While thanking you for being the only newspaper that reported my intervention to the Social Affairs Committee of Parliament on the subject of the knowledge economy (TMID, 28 September), permit me to put the reported part in the context it was made, an omission which I am sure was merely due to lack of space, and to correct the headline chosen which was somewhat misleading.
I do so in the full knowledge that in attempting to initiate a debate on Malta’s future I risk being taken out of context, being misinterpreted and giving the opposition a great opportunity to spin and invent stories. All I can do is to hope that they have fun because not only will it not change the realities we face but also because it will merely re-confirm their complete detachment from present economic realities.
On the contrary, I hope that this intervention will elicit informed criticism and will hopefully not merely start a debate (that has been going on far too long) but a process of wide consensus where the underlying hard decisions that need to be taken are taken – hopefully by consensus, which requires that all the players give up something but all come out winners.
The premise of my intervention in committee was that not only Europe but also countries like the United States, Hong Kong and Singapore have long resigned themselves to the fact that they can no longer attract investment in low to medium end, high volume manufacturing industries. Worse than that, in recent years we are also seeing that certain skilled industrial sectors (silk manufacturing in Italy, home furnishings in the US and others) are also moving to low cost countries and it is pointless to hope to keep them where they are.
In this context it is useless for Malta to keep on thinking it is going to be the exception to the rule. The trends we have witnessed in the last years will inevitably continue. If even Maltese industrialists are investing abroad because that is the only way they can remain profitable, then all the social partners should not hesitate to publicly draw the self-evident economic and political conclusions.
Lesson one: forget trying to salvage the unsalvageable but concentrate on creating new jobs in new economic areas. I believe it was (UHM secretary general) Gejtu Vella who was reported as saying “Do not protect jobs, protect workers’ employability” and he is absolutely correct. We still have industries that are low end and high volume. They will inevitably close whatever the unions or the politicians may hope or say about it.
We are in the meantime creating new jobs in different sectors and employees made redundant from the former have to train to become employees of the latter. This simple economic reality – which will inevitably occur no matter which party is in government or which union represents the employees concerned – should not be met with crocodile tears blaming the government for what is clearly not up to a government to control, but with a sense of challenge to meet new opportunities.
Lesson two: forget subsidising inefficient operations. What is scandalous about (Opposition Leader) Dr Alfred Sant’s recent statement that Labour would continue subsidising the Drydocks post-2008 is not the mere fact that it is a blatant lie that this is even possible under EU rules (as immediately confirmed by the EU Commission) but that Labour is still advocating a policy of subsidies to inefficient industries!
The reality is harder than Labour seems to wish to numb the country in believing: this country can no longer afford inefficiencies or monopolies and if that means laying off workers from one industry to retrain them for another, so be it. The bottom line is that there cannot be any sacred cows, whether it is the Drydocks or taxi drivers, whether it is Sea Malta or the bus drivers, whether it is Cargo Handling or the port workers!
This government stopped subsidising the Maltese hobza (probably the most traditional bulwark of socialist subsidies) and no one seems to have noticed…. whatever headlines in l-orizzont and Kull Hadd wished us to believe.
Lesson three: we can either control change or we will be taken over by change. Like it or not, globalisation is here to stay – China and India will continue to eat up greater chunks of industry and others will follow them in gaining an ever greater share of the manufacturing supply to the rest of the world. Within five years – if not earlier – they will start gobbling up the service industry! The option to wish this global reality away is not available and this will mean that we will lose jobs and we will lose investment.
Our choice is either to do nothing except panic when it happens and let the political parties slander each other on their otherwise pointless media machines (and Dr Sant adding another of his equally pointless Prosy Points) or plan for this changing reality. The message to employees has to be clear, change is now constant, life-long jobs do not exist anymore, retraining is a constant part of life, job security is history. Obviously, this requires courage, foresight, planning, retraining programmes and all the rest but what it requires most of all is a change of heart in the way we do things.
Lesson four: forget sectarian interests; have the courage to say no to your members or voters if they refuse to face up to unpleasant realities. Ireland changed from an agrarian to a knowledge economy because political parties, employers and unions had the courage to lead and that courage inevitably means that you have to overcome egoistic, albeit short-sighted, positions even at the cost of not being elected! Singapore’s leaders had the undesirable advantage of being able to impose policies: at least as far as economic growth is concerned their policies were correct and yielded admirable results.
On the other hand, Tony Blair has won three consecutive elections for Labour simply because he had the courage to confront union power within his party. He ended up out-Thatchering Thatcher. The outcome? The UK is today the most successful economy in Europe. What happens in Malta? We spend months of interminable chattering over a ditched attempt to put together a social pact and all we end up with is a breakdown over four more or less holidays! Unless all of us – government, parties, unions, and employers – change our attitude there will never be real change.
Lesson five: we can make it. We have a world-class work force if motivated correctly. We have a work force which has historically faced retraining challenges and won them. We have a work force which has constantly imported new work techniques from abroad, trained in them and excelled in them. We have people who have excelled in their spheres be they professionals or industrials. So why do we keep harping on the inefficient rather than the efficient? Even worse, why protect the inefficient on the premise that the status quo is preferable? Why not simply state the obvious – that certain work practices have to go – even if the employees do not like it – because unless they do go the only option is redundancy, even if you are employed with the government.
Lesson six: we can have an exceedingly effective knowledge economy but being small and limited in resources we have to make strategic choices. Malta Enterprise has to go only for high value added manufacturing and their relative clusters (as it is doing). It has to forget the rest. The FDI we require is today more oriented towards financial services, back room operations, telecoms, trade and services. This is why 2006 will be the year in which we will perform an unprecedented national effort to attract IT companies to our shores to capitalise on the investments this government has made in telecommunications.
However, the consequence of this is that we should consciously phase out subsidies that are not within our strategic fit – and that includes giving out factory space. That move will obviously negatively effect certain existing operations but it is a move that is inevitable unless we want to be everything to everyone, which we cannot be! We have to think out of the box – as we will do next year when we will earmark Lm1.5 million in subsidies for films shooting in Malta.
Can all this really happen? Yes, given strong and courageous leadership – of the type already shown by Lawrence Gonzi. Yes, if all the social partners adopt retraining as their mission while at the same time abandoning inefficient and anachronistic operations and work practices. Yes, if rather than looking inwardly within our organisations we look at the genuine national interest. But, as the CEO of Ryan Air said (incidentally the only one I agreed with) “you cannot make an omelette without breaking eggs”.
I am not saying that it is going to be easy or that this is a painless vision – I am merely saying that it can be done and for the sake of pushing our economy into the new globalised environment we should all jettison our unnecessary baggage and do it. I am saying that leaders are elected to lead and not to do only what gains them popularity.
I have no doubt that Malta can be a tiger in the Mediterranean but a cub does not become a tiger if it follows the ways of kittens.
It will not happen by accident. Nor will it happen if we as a government do not continue with the change agenda championed by the Prime Minister despite the misgivings this may create with voters. It will certainly not happen if the opposition continues with its policy that for the sake of winning the next elections it is prepared to sacrifice sound economic policies.
It will also not come about if our numerous employers do not accept the simple and naked facts that real competition, the breaking down of monopolies and the removal of hidden and not so hidden subsidies are the basis of a genuine market economy. Finally, and possibly the greatest but most important change, it must happen with the agreement of the unions who must be prepared to accept that old ways of operating are a thing of the past and are prepared to confront their members (rather than the government) on it.
Lawrence Gonzi leads a party and a government that believes we can change. The responsibility to lead certainly belongs to the government but it also belongs to all partners of our society. Will they all have the courage to lead?