The myth of missing workers

Last Updated on Thursday, 5 August, 2021 at 9:17 am by Andre Camilleri

George M. Mangion is a partner in PKFMalta, an audit and business advisory firm.

The latest IMF report on the economy mentions how key downside risks include a global resurgence of the Covid-19 pandemic together with the uncertain long-term impact of the Delta variant. It points to a labour shortage due to reduced inflows of foreign workers. Naturally a prolonged placement in the FATF grey-list could adversely affect correspondent banking relationships and foreign direct investment inflows. In line with the FATF action plan, the IMF recommends that the authorities need to intensify efforts to demonstrate effectiveness. Three weak areas which prompted the tarring of our image as a grey-listed country are:

  • ensuring the accuracy of beneficial ownership information;
  • enhancing the use of financial intelligence to support tax and money laundering cases; and
  • focusing the Financial Intelligence Unit’s analysis on criminal tax offences.

Returning to the subject of scarcity of workers exacerbated by the dilemma of testing unvaccinated workers as a precaution prior to entering sanitised factory/office premises. To start with, one heeds the caution of the Malta Employers Association advocating that employers protect their staff and the public by encouraging vaccination or tests. Perhaps this may lead to quarantine of more workers and extended absence away from work which leads to the argument – why are employers complaining of scarcity of workers? Given that the prime minister reminds us that more than €500m were spent on a Covid wage supplement that helped part-finance wages of workers at businesses forced to shut or slow down due to the pandemic, one would not expect any undue shortage. Officially jobs were protected, apart from the departure of third country nationals; there is no logical reason for staff shortages.

These shortages are confirmed in a survey of the Malta Chamber of Commerce. It highlighted that 77% of businesses reported having trouble finding workers, of varying skills, with operations being negatively affected as a result. Sixty-one per cent stated that hiring challenges are limiting their company’s ability to operate at full capacity. Quoting Domestica Limited owner, Chris Vassallo Cesareo, who said the cabinet-making and furniture sector had experienced a shortage for five years but lately it was under more strain since it was difficult to bring in foreign workers due to the pandemic. In the hospitality and restaurant arena, one reads about the claims of the Malta Hotels and Restaurants Association to help the sector. It wants government to grant tax exemptions on overtime and part-time income to those employed in the sector to encourage more employees to fill the numerous vacancies in the industry. This has resulted in a controversy as ADPD chairperson Carmel Cacopardo argues that “any aid to the sector must be linked to better conditions of work and a change in the business model to one of sustainable tourism”. In his opinion, both tourism policymakers and operators should really be asking whether the business model funnelled by the JobsPlus policy on foreign workers, is the right one for their industry. It goes without saying that sustaining mass tourism on cheap imported labour carries operational risks that should not be countered by tapping into taxpayers’ money. A popular argument states that both the Malta Tourism Authority and the Minister for Tourism continue to ignore the risk of over investment in tourism. Equally stressing is the counter argument that honest taxpayers, who pay their dues on time, are expected to protect the investment of those who just want more of the same kind of tourism built on a jaded business model. Taking a more pragmatic view on the situation, one is emboldened to read how on 24 July, Times of Malta reported that the number of people registered as unemployed has fallen to record lows. This was announced with aplomb by Prime Minister Robert Abela. He challenged those claiming shortage of workers when statistics showed that there were fewer than 1,600 people looking for work this month. Previous lows in registered unemployment date back to 2019, with a low point of 1,616 registered in June of that year. So who is to debunk the mystery of the missing workers?

The NSO came to the rescue on 29 July. It declares the seasonally adjusted monthly unemployment rate for June stood at 3.6%, at par with the previous month while the number of unemployed persons was 9,840. The seasonally adjusted number of unemployed youths amounted to 1,982, whereas those aged between 25 and 74 years stood at 7,857. Solving this dichotomy about the true level of persons reporting for work may shed some light on the mystery of the missing workers. 

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