The first shocks of the international financial crisis have started to hit Malta. In other countries, the effects started to be felt right after the collapse experienced in the United States towards the end of last summer, and perhaps this delay led us to believe, erroneously, that we would have been spared the problems that were hitting other countries.

We thought that our small size and economy would not have been adversely affected by what was happening all over the world; that somehow we would have escaped the grips of a situation that was deteriorating in the bigger, stronger countries.

But after the poor tourism results in the last quarter of the past year, which unfortunately seem to be just the start of even worse scenarios in the months to come, we have now also been hit in an area where it hurts so much – jobs.

We had a taste of this some years back when big companies relocated to countries where labour was cheaper and their profits could be higher, and then we spoke of a diversification process in our industry. The low-end manufacturing companies were closing down but other high added value factories were opening up, and were absorbing the hundreds of workers that were losing their employment.

We all know that Maltese workers are versatile and flexible, willing to learn new trades and skills, and many were those who found jobs within days or a few weeks of losing their previous one. The level of unemployment in this country did not rise in spite of these difficulties; actually, the National Statistics Office continued to report a decrease in unemployment.

But the problem that we must face now is perhaps the toughest obstacle that we have had to face in the employment sector for many years.

The news, broken by The Malta Independent last Friday, that ST Micro has decided to reduce the workforce at its Malta plant – part of a downsizing of some 4,500 workers in all of its factories worldwide – will hit Malta hard.

Speculation that the Kirkop firm was thinking of reducing the local workforce had been in the media for the past year or two, but the government always assured the people that there were no such plans. The same day that TMID learnt of ST’s decision to cut down 1,300 workers from its Malta and Morocco plants, the Finance Minister was being reported in another newspaper as saying that it did not result to the government that ST was planning any layoffs.

The government was apparently being kept in the dark as to what ST was planning to do, and it was only after TMID carried the story last Friday that the wheels were set in motion to see what was really happening. A meeting was in fact hastily called up with the General Workers Union to discuss the issue, which is putting hundreds of jobs at risk. The opposition has since also called on the Finance Minister to resign as they felt he was giving assurances that no jobs would be lost when, a day later, ST announced that it would downsize the Malta plant.

The news is a big headache for the government, not to mention the people involved. Apart from the fact that these workers all have families and need to be resettled in other places at a time when the creation of other jobs is not that easy, the government must also think of the fact that the level of exportation will drop considerably because ST is the largest exporter by a big margin.

All this puts extra pressure on the government. We are no longer only talking about diversifying our industry, an exercise that has led to important positive results, but of attracting more and more foreign investment to replace companies such as ST (and Trelleborg) which are reducing their workforce or also closing up shop.

In the prevailing circumstances, it is not an easy matter.