An immigration-based economy?

The differences in the thrust of the addresses delivered by the Prime Minister and the Leader of the Opposition last Wednesday during Ernst & Young’s Annual Attractiveness Conference when their most recent Attractiveness Survey was released and discussed are intriguing.

This year the conference focused on ‘transformative age’. The media seemed to have concentrated on the conclusions of the survey that indicated a presumed loss in Malta’s attractiveness to foreign investment, more than to the political direction espoused by the two party leaders.

I think, however, that these addresses indicate – for the first time – an emerging tangible difference between Joseph Muscat and Adrian Delia on economic policy. If handled carefully and wisely, this could be the start of a serious challenge to Muscat’s political supremacy.

Basically, the Prime Minister’s message rested on his government’s economic achievements since first gaining power in 2013. In his words, he wants to use these achievements as a ‘springboard’ that can be used to continue building up this country.

For Joseph Muscat, Malta needs to become even more cosmopolitan as otherwise the current economic momentum would stall. He insisted, however, that Malta’s economy was regulated and did not offer a free-for-all market or one single tax incentive. He even boasted that his achievements defied all negative predictions based on the perception that Malta was too small to become the best in Europe.

His speech seems to indicate that this continuous economic growth could go on forever – or at least so long as he is Prime Minister.

But is such a continually growing immigration-based economy sustainable in the long run?

The Prime Minister ignored this question while the Leader of the Opposition tried to make a meal of it. In his address, Adrian Delia said that the current ‘immigration based’ economy can only last for the next five to ten years. By that time, of course, Muscat would have been long gone – to say nothing of Delia. And government is acting as if it is oblivious of any concern in this regard.

As Delia rightly pointed out, the government does not have a clear and transparent plan for the future. This leads to a number of questions that Delia asked his listeners to consider: What is the island’s carrying capacity? How many foreign workers does government want to import? What is the infrastructure needed? What integration processes and measures are needed? All these questions must be answered in the light of the fact that Malta is already the most densely populated country in the EU.

Adrian Delia admitted that we need to import some particular types of employees but his concern is that what is happening is a reckless expansion rather than a planned enlargment of the labour market.

Delia also noted that the extraordinary increase in foreigners working in the private sector has helped government to ‘hide’ the unnecessary increase of workers in the public sector. In fact, government always concentrates on figures of the public sector workforce as a percentage of the total workforce. This hides the actual increase in public sector employees under Muscat’s government. Delia reckoned that public sector employment has unneccessarily ballooned to 46,900 from 41,500 in a few years.

This increase is mainly an increase of state employees who have been employed because of the long held national obsession that the best one can do is become a state employee – an obsession that is felt more within the Labour Party’s traditional supporters.

The only way to stave off this pressure is more education. And in this we have failed. Malta tops the EU list as far as the percentage of youngsters who discontinue their education after secondary school level is concerned. Our educational system is producing too many unemployable persons who then find refuge in unproductive state employment that is an unneccessary burden on the taxpayers and the country’s finances. Meanwhile we import foreigners who can do the productive jobs – to the extent that private sector employment is increasing at a faster rate than public sector employment.

Can this go on for ever? Certainly not.

Delia’s emphasis on this point uncovers Muscat’s weaknesses in his plans for the country’s future.

Now, perhaps we have good political and economic reasons that point to an alternative for the future, an alternative that is more sensible than Muscat’s acting as if tomorrow never comes.

Or as the Maltese idiom goes: Għada min rah? (Who has seen tomorrow?)

A visionless Budget

The second term of every administration usually signals the beginning of the administration moving towards becoming, slowly, slowly a spent force.

The most telling sign is the gradual loss of that vision that spurred the administration into power in the first place.

The Budget speech last Monday was in fact, more of the same, with nary a hint of creativity and long term vision. It is true that people vote on the way life is treating them at the time that they vote but a winning political party needs to have a vision that inspires the electorate with the hope for a better future.

This was missing in the speech delivered by Finance Minister Edward Scicluna last Monday.

In the new Malta there are too many people who have been left behind – not people at the risk of poverty but actually poor people. Pensioners are also another group of people who feel left behind. The increases they got were a pittance.

Those who feel left behind may have found a champion in Dom Mintoff’s daugher, Yana Mintoff, who is much more ideologically to the left than Joseph Muscat can ever be. According to her, Malta’s economy is booming... but beneath the positive sheen of record employment lies a darker reality that often goes ignored.

When interviewed on ‘Times Talk’ a few days ago she insisted that “Our economy is built on cheap labour and precarious work. It’s not healthy. It’s not good for the workers and it’s not good for society as a whole.”

According to her, “The crux of the problem is having low income work on one side and rising rental, property and food prices on the other.”

The Budget did not have any creative ideas aimed at solving this problem either.