The Malta Independent 22 May 2019, Wednesday

TMBW Business Breakfast: ‘Employment sustainability requires right economic balance'

Kevin Schembri Orland Thursday, 14 March 2019, 08:46 Last update: about 3 months ago

Employment sustainability requires the right economic balance, Gordon Cordina, Executive Director E-cubed consultants highlighted today during a business breakfast organised by The Malta Business Weekly in conjunction with the Malta Federation of Professional Associations (MFPA).

The event was introduced by The Malta Independent's Editor-in-Chief Rachel Attard, and the topic of the business breakfast was: 'Sustainability Measures to Protect Employment’ 

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Cordina spoke of the productivity conundrum, which is a typical chicken and egg dilemma. "Do we first have people to generate activity, or should we first increase productivity and then hope that output and jobs will increase? He asked. "This is a simply put dilemma which digitalisation poses."

He presented two equations. The first is that the output of the economy is equal to the worker productivity multiplied by the workers employed. The second is the workers employed equal to the output divided by worker productivity. These, he said, are two equations using the same set giving a completely different story.

Employment sustainability requires the right balance, he said. In the short run the second equation might hold, but in the long run, the first equation needs to hold true, Cordina explained.

Cordina spoke of the performance of different EU economies over the past few years. Malta and Ireland's economies grew the fastest, and they grew in a way providing the right balance between growth and the change in the employment rate - the number of jobs being created. A number of other countries based themselves on jobless growth, for example, and others focussed mainly on creating jobs without too much growth, he said. "Either strategy does not produce the final growth and results which a more balanced approach would give. Pursuing the balance between growth and productivity mirroring the other variables is key to success," he said.

Over the past five years, he said, the manufacturing sector in terms of employment remained stable, but increased productivity which is reflected in an increase in salaries. There is a trend towards a sustainable manufacturing presence in Malta, he added.

On retail and tourism, he said they remain the most important employers in Malta, and it worries him that they are at a low productivity level. "But improvement in productivity and job creation is being noted."

Public administration continues to grow, he said, adding that he is not worried about it growing as if it needs to grow for the country to be better then "so be it."

He said that we must be careful not to just criticise that this sector is growing but see what they are doing.

He spoke of the need to expand employment in the more productive sectors while ensuring sustainability and consider a downward cyclical fluctuation when it does come. He said "we might see fantastic growth years for a few years but it will eventually come and we need to use the growth dividends of today to prepare for that eventuality."

He said that the public debt to GDP ratio is declining rapidly and is likely to drop below 40% by 2021, arguing that this was needed for government's work on the economy.

Talking about tourism, he said that this activity creates widespread and capillary multiplier effects. "Where do we grow from here in tourism if we reach our capacity limits?"

Malta must focus on the shoulder months and the quality and experience, as well as longer-haul stays, he said in terms of tourism. "As activity moves closer to full capacity, while the global economic scenario turns riskier, new higher value added tourism activities need to be developed, at the same time that perennial challenges related to the quality of product and experience need to be further addressed."

As for the construction industry, he said its share in the economy has been decreasing as other sectors were growing faster. He spoke of the high number of permits approved last year, and highlighted the need for sustainable development. "Alongside those permits we need a much more responsible attitude to our construction activity, which is key to sustaining employment in that sector."

In terms of productive infrastructure, he said that productive capacity and residential spaces are being created at a strong pace. He said that there is a risk with too much going along at the same time we might be expanding supply excessively, "so let's plan to phase in wisely and avoid environmental conflicts."

In terms of traffic, he spoke of the need to have a longer-term view of where the country is heading, and also spoke of longer-term solutions in terms of enjoying the roads. "Waste also needs to be attacked away from politics. There are technologies which will enable us to solve this issue."

In terms of housing, he said that he does not see the need to speak about a bubble, adding that there could be a sharp correction if a crisis occurs, like if tourists no longer come to the island for example.

A panel discussion chaired by The Malta Independent News Editor Neil Camilleri then followed. Clyde Caruana, CEO of Jobsplus said that workers today aged 30, by name would have changed their jobs nine to ten times, as opposed to much fewer times in the older generations. This, he said, means that in the coming decades the younger generations will be very mobile in the market.

He said that the highest share of employees in the labour market were in their current job for less than a year, where in the past it was higher. This, he said, was due to the current economic growth.

He also said that today an employee chooses an employer based more on non-monetary conditions offered by a job.

Turning to employees, he said the need for foreigners is here to stay, stating that the Maltese society is ageing. "This means that the local labour supply will shrink." 

Helga Ellul, Director of Advise Ltd spoke about the re-skilling employees. Employees change rapidly, she said, adding that it is important to give employees the ability to grow. "It makes a lot of sense to continuously train and empower employees," she said.

She also spoke of the need to upgrade the quality of education, in order to upgrade the quality of employees.

Director General of the Malta Employers' Association Joseph Farrugia was asked about seeing more cases of professionals moving to lower-skilled but better-paid jobs. He said that the labour market is going through a rapid transformation, and the near full employment situation is changing the employee to employer dynamics. He called it an 'employees market' as there are more options available and it is easier for employees to switch jobs.

He said that changing employees is good for a company to change ideas, but not investing in employees causing them to look for jobs elsewhere is also a danger.

He said that wages are not the only factor in employee retention, adding that if employers compete among themselves in the market they must not just offer attractive remuneration packages but flexible work arrangements and work-life balance incentives. "These could be more attractive than wage packages."

"Employees are valuing their leisure time and flexibility more nowadays," he said.

Dr John Cachia, during the Q&A round, had highlighted the high amount of acute mental health issues being shown by foreign workers, stressing the need to look at Malta's workplaces, and the mental health and well-being in those areas. Gordon Cordina agreed and said that mental health will be a sustainability problem in the future, where there will be issues with workers being productive as Malta is not investing enough in the mental health care sector.

PN MEP hopeful and sociologist Michael Briguglio said on public sector employees, that meritocracy is going down the drain. He highlighted people being transferred, like architects, for refusing to certify sub-standard roadworks, the Head of Mt Carmel not being a psychologist etc. He also spoke of the importance of evidence-based policy making. "Policies need to be based on evidence. If non-experts are leading fields, how can we have policies based on evidence?"

Victor Carachi, President of the GWU agreed with the need to align education with industry. 

Benjamin Rizzo, President of the MFPA said that the increase in professionals increased more than the increase of independent workers in Malta, and the increase in income was 6% in liberal professionals. He said that the number of professionals as at 2018 in Malta was 34,500 and the average income is €24,000, he said.

The minimum wage is €9,000 he said.

The duration of work-life is 34.9 years, he said, and 7,900 people on the island have a second job.

Dr Enrico Tezza from Confprofessioni spoke about sustainability, and spoke about People prosperity peace and partnership being key priorities.

He spoke of the sustainable development goals, and the promotion of inclusive and sustainable economic growth.

He spoke of the need for work to build a decent life, while also helping forge social creation.

One of the most important challenges is technology he said, explaining that technology is seen as one of the strategic drivers, and AI will affect all sectors. He said the mindsets need to adapt and change to this situation.

The Digital Economy is also likely to widen regional divides, and the ageing population will also play an additional strain on social security and healthcare systems. 

MFPA held this event as part of an EU funded project led by Confprofessioni, the Italian Federation for Liberal Professions.

 

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