The latest statistics from Eurostat, the statistical office the European Communities, show that Malta registered the highest increase in unemployment among the 25 member states.

According to Eurostat, Malta is one of seven countries, including the UK, that has registered an increase in the percentage of unemployed. In June 2006, unemployment in Malta increased to 8.5 per cent from 7.2 per cent, up by 1.3 per cent.

There is no doubt that the Opposition will have a field day with these figures. It will use them effectively to criticise a government that despite the many promises, has failed to generate enough jobs to lower the rate of unemployment and to get the economic wheel turning again.

The government will obviously come up with myriad excuses to explain why the rate increased. Given that we are talking about June, when most school-leavers decide either to continue studying or else join the workforce, the number of “prospective job seekers” will have to be added to the unemployment tally. The government will insist on a more objective analysis covering the 12-month period instead of a month-to-month comparison.

Whichever way you look at Eurostat’s figures, there remains one simple question to answer: Are we generating enough jobs to stimulate the economy? Are we targeting the right sectors? Are we focusing on the right jobs for today’s and tomorrow’s workforce?

We have to admit that, irrespective of which political party were to be in government today, Malta’s economy would still be battling to maintain a growth rate that is commensurate with an increase in foreign direct investment, an increase in exports and greater purchasing power for the public. Malta is far off the four to five per cent growth rate required to keep the country’s economy chugging along.

Local industry is still complaining that costs are too high. Businesses are concerned that inflation is becoming a problem that is too hot to handle. The taxpayer is worried that his or her rate of saving is on the decline, purchasing power has been eroded by taxation – direct and indirect – and electricity and water bills continue to rise.

Is it surprising, therefore, that Malta’s unemployment is on the increase? If the Maltese economy is not performing as it should, can we expect local businesses and industry to be in a position to create jobs?

Many new job-seekers or those looking for alternative employment are concerned that the choice of vacancies is limited. We are proud of our tourism product and consider the hotel industry to be one of the leading employers in the country. Has anyone bothered to ask them how their recruitment plans have been affected because of yet further drops in the number of tourist arrivals?

Only last week, one of the stalwarts of Malta’s manufacturing industry in the 1970s, Menrad Ltd, announced that it was closing down. Over 100 workers will be made redundant by November. Another blow to the manufacturing industry.

The government has insisted that the country has to shift from high volume to high value added industries and it has been successful in attracting major players in the IT and pharmaceutical sectors. The Lm100m deal with Dubai-based Tecom Investments to build a SmartCity in Ricasoli is still on the drawing board. Even though this project will generate around 5,000 new jobs, such a scenario is still a minimum of 24 months away. In the meantime, the unemployment figure will continue to rise unless the economy is given a much-needed boost. The government is expected to publish its pre-budget document on Saturday. This should also include a series of proposed tax cuts to stimulate the economy.

This will be a doubled-edged sword type of exercise for the government. On one hand, it stands to lose more than Lm20m in revenue, and on the other, the government hopes that it will boost growth and push up our GDP, the end result being more jobs.

Unemployment is a dark force to deal with. Like inflation, it can be crippling for any government. Two negatives. The government really needs to come up with a strong positive: will tax cuts be the economy’s only hope?