Reskilling and digitalisation: the keys to resilience

Last Updated on Thursday, 5 November, 2020 at 1:17 pm by Andre Camilleri

Joseph Farrugia is Director General of the Malta Employers Association.

This year’s edition of the European SME Week was more significant than ever before. The Covid-19 disruption spared no economic sector and many companies in Malta have been directly impacted by the economic fallout of the outbreak. Nevertheless, many businesses have retained their employees even if it meant suspending their investment plans until after the crisis abates.

Companies showed their resilience by quickly introducing flexible working arrangements and shifting their businesses online to cater for the abrupt change in consumption patterns. Although these transformations were primarily driven by the pandemic, many of the newly-implemented methods will remain in place long after the situation improves.

Like in most other countries, SMEs are essential to our economy and, given the limitations of the domestic market, internationalisation is fast becoming an important factor in Malta’s economic formula. Growth nowadays relies heavily on the quality of skills and access to and implementation of digital strategies.

Malta’s reliance on imported workers to fill a range of vacancies shows that there still is demand for unskilled employees. It must be recognised, however, that shifting to sectors with a higher degree of digitalisation leads to more value-added economic activity, which in turn facilitates economic expansion and lowers the burden on the country’s human and natural resources.

The opportunity of digitalisation is that it enables companies to access niche markets and build supply chains in any part of the world. I believe that digitalisation is today fully embraced as a concept, but many businesses lack the technical know-how in deploying specific technologies to their businesses. 

Digitalisation is a wide concept with different applications to different sectors and, many times, the generic term becomes confusing.  Manufacturing processes, retail checkouts, and banking services, for example, all require unique processes of digitalisation and technical guidance is essential to help them take advantage of new possibilities.

Digitalisation goes hand-in-hand with reskilling, as many SMEs in Malta are well aware of. Meanwhile, few companies are prepared to invest in new skills just for the sake of it: a reskilling plan has to be directed towards clear business goals.

Enterprises usually offer reskilling to their workers, but employees are also responsible for their own development and there are multiple opportunities for further training. Government policy, however, remains instrumental to update the national skills strategy. It provides the educational infrastructure that makes the resources available including preparation of educators and upgrading of qualifications.

Failing to reskill leads to economic stagnation with all its consequences. Unless we invest in skills, Malta’s situation relative to competing firms and countries will deteriorate at the cost of a fall in investment, economic activity, and overall standard of living. The need to reskill is not a new scenario; Malta has been in this situation other times since the second half of the last century. In fact, investment in skills has been the primary source of Malta’s economic success, and reskilling has imbued the economy with flexibility to reshape its labour force and meet emerging challenges. What may be different today is that the pace of change is faster than what we have been hitherto accustomed to.   

Businesses need a comprehensive direction to be able to shape their digitalisation and reskilling strategies. What tourism niches are we going to target? How is manufacturing going to be restructured? What population is being envisaged for Malta to plan construction activities? These and other fundamental questions require concrete replies to enable businesses to plan ahead and grow.

Ultimately, economic growth has to be enacted within a national vision that addresses the many dimensions of social equity and environmental protection. Individual enterprises cannot, nor can they be expected to, bring about social and environmental changes at the macro level on their own. But through dialogue with national authorities, they can contribute towards a holistic and proactive programme that aligns business plans at enterprise level with a national programme.

Companies have shown that they can be resilient in times of turmoil, but their development needs to find the support of the public sector through access to finance, bureaucratic controls, technical assistance, and other means in order for business to flourish.

In this trying year, companies in Malta understand more than ever before than reskilling and digitalisation are the keys to resilience.

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