the Sotogrande area. So why not pop in and take a look around.

Track Days Spain is bringing the ultimate drivers experience to Spain. Giving residents and visitors who own high performance cars the chance to explore their cars potential in a safe and legal environment.

Your car, Our Circuit
Track Days Spain offers affordable, first class, well organised track days at one of Spain´s premier race circuits, Guadix which is situated approx. 90 minutes drive from Malaga.

The official launch date was on July 27th with a special introductory offer of only E299 per person including unlimited laps, advice from a FIA GT3 professional driver, lunch, light refreshments and a special edition polo shirt.

Ideal for individuals, groups, corporate events or as the ultimate gift. Visit www.trackdaysspain.com