Is Muscat’s success Mintoff’s failure?

Paying tribute to the late Labour Party leader, Dom Mintoff, on the occasion of the 100th anniversary of his birth, Prime Minister Joseph Muscat said that the former Prime Minister was being given ‘the best present possible’, as Malta is now the country with the lowest level of unemployment in the European Union.

Eurostat figures for June show that Malta’s unemployment rate is far lower than the EU average of 8.6% and the Eurozone average of 10.1%. Youth unemployment in Malta stands at 6.9%, compared with 18.5% across the EU and 20.1% across the Eurozone.

There is no doubt that this is one of Labour’s greatest successes since taking office in 2013. It remains uncertain, however, whether Dom Mintoff would necessarily have approved the present government’s methods.

On his part, Joseph Muscat argued that the country’s success was built on his government’s decisions: be they Sadeen’s ‘University of Malta’ at Zonqor Point, the contentious Individual Investor Programme, the reduction in utility tariffs and pension increases, free childcare services, and a host of other initiatives. 

“This government bucked the trend,” Muscat said. “Contrary to other Labour administrations, its power did not coincide with unemployment and economic instability… During the Mintoff administrations, there was little work and people had to emigrate to Australia and America. Now, we are in a completely new reality; people are coming to Malta looking for work.” 

All of this is positive in itself, but we must also question how sustainable this model of economic management really is. European countries tend to measure success through economic growth, primarily because it implies the creation of new jobs. More people in the workforce also means greater demand for goods, more purchasing power, more tax revenues, higher welfare payments, and (in theory, at least) higher standards of living.

But economic growth – and to a certain extent employment – is an incomplete indicator of wellbeing in society.  Growth does not take into consideration other important things, like community, security, property prices, the cost of living, the protection of the environment, and many other factors. 

In a country as small as Malta, unsustainable economic growth could not only lead us to living beyond our means, but it can also have irreversible effects on our environment. 

The former is of particular concern, as estate agents now warn that the co-called ‘property bubble’ may burst, as more and more construction projects create an ever-increasing supply for a dwindling demand. This can only be exacerbated by the pressure recently applied by the Prime Minister on the local banking system, to issue even more loans in a climate of industry uncertainty.

In an uncharacteristic outburst, Muscat claimed that Malta’s economic success was being achieved despite the banks; and implied that financial institutions should lower their lending standards to facilitate more projects.

This is worrying on two counts. In the first place, Malta’s economic success is in part down to the traditional conservatism of the banking model. Malta did not experience the banking crisis felt in other European countries, primarily because local banks were reluctant to be drawn into bad or unrecoverable loans. Any change to that outlook could easily bring about the same dire repercussions experienced elsewhere.

Moreover, the emphasis on more construction also exerts pressure on our limited land, on roads and traffic, and other fundamental aspects of our national infrastructure. 

There are social implications also. Many fear that the influx of asylum seekers will have a negative effect on the welfare state and wages; but very few question the impact of foreign workers from European countries.

The catering sector and the construction industry employ large numbers of European workers – many on the minimum wage – while the gaming and financial services, which offer much higher wages, likewise employ large numbers of European citizens.  

The Prime Minister himself admitted that the government must now address those people who remain unemployed. Significantly, he said that there are a number of jobs, particularly in the tourism industry, which were shunned by Maltese workers, while other jobs were not being met because of the skills gap.

The reality is that foreigners take up half the new jobs being created in Malta. This creates pressures on many aspects of life: from the property market, where prices have shot up; to a race to the bottom for lower wages and working conditions, with direct implications for workers’ rights; to inflation in food prices and other essential services, etc. According to Eurostat’s latest statistics, Malta had the third highest level of inflation in the EU in May. 

It is therefore debatable whether Dom Mintoff would necessarily share Joseph Muscat’s enthusiasm for Malta’s economic performance. The man who for so long resisted the ‘consumerist, capitalist mentality’ of the West, is unlikely to be thrilled at seeing Malta attracting online gaming companies and other large multinational corporations: against the likes of which his own government had employed a ‘protectionist’ stance.

Moreover, the man who brought his government down over the Cottonera project, would probably be horrified to see a Labour government boasting about an ‘American University’ for the wealthy in the heart of his beloved South. 

In this sense, Muscat’s success may also be also the failure of Mintoff’s vision. The implications for the Labour movement cannot be ignored.