The Principal Auditor has uncovered “staggering” levels of absenteeism in government departments. In his latest annual report, James Posso revealed the shocking results of a study carried out in five government departments.

In one department, Buildings and Works, industrial workers were each taking an average
of 25 days sick leave a year, more than the normal annual holiday entitlement for private-sector workers.
In other departments the average number of sick days taken by workers was around 18 days a year.
Last year, the Principal Auditor took the issue up with the Human Resources Manager, who was asked to issue a circular asking heads of departments to ensure compliance with the regulations on sick leave.
But as recently January this year, the Principal Auditor found that eight out of 10 departments continued to perform badly in this respect and “certainly below acceptable standards”.  His obvious conclusion was that such high levels of absenteeism had “a serious negative impact both on the cost and delivery of the service being provided.”
To tackle the issue, he recommended setting out guidelines to manage sickness absence and address issues related to long-term absences. Among other recommendations, he said interviews should be held with staff returning to work after certain levels of absence.
Mr Posso also said line managers should be required to monitor and record absence levels, warning employees who take excessive leave that the concession may be withdrawn, leading to requiring a doctor’s certificate even for uncertified sick absence. He also said government should produce reports analysing sickness tendencies.
Speaking in Parliament during the recent budget session, Chief Minister Peter Caruana acknowledged that there was an issue with absenteeism in certain departments and that the Government was committed to tackling the problem.
However he cautioned that the vast majority of civil servants were hard-working and also disliked to see the system abused.

On a sunny afternoon recently, the road to the top of the Rock was heaving. The behemoth cruise ship, Independence of the Seas, was tied up in port and passengers on shore excursions mingled with casual day trippers as they surveyed the panoramic views and cooed at this year’s brood of young monkeys frolicking in the trees. It was the postcard Gibraltar experience: When it comes to wooing visitors, the Rock has few problems attracting the numbers, of that there is little doubt.

Record numbers of visitors are crossing overland, cruise arrivals are at an all-time high and tourists spent an estimated £230.58m last year.
Faced with cut-throat competition from rival destinations, Gibraltar must ensure it continues to evolve and develop its offering to visitors in order to sustain continued growth. The Upper Rock Nature Reserve is becoming increasingly congested and few can deny that many sites are in dire need of a radical facelift.
In town, Main Street is buzzing with activity but traders nonetheless complain they are not selling enough. Cigarettes and alcohol remain popular purchases, but most visitors whizz in and out in the space of day, leaving little time for more leisurely – and thus more lucrative – tourism. Gibraltar is successful as a tourism destination, but what is being done to improve the product and maximise the economic impact of this vital sector?
Corporate trend
The Gibraltar Government’s tourism policy focuses on selling the Rock as a short break destination, which in the travel industry is defined as a three-night stay. The latest Government tourism statistics show that the average stay during 2007 stood at 3.1 nights, so in that respect the policy appears to be working.
Yet despite the fact that hotel arrivals rose from 59,194 to 63,691 last year, room occupancy and sleeper occupancy fell during the same period. In historical terms, this dip is a blip in an otherwise upward graph. Total arrivals at hotels have risen by 38.03% over the past decade, while room nights sold in that period increased by 53%. Room occupancy rates also rose significantly from 43.3% in 1996 to 57.8% in 2007. But a number of underlying factors are changing the nature of hotel business in Gibraltar and the broader implications have yet to become clear. Hoteliers say that a one-off factor that hit the figures in 2007 was the demise of Monarch’s thrice-weekly service to Manchester, an important cachement area for short-break visitors. Monarch’s decision to reinstate that route as from later this year following the Government’s move to slash airport landing fees, should help redress that situation in the medium term.
More significant perhaps is the trend toward increased corporate custom, where stays are normally shorter. This is good news for hotels, which continue to report higher yields largely on the back of this lucrative type of business. But there is some evidence that this income is coming at the expense of all-inclusive tour business and, with hotel capacity a finite resource, this has prompted some concern at political level about the need to understand how it will affect the Government’s planning on tourism.
Chief Minister Peter Caruana said recently that the Government suspected that hotels preferred to set aside rooms for business traffic rather than assign them to tour operators for sale as part of all-inclusive deals, even at the risk of ending up with an empty room.
“They are sacrificing occupancy rates for yield per guest,” he said during this year’s budget debate. “We need to get to the bottom of this, not because they are not entitled to do it, but because we need to understand the economic implications.”Tourism Minister Ernest Britto, who only recently took over this portfolio from Deputy Chief Minister Joe Holliday, said that in order to ensure more hotel beds were made available to other market sectors such as the all-inclusive tour business, the Government is encouraging the hotel industry to continue upgrading and updating its facilities. It is also anticipating the construction of new hotels and is in discussions with parties keen to do just that. Through the Gibraltar Tourist Board, the Government is also continuing its partnership with the AA of the UK for the official grading of local hotels, an important bench-marking and marketing tool.
Other political parties in Gibraltar share similar concerns to the Government.
The Progressive Democratic Party raised the issue through its tourism spokesman Henry Catania, who has wide experience of the sector. He noted that “the travel-experience of today’s  visitors and an increase in visitors travelling for business is bringing pressure for change within Gibraltar existing accommodation sector.”
“The PDP considers that the supply of accommodation must be increased,” he said, adding that the party would support and assist projects that are aimed at providing increased and better facilities in this area.
Infrastructure investments
For years, the distinctive and unique Charles V wall has lain in a state of disrepair and neglect. Despite its prominent position zig-zagging from the top of the Rock to town, this  defensive historical wall has been abandoned to its fate, slowly crumbling away before the eyes of visitors. In recent years access to the wall has been barred for safety reasons. This year the Gibraltar Government announced a refurbishment project – backed by the Bonita Trust and EU Funding – that aims to repair this iconic heritage feature and open it up to visitors who fancy the challenge of walking up its steep steps.
This has the second major Upper Rock project supported by the Bonita Trust, which was involved in the rehabilitation of Mediterranean Steps and turned this isolated part of the Rock into a wonderful place in which to escape to nature, a rare luxury in Gibraltar.
The Government is also embarked on its own ongoing program of investment in the Upper Rock Nature Reserve.
Several projects have been completed on the Upper Rock over the past few months, including infrastructure work for new – and much needed – toilet facilities. A new sewage system has been installed linking Princess Caroline’s Battery to the Upper Town network, while the sewer line from St Michael’s Cave to Jew’s Gate has also been refurbished. Princess Caroline’s Battery and Moorish Castle – recently revamped too – have also been provided with potable and brackish water. While these investments are out of sight, they are nonetheless vital to the overall product and comfort of visitors to the nature reserve. Along with Mediterranean steps and Charles V wall, work has been carried out at several other sites too, including the Great Siege Tunnels, the Lime Kiln near Princess Caroline’s Battery and the Military Heritage Centre.
“This Government believes in the tourism industry and has, since 1996, invested in an unprecedented manner, particularly in human resources, in providing a sound support base for the local industry,” Mr Britto said. “This Government’s belief in tourism now makes this industry one of the largest generators of income to our economy.”
The investments were not only in the Upper Rock, he said, but also at key tourism sites around town. The Gibraltar Coach Terminus had been fitted with new toilets and a new information counter was being built. Beaches were being refurbished, with work complete at Camp Bay, and Catalan Bay also to be equipped with new railings and public toilets. The sea wall is also to be repaired at Eastern Beach.
As ever in Gibraltar, however, not everyone believes sufficient investment is being channelled into tourism projects.The Opposition tourism spokesman, Dr Joseph Garcia MP, said the  latest budget proposals fell short of the mark and that income generated by Upper Rock access fees - over £3m last year alone - should be channelled into improvements to the reserve rather than into general Government coffers. By contrast, he said, only £25,000 has been earmarked for improvements to Upper Rock tourist sites this year.
“These funds (£3m in entry fees) could have been used to improve the environment of the Upper Rock, the access, the roads and the facilities,” Dr Garcia said. “This would have been in the interests of both visitors and residents.” “Whatever the Government proposes to do with the £25,000 will be very limited by comparison.”
Land, sea, air
Gibraltar registered a sharp increase in the number of cruise visitors this year, as a record number of passenger ships called at the Rock. The trend toward larger vessels also helped prop this figure up even further.
Nearly 276,000 cruise passengers disembarked at the Port of Gibraltar last year, a rise of 31% over numbers in 2006. Although most were on short half-day visits, the average expenditure per passenger in the cruise sector was nearly £39, making this one of the more lucrative of the various tourism segments in Gibraltar.
In order to accommodate more than one large cruise ship at a time, the Government is embarked on a major project to dredge the interior berths of the Western Arm and extend the existing cruise terminal by demolishing adjacent warehouses and relocating those businesses.
The income generated by cruising activity has climbed steeply over the past decade, from £1.8m in 1997 to £10.7m last year.
Analysis of Government figures shows that by far the largest segment contributing tourism revenues to public coffers, is the frontier excursion sector, where expenditure last year reached £230.6m compared to £210.5m in 2006.  But that figure was largely the result of volume: on an individual basis, each tourist on a day trip from Spain spent on average just £22.58. Finding ways of increasing that average spend per visitor, or attracting them to longer stays, will be a vital element of the tourism strategy looking ahead.
Excluding frontier workers, around eight million visitors entered Gibraltar by the land frontier with Spain last year, representing an increase of more than 14% on 2006. “This increase was in spite of a continuing downturn in the traditional package tour market in Spain, which is the source for the majority of the day trip visitors to Gibraltar,” Mr Britto said. “Gibraltar continues to be the top selling day trip destination from the Costa del Sol.”
Consumer patterns continue to change and an increasing number of visitors to Southern Spain and Gibraltar make their own travel arrangements via the Internet. As a result of this, coach arrivals continued to drop last year by 1.2% compared to 2006. But this is more than balanced out by the increase in the number of private tourist vehicles visiting Gibraltar and the increase in air and sea arrivals.
Arrivals at Gibraltar airport were also up last year to 159,666 according to Government figures, more than double the figure in 1997 and up from 143,914 in 2006.
The acquisition of local carrier GB Airways by lowcost airline EasyJet means that, together with British Airways and Monarch, there are now three airlines linking the Rock to the UK market. Iberia also continues to operate a weekly service to Madrid and may increase frequency during the peak summer months.
With landing fees now reduced and major infrastructure works planned for the airport in the coming years, the long-term forecast is positive despite the short-term logistical difficulties that the construction phase will inevitably pose. Indicative of
this positive trend is the announcement by Spanair that it had appointed a General Sales Agent in Gibraltar, coupled to a medium-term commitment to explore launching flights from Gibraltar to Barcelona.
The Government continues to encourage airlines to provide more services from Spain to Gibraltar, “albeit with realistic schedule timings that would benefit the leisure and business markets,” Mr Britto said, which also reflects the Chamber’s view.
The aviation market is also bullish in the corporate sector, to the point that a local businessman has invested in setting up Gibraltar’s first company operating private jets.
Changing face of gib
All around Gibraltar, new facilities are being constructed and old ones refurbished that, taken holistically, will further strengthen Gibraltar’s offering
as a tourist destination. In the short-term, the construction phase has often proved painful, with heavy vehicles clogging roads and much of Gibraltar resembling a construction site.
However as projects come to fruition, so too are the benefits being felt.
The King’s Bastion Leisure Centre, while largely aimed at the local market, proves what can be achieved. The refurbishment of this forgotten bastion has created top-notch recreational facilities and opened up another area of Gibraltar’s historical defensive walls. More will follow as the refurbishment project focuses now on Wellington Front.
Elsewhere, the first phase of the mega-development Ocean Village, has opened for business and is set to become a centrepiece of Gibraltar’s social life.
In the longer term, it will also provide much-needed marina capacity and enable Gibraltar to compete as a key yachting centre in the western Mediterranean.
Work has also started on new road infrastructure in the border area which, while no doubt chaotic in the construction phase, will eventually smooth the flow of traffic in and out of Gibraltar.
Over on the east side, the Development and Planning Commission recently gave overall planning permission for a massive project to construct new luxury residential homes and hotels on this undeveloped side of the Rock.
There are other projects on the cards too that will increase the heritage offering to tourists visiting Gibraltar.The Tower of Homage has recently been refurbished but construction of a new prison will enable development of the remaining areas of the Moorish Castle to be restored and opened up to visitors, a medium-term project linked to work to open up parts of the northern defences as a tourist attraction.
Physical projects aside, Gibraltar is also enjoying a growing number of cultural events that will appeal to both locals and visitors alike.
They range from world-class classical music and opera events at St Michael´s cave, to cosmopolitan food festivals and live music in Casemates Square.
While there is always room for improvement across any number of areas, the tourism sector - and the physical and social structures that underpin it - is well placed for the future.

In the face of continued long-term tax uncertainty in the finance sector, Chief Minister Peter Caruana signalled that he favoured a corporate tax rate “at the bottom end” of the 10-12% range as from 2010.
He made the comment in a budget address where he also announced a 6% cut in corporate tax from 33% to 27% for the 2008/9 financial year, advancing the Government’s tax reduction timetable by one year. Until now, Mr Caruana had reduced the tax rate for businesses by three percent annually.
“I envisage a further cut in the rate next year, before moving to the rate of between 10% and 12% from 2010, to which the Government remains firmly committed,” he said.
“My strong preference will favour the bottom end of that range.”
Mr Caruana said the financial sector continued to develop and grow in terms of product and activity range, employment levels and international standing and reputation.
He described the finance sector as a major activity and a vital segment of our economy.
“It is a major employer, has high employment and income multiplier values and drives up the skills set in our economy,” he said.
The number of jobs in the whole of the finance centre – including law and accountancy firms, as well financial entities - stood at 2378 in 2007, up by 162, or 7% from 2006.
Mr Caruana highlighted developments in the insurance sector.
There are now 100 licensed insurance operations, 60 in licensed companies and 40 in six licensed protected cell insurance companies.
“The sector continues to grow [and] the critical mass that has been achieved in this sector now makes Gibraltar a mainstream insurance domicile within the European Union,” he said.
“There are 33 investment firms, 32 Experienced Investor funds, 12 protected cell funds companies, 86 trust and company managers, and 18 banks with total assets of £11 b, and funds under management of £10.3bn.”
“Given this robust performance in the current climate of tax uncertainty, the prospects for our finance centre are huge when the new tax system can be introduced.
Not everyone shared his bullish sentiments however, particularly because as this edition went to press, there was still no sign of the long awaited judgement from the European Court of Justice on Gibraltar crucial challenge to the European Commission on tax-related matters.
The Government has opted not to confirm its new tax proposals ahead of that ruling, creating deep unease amongst many finance centre professionals.
Shadow finance spokesman Fabian Picardo MP said the Government’s refusal to provide firm guidance on its long-term plans for corporate taxation had left Gibraltar with “no serious corporate product to sell”.
Finance practitioners were being forced to look at other jurisdictions when structuring corporate vehicles for their clients, and with competition between finance centres vigorous, Gibraltar increasingly risked losing out on business.
“We have now been told that [Mr Caruana’s] preference is for 10%, but there is no certainty in what will occur,” he said.
“Absent an unfavourable decision by the Court – which none of us expect – the financial services industry is clamouring for clarity on the new corporate tax system that will be implemented if we succeed in the case against the Commission.”
“I accept, unhesitatingly, that [Mr Caruana] might not want to implement a new system until after the decision of the Court, but we should at least have knowledge of what the new system will provide.”