Malta performed worst in the macroeconomic environment, labour market efficiency, and innovation “pillars” of the report. Do you agree with this assessment, and what steps do you feel are needed in these areas?

The report of the World Economic Forum is based on a comprehensive assessment of national competitiveness among 150 countries, and its conclusions provide important relative indicators of Malta’s standing on important aspects of economic performance. This means that, even in areas where progress has been made, relative performance may still deteriorate because we would have been outpaced by other countries. The poor rating in labour market efficiency is particularly worrying because our economic performance is directly related to labour market efficiency. We have to identify the factors that are contributing to this assessment, for example educational achievement, productivity and activate focused strategies to address the situation. It is also known that the country lags behind in innovation, and more needs to be done to change this situation through allocation of more funds for R&D and education.  There may also be a case for better reporting, as many SMEs do conduct considerable research activities that may not necessarily be recorded.

At a macroeconomic level do you share the WEF’s poor opinion of Malta’s low level of saving, as a % of GDP, and its high level of government debt, as a % of GDP? Do you think that more needs to be done here or is the government currently implementing the right measures?

The MEA has been quite vociferous in drawing attention to the public debt and set fiscal consolidation as a national priority. However, one needs to keep this in perspective, considering that within the EU and other industrialised economies there are far worse performers in this respect. There is also the matter that the greater part of public debt is funded by domestic finance, not through borrowing from foreign countries. This is, of course, no reason to be complacent and one of the challenges facing government is to control its spending and, through its policies, facilitate investment which will in turn generate sufficient growth to increase its revenues.  This is why competitiveness is key to improving the country’s performance.

Examining “Goods market efficiency” Malta is again ranked poorly for the number of procedures to start a business and the number of days to start a business. Do you share these concerns and, if so then what should be done to address them?

This has been the topic of a recent discussion at MCESD, and government has set targets to reduce unnecessary bureaucracy. Business organisations in Malta have been complaining for years about the need to make it easier to start up a business and although the number of days to start a business has been reduced, we still have a lot of ground to cover. In many cases this requires not just a change in procedures, but also a different attitude by government departments to transform themselves from being gatekeepers to customer driven entities. In essence, the private sector deserves a better service and more respect.

Ranking “Labour market efficiency” Malta scores badly for the number of women in the labour force, as a ratio to men.  What more needs to be done to address this?

On this issue, Malta is on a positive trend, and has been for a number of years. The labour participation rate of young women has increased drastically over the past seven years and is currently higher than the EU average. The cohort effect will probably result in a much higher overall percentage of women in the labour force in the coming years. This is a result of numerous fiscal and social measures, combined with sociological factors that will inevitable push Malta to score higher in this respect. The true challenge is to generate sufficient productive jobs to cater for the increased supply of labour.

The WEF invited respondents to select from a list (below) the five most problematic factors for doing business in their country, and then rank them between 1 and 5. In the same way can you select your five most problematic factors for conducting business in Malta, ranked from 1 (the most problematic) to 5.

On the 4th of September the government also published its pre-budget report. Do you agree with the government’s analysis? 

MEA has issued a document with proposals for the national budget, emphasising the need to curtail an emerging culture of entitlement. There are definitely some positive economic indicators – e.g. low unemployment and inflation, real GDP growth higher than the Eurozone average – which confirms the resiliency of the economy experienced during the onslaught of the international recession. The Maltese economy certainly has many strengths, amongst them is its diversified nature, that has resulted in considerable economic and social progress since we became an independent nation. I am convinced that we can do better, and this is why reports such as the one by the World economic Forum and the rating agencies are useful as an external and objective assessment of our performance. Government has to ensure that key decisions related to energy policy, education and transport, among others, are taken in the interest of having Malta realise its full economic potential.  In this, government cannot operate in isolation from the other political forces and the social partners. MEA has consistently called for national consensus on critical issues in lieu of partisan and sectorial bickering.

Is there anything that you would like to see the government include or change in its final budget?

The stated objective of the budget – creating opportunities, not dependencies – is one which MEA supports. Government has to show the political will to live up to this objective through its actions. The budget needs to send a message that Malta can only make progress through hard work, efficiency and innovation. The social dimension is also important but it must be understood that it is only sustainable if there is productivity and competitiveness.   We see what we have labelled as a ‘culture of entitlement’ as a threat to initiative and achievement, thus the budget should include concrete measures to enable and reward productive participation.