Joe Tanti | Towards new niches and greater labour participation

The MBB is the EU-business advisory office for the Malta Chamber of Commerce, Enterprise and Industry, and the Malta Hotels and Restaurants Association, and liaises directly with various stakeholders, including the European Commission, the European Parliament, the Maltese Permanent Representation in Brussels and other European umbrella business organisations such as BUSINESSEUROPE, EUROCHAMBRES and HOTREC on all EU policy and funding issues affecting Maltese business interests.

How would you characterise the current state and health of the Maltese economy and private sector?

Undoubtedly, same as many other countries, the Maltese economy in the past years had to go through some difficult times, which are not yet over. As an open economy, which depends on trade, Malta was very much prone to international market developments notably volatile prices, and to dwindling consumer demand in our main export markets.

Yet, the strong foundation of our banking sector, along with the investment in a diversified economy over the years, our entrepreneurs' persistence to push on despite economic uncertainties, and the consistent investment in education and in the various industries; have all contributed towards a resilient Maltese economy that stood its ground. Even though it has not grown as much as one would have hoped, on the other hand it did neither collapse as unfortunately happened with some of our neighboring countries.

Just last month, credit agency Standards & Poor downgraded Malta's credit rating. The announcement was met by considerable political dispute regarding the reasons behind the downgrade. What is your take on the downgrade, and the ensuing lack of agreement regarding how to address it?

Business organisations stay out of the political dispute regarding the reasons behind the downgrading of Malta's credit rating. I believe though that everyone agrees that a downgrading is not in the country's best interest as it affects the perception of potential investors on whether to invest in Malta or elsewhere.

The business community therefore expects a collective effort from all stakeholders to ensure that this position by Standard & Poor is reversed positively as soon as possible. This should be a top priority for the new elected Government by passing the 2013 Budget and by presenting a strong and credible economic plan for the upcoming legislature.

Despite official NSO figures that show a slight increase in unemployment over the past few months, employment locally has been strong - especially when compared to other EU member states. What do you attribute this to, and what should we do to safeguard it?

We have to acknowledge that despite the turbulent economic environment in Europe, Malta has succeeded in keeping the unemployment rate well below the 10.5 percent of EU average. Over the past few years job creation in Malta has emanated mainly from service-based sectors while employment in the traditional sectors has been largely sustained thanks to the right public policy support measures.

For the future, more jobs need to be created to meet the growth demands of our economy. In this respect, Malta should continuously strive to identify new niche sectors and focus on upgrading the productivity of employees, re-training and multi-skilling our workforce. 

Just days ago the European Commission forecasted that Malta is expected to enjoy the second-highest economic growth in the eurozone and a potential increase in unemployment. What is your take, and what should Malta's priorities be to ensure that these positive developments come about?

The forecast by the European Commission is surely positively noted, and confirms that in general the Maltese economy has shown resilience during the economic crisis. Now that the EU is slowly coming out of the crisis, the member states that have a healthier economy than their counterparts naturally are in a better position to achieve economic growth.

The Maltese economy needs to capitalize on this momentum. It is therefore the responsibility of the incoming administration to steer the economy during the upcoming recovery period by creating the right business environment for the private sector to accelerate growth and employment.

There is agreement on the need to bolster the labour force by encouraging more women and parents to enter the job market, as well as encouraging pensioners to do likewise. Will the proposals tabled so far by the leading parties be effective in tackling this issue?

The fact that all parties are acknowledging that Malta needs a more integrated work force is very positive to note. As a country that has no raw materials, it is essential to make use of our human resource in its full capacity. Unfortunately, Malta lags behind its European counterparts in some categories, particularly in the employment of females and the elderly. In the past few years we have already seen a number of initiatives by Government to address this issue, but more needs to be done.

Whoever will be in government as of next month should continue encouraging disadvantaged groups to return to or engage in the labour market through fiscal incentives and training programmes. The business community acknowledges that free child-care centres can be beneficial. On the other hand, they have expressed concern on how the proposal of employees making use of sick leave entitlement for children will work in practice. Businesses fear that this may lead to additional cost for enterprises and possibly abuse.

The reality of the current economic climate dictates the need for a more structured approach towards reconciling a work and family life. Again, it is positive to note that the political parties are committed to address the issue of childcare facilities. However we also need to promote better-structured support services through which the private sector can truly boast of a healthy and diverse mix of skilled employees, ensuring both equal opportunities and the necessary flexibility to maintain a competitive Maltese labour market. 

Incidentally, the MBB is implementing a project on flexible-work arrangements and family friendly measures in the private sector. This involves a study to identify gaps in the private sector, which is currently underway. The MBB will be presenting the results and recommendations in the coming weeks.

While Malta performed well in an Ernst & Young investment attractiveness survey carried out late last year, among the discouraging factors listed were 'rising costs'. What can be done to keep costs for operators low to attract more foreign investment?

One needs to acknowledge that the indication of rising costs can indeed start to increasingly worry investors when making a decision whether to operate in Malta or elsewhere. As a country we should certainly take all necessary measures to control such increases as much as possible, but this can only be done to a certain extent, given the nature of our open economy, and therefore our vulnerability to volatile global pricing fluctuations.

Malta should therefore strengthen its investment on the various diverse factors that have attracted foreign investment successfully to Malta in recent years; one must note, even during recent economic turbulent times. These include political stability, our geographical location as a gateway to new markets, our tax regime, an educated qualified labour force, a pro-business environment, and smart regulation, among others. Such factors can compensate for other rising operational costs, given that in the end, they may outweigh costs, through higher added-value operations generating greater revenues in Malta.

What do you think should the new government's priorities be for the coming five years?

The work to be undergone by the new Government in the upcoming five years will be key in Malta's course to achieve the Europe 2020 Strategy targets. These are challenging obligations arising from the EU's long-term competitiveness agenda. Naturally, a stronger Europe on a global level will also have a positive effect on our economy, including the private sector.

In this respect, the Malta Business Bureau has published a document entitled 'Delivering the Europe 2020 Strategy in Malta', which includes a number of policy recommendations for the political parties in view of the 2013 General Election. In a nutshell, Government should keep supporting businesses in becoming more competitive, address labour market reforms and provide for sustainable environmental resource management.

Concrete measures include more access to finance for business, reduce compliance costs with new legislation and the promotion of business clusters to enable enterprises fight economies of scale. The incoming administration should introduce more schemes to address Malta's skills gaps and to integrate more people into the labour market, including females, youths and the elderly. For a sustainable environment, the new government should be highly committed to renewable energy and better use of our scarce water resource.