The Malta Independent 9 December 2018, Sunday

TMBW Editorial: Growth must be sustainable

The Malta Business Weekly Thursday, 14 December 2017, 11:09 Last update: about 13 months ago

The recent figures regarding our economy have continued to attract positive comments from all over the world.

Three weeks ago, the IMF said that "Malta's economic growth remains one of the strongest in Europe" and projected that this robust performance will continue on the back of rising incomes and historically-low unemployment, complemented by buoyant services exports. 

The European Commission's experts are forecasting that this year and over the next two, Malta will have the highest current account surplus as a percentage of GDP of all euro area countries, "beating" countries such as Germany and the Netherlands.

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International institutions have emphasised the need to shift attention towards sustaining growth and making it more inclusive. The latest IMF Article IV mission's recommendations focus on addressing housing market pressures, closing the infrastructure gap, upskilling and reskilling the labour force and strengthening innovation.

At the recent speech at the ifs Annual Dinner, the Governor of the Central Bank, Dr Mario Vella, seems to focus almost exclusively on the growth aspects, with almost no reference to any negative effects. "House prices have continued to rise. National statistics data suggest an increase of 5.3% during the first half of this year, as against 6.1% in the same period of 2016 and 3.2% in 2015. That said, housing supply is responding to the high demand that is contributing towards house price inflation. In the first seven months of 2017 building permits were 62% higher than they were in the same period of 2016 and 153% higher than in 2015."

But we all know, don't we, the flip side of this: a monster industry that has taken over our towns and villages, carved out their inner cores, demolished buildings that were prime examples of the architecture of their time and replaced them with concrete boxes on top of each other. Fields have disappeared and villages joined together to form one vast conurbation.

Elsewhere, the Governor rejoices that the growth "was due to a significant improvement in our labour supply, both in terms of quantity and quality. Part of this is related to inflows of foreign workers, but our success in raising female participation and improving financial incentives to work has played a key role."

So now we know: the secret behind our growth was allowing a vast inflow of foreign workers. That is what mainly pushed up the growth.

The Governor does not seem to see the cranes on every landscape, the blocked roads, the increased traffic on the roads, the stress on all who work and produce, the empty apartment buildings mushrooming all around, the increased stress on infrastructure.

Nor does he care to analyse how lopsided this growth has been and still is. It is true that more Maltese, especially women, have entered (or re-entered) the labour market, there has not been a corresponding upward movement of citizens to a more sustainable lifestyle. The working class has inched forward, and more students now enter the university or other tertiary institutions but the growth has been slow and rather sporadic. Today the Maltese proletariat has been joined by a new sub-proletariat consisting of asylum seekers and foreign workers who work for a fraction of the wages of Maltese workers.

To get back to the construction industry, this has gobbled up land, airspace, with no noticeable contribution to the country's more sustainable future. Malta being the small island it is, every time a field is taken up for construction, a tree is hacked down, a view obliterated is a loss which cannot be replaced.

Side by side with all this there is a government bureaucracy that has grown and grown and an industry where there are indeed some high-fliers but also others who have not improved over time.

Growth, we are told, will moderate in future. We can only hope it will be more rounded, more sustainable and care more for the quality of life of all who live here.

 

 

 

 


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