Last Updated on Thursday, 31 August, 2023 at 12:32 pm by Andre Camilleri
Last week, I resorted to my social media page to propose new ideas on how we can use our scare resources effectively and efficiently. Clearly, the economic adjustments that we require as a country must be based on economic projections that include estimates of the total factors of production required.
We must take stock of the current labour living and working in Malta including their skills and estimate the number of workers needed in different sectors, especially those that entail a significant human resource. In my opinion, we cannot have a situation where the private sector is allowed to freely import labour. Surely, the advertisement of a vacancy within the private sector must be realistic. At times the skills required, including the wage attached thereto, is unrealistic. This is one of the loopholes that the government must look into and readjust.
Also, those who are saying that economic growth is bad without even knowing what they are talking about, are either misinformed or else they are parroting what others are feeding them for ulterior motives. Indeed, you hear several people talking about the economy. Understandably, people are feeling the pinch of inflation. Of course, I do not blame them because when people struggle to make ends meet, they start talking about the economy and what is truly bothering them. Au contraire, those who are comfortable enough are just capitalising on the current economic situation to push an absurd economic narrative.
Let us all agree that we are registering an economic growth. We cannot deny the numbers. However, the trickling down effect is being eroded as a result of the same economic success and the accompanying challenges attached to the laissez faire attitude of importing labour and the lackadaisical attitude to take a snapshot and enforce our laws. To be fair, it is also a European problem created mostly by the dysfunctional Schengen practices. However, the way third country nationals are being handled by the private sector to service their industries is akin to the same environmental concept of the tragedy of the commons. We cannot leave a situation whereby the private sector is allowed a free supply of labour without any sanctioned numbers.
Personally, I believe that the people are not upset about economic growth. Yet, they are upset about the management of the economy and the scarce resources. The government is clearly doing its part to ascertain that economic policies register a growth, especially after two consecutive economic shocks. Let me start by giving an example so that we simplify things. For instance, the Planning Authority (PA) has before it the development applications. Hence, the same authority has the information at its disposal of how many building applications will and can be approved. The authority can choose to either approve them all, discard half of them or reject them. In this case, there must be models that calculate the number of required workers needed for the accompanying number of approved applications. Obviously, economists exist and are employed by different entities to work with the economic policy and division of the government to make such projections.
Let’s say there will be a need for 2,000 new apartments, hopefully all approved within the development scheme. The modelling can be based on the number of apartments to estimate the number of workers needed in this sector. Obviously, we need to take stock of the situation, especially on the number of EU and third country nationals living and working in Malta. Abroad, they approve building applications. However, the start and the end date are mandatory. This is imposed in order to respect the neighbouring residents. Clearly, the PA can start sanctioning time to primarily reduce the inconveniences and to limit the number of workers required in this sector.
Therefore, the government can project how many workers are needed such as builders, engineers, carpenters and plasterers within this sector and impose a strict timeframe for the completion of works. If there is a need of, for example 500 workers in the construction sector or other ancillary sectors, the government can open a call and sanction the number of inbound workers. The same applies within the retail sector, especially the tourism industry. Let us say that the country is aiming to hit 3 or 4 million tourists a year. Likewise, we can calculate how many hotels are required, the existing ones requiring a retrofitting, and the number of workers needed to service the industry, including waiters, restaurant managers, housekeepers and other skilled or unskilled workers.
Better visibility can aid the government to limit the number of workers entering Malta, by industry, and even impose strict rules on the quality of the skills of workers entering the country. The problem here is not that workers enter Malta but even their traits. Essentially, we must analyse the current stock of workers just like large continents and even smaller countries do. A decade ago, Luxembourg required a number of foreign workers to service its economy. Indeed, their population is made up of many Portuguese who live in Kirchberg. However, we must admit that in Malta certain blue-collar work will still be executed by non-Maltese workers. We must understand that the economy doubled in 10 years. Hence, we required additional workers. We must understand that in order to build new roads we require foreign workers. If large foreign construction companies bid and win tenders, we must have the calculation of how many workers they will bring with them, how long the project will last and where they will stay. Evidently, everything connects to everything, including the pressure on the rental accommodation. If for instance, we need to build three large hotels, and foreign companies tap in to construct them, then we must see that they have a project timeline and strictly adhere to it.
If they will come from countries outside the European Union, and spend two years here to build a hotel, obviously I believe that the private sector must pay a private health insurance to cover the imported labour. It must be strictly imposed that private hospitals are used before those of the state. State hospitals must be used as a last resort. Perhaps, the government can look into readjusting even the national insurance rate for these workers and for the accompanying employers. The government can no longer bear the pressure of foreign workers to work in the private sector, especially on the health sector. They can enter into discussions with the private sector, expanding the health insurance policy sector, as well as the capacity of the private hospitalisation. The government can even use the private health care to reduce its waiting list.
The same applies in the housing sector. If for example 500 workers are required to build new hotels, spend a few years, and leave, obviously they are creating pressure on the rental market. In the housing sector, I think we can start applying a type of time share, as already exists in hotels, so that apartments are also constantly being occupied. This reduces the need to build more apartments and the pressure on the rental prices. We can create a new market.
Lastly, we must start thinking about these types of markets if we really want to continue expanding our economy and apply a pareto optimal model. Everything revolves around implementation and discipline in every sector. Ultimately, it all boils down to efficiency.