As we speak, hundreds of Maltese businesses are reviewing company balance sheets day after day, calculating how long they can last with plummeting turnovers. The government fiasco in handling the reopening of our economy burnt much cause for optimism.
They must now brace for the worst. Over the past weeks, I met with three separate small businesses which are basically hinging on government benefits not to fire employees. In one case, a catering company which survived recessions and competition for three generations is struggling to keep its skilled workers on-board in the face of a free fall in orders from hotels and weddings, which normally present its biggest client share.
Workers in tourism and the many associated industries are indeed under particular duress. A good portion of these jobs now work under a reduced regime, which in many cases cover just about the hours of the government subsidy. That subsidy was meant to end by the end of September. Government has not announced yet whether it will be renewed. This in itself is cause for generalised uncertainty. I think it is time to clarify government capabilities in this context, at least on a continuity until further notice basis.
Clearly government hand-outs, albeit fundamentally important for the next few months, will not be enough to see us through the full economic downturn of the pandemic. Now is the time to consider all possible tools at our disposal to sustain the sectors of the economy that need life support. One avenue which merits detailed analysis and wider public discussion is the immediate deployment of the EU recovery funds to help maintain jobs and businesses.
The first myth that one needs to clear out about EU funding is that this cannot be used for direct payments to companies or employees to fill in for loss of business. EU funding deployment has to be systematically linked with projects or schemes which would benefit from an injection of public funds with a view to achieve a wider public objective. Health prevention, environmental protection, energy efficiency, educational advancement and employee skill enhancement are all possible EU objectives meriting such public support. The urgent thought process that must be undertaken right now revolves around how to fit those EU objectives within the urgent needs of Maltese businesses and jobs, with a view to deploy the EU recovery funds at the earliest opportunity.
The exercise is worth the effort given that a good 327 million euros in direct grants and a facility of over 400 million euros in loans have been made available to Malta under the Union’s special covid-19 recovery package. The way we use such funds from now until the large-scale vaccination programme will play an important role in securing the welfare of the Maltese economy and thousands of jobs with it.
To begin with, I believe we must front-load the use of such funding possibilities to use them in as short a period as possible, starting from the earliest date. Technically speaking, these EU funds still require legislative green light from the Council of Ministers and the European Parliament. If all goes well, the whole package will be secured by end of year and the funds will be ready for use in January. That is, however, only the beginning. We must be ready with a detailed programme way before that date if we want those funds to reach our companies before bankruptcies set in.
The European Commission just announced that Member States can submit their funding plans by 15 October for a first examination by the Commission. I hope that we can have an open discussion in Malta about this before this is sealed behind closed ministry doors. In particular, I believe that the forthcoming recovery funds should also be used as a catalyst to complete the mini-revolution taking place at the workplace over the past months – the silver linings of Covid-19 on our work culture.
Thousands of workers have been forced to telework during the pandemic. A good number of them realised that it is not as bad as we imagined it before, at least on an occasional basis. Many employers, however, still have mixed feelings on telework. Justifiably, some see it as an additional risk to their company security, a threat to the safeguard of commercial secrets and a challenge to the management of team missions and communication ethos. A good part of the above issues can be helped with the right investment. Companies with sensitive client dossiers can be helped with additional resources on cyber-security for instance. All other traditional business would also benefit from public assistance to equip their workforce with the latest technology, boosting productivity while ensuring the comfort of working from home.
The European Union is already in transition towards a highly digitalised economy. The Covid-19 recovery funds should be seen as an accelerator of that process in Malta. The leisure and tourism industry should pick up the pace on that too, and now is the best time for that. We can already notice the scores of scooters buzzing around with meal deliveries. They mushroomed over the past months, partly in response to the pandemic’s forced reduction of direct restaurant visits. For those scooter companies the business edge lies in their apps and their digitalised communication. Hundreds of our hotels and restaurants can benefit from advanced digital investments be it in operations or marketing. A clear case for a recovery fund scheme addressing this in Malta and Gozo.
At the risk of repeating the universally known, adaptation is the key to survival. A tale told in the bones of the dwarf elephants found at Ghar Dalam, restricted to a smaller territory the species grew smaller to survive. Present day circumstances call for our adaptation to more digital and more mobility, all the way. No sector should be spared, from Health operations assisted with robotic arms connected to surgeons in a foreign land to the boosting of Malta produced products with a better localisation on Google Maps, we must turn the pandemic downturn into an investment in our business capacity once business returns to normal.
The above risks leaving temporary victims of missed adaptation. This therefore calls for another branch in our efforts in the Covid-19 recovery – a strong social arm, focusing on skills upgrades and training. Malta must once again deploy the millions of the European Social Fund as we did during the 2008 economic crisis to this effect.
Europe can come to the rescue in our situation if we commit to adapt it to our needs and work with honest engagement with our European partners. Such commitment is capable of producing concrete results for our families, as we can clearly see in the secured allocation of 300,000 doses of Covid-19 vaccine just announced last week. Europe can certainly help all our families to see the light at the end of the tunnel in this pandemic. Let us make sure to do our part by deploying it in the way best adapted to our particular situation by aiding business enterprises and jobs in Malta and Gozo.
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