The public sector has grown significantly over the years, and while it is understood that there is demand to recruit the right people, oftentimes this is creating unhealthy competition with private employers, Malta Employers' Association president Ivan Refalo told The Malta Independent on Sunday.

He continued that Malta Employers is not against the need for certain key people being required in the public sector, nor is the association saying that the public sector needs to decrease in every area, but there are concerns that the public sector is taking employees from the private sector, and "many members" have reported as such to the association.

Refalo stated that the association understands that due to the increase in Malta's population, the public sector also needs to increase as a result due to the need for more doctors, nurses, teachers, police, and other such critical positions.

The Malta Independent on Sunday recently interviewed William Spiteri Bailey, the president of the Chamber of Commerce, who spoke about how the public sector should decrease its workforce and create ways of upskilling, partly because it has taken many workers away from industry. This newsroom spoke with Refalo, the newly-elected Malta Employers president, and asked for his thoughts on the matter. Refalo was also asked how the public sector's workforce potentially impacts local businesses.

Refalo remarked that in the past it used to be the other way round, in the sense that it used to be the private sector which "headhunted" or sought after prolific people from the public sector that could contribute to the productivity in the private sector. He said that the situation being faced today is that many people prefer to work in the public sector because there is generally more flexibility and less discipline of increasing costs all over, which is leading to "actual inflationary pressure", effectively reversing the original situation.

"We are seeing many cases where people from private industry are being attracted, let me put it this way, in a mild way, attracted to enter into the public sector, and that creates a certain competition." Furthermore, he commented that the private sector may not always be able to support certain conditions that can be supported by the public sector, which also creates a slight imbalance.

Refalo said that there have been discussions within the association regarding how there is a shortage of potential Maltese workers and how this situation is expected to get worse due to the expanding public sector which tends to employ more Maltese people. He said that the bigger the share of public sector employment, the less availability of Maltese people there is and will be for the private sector going forward.

"This is not to discriminate between Maltese and foreigners, but the Maltese employer prefers Maltese workers." He continued that Maltese employers may prefer Maltese workers "for many reasons", including less bureaucracy in their engagement, more ease in terms of training and communication, and generally more loyalty in terms of length of service, in the sense of fewer resignations within the first couple of years of employment.

When asked to discuss which sectors in particular may feel pressure as a result of the public sector's workforce, Refalo spoke of the hospitality, logistics and manufacturing industries as examples. He said that such industries are losing a lot of talent and are proving to be areas of concern.

The Malta Independent on Sunday asked Refalo whether he believes it is possible for Malta to shift its economy away from foreign labour without significant disruptions to economic growth.

He replied that since 2017, during the country's economic boom, when there was an influx of foreign workers, Malta Employers had raised attention to how such an influx needed to be supplemented with "all-around support". He said that the country is now struggling to cope with the added burden on infrastructure, such as hospitals, schools, roads upkeep, and an increase in traffic. He continued that with the number of non-Maltese and non-EU workers in the population set to continue increasing, he does not see such infrastructural challenges decreasing over the next few years.

Labour policy document

Speaking on the government's labour migration policy document, Refalo said that there are many proposals and positive points in the document, but that there are certain areas which "really need to be clarified more", such as how turnover is defined and acted upon. He remarked that Malta Employers always emphasises good ethical employment to minimise the need for many extra control measures to be imposed.

Continuing on the point of infrastructural challenges, Refalo was asked whether Malta can sustain a growing population. He responded that if the rapid growth continues, it would be "very difficult" to cope.

He said that he believes a saturation stage will be reached, "especially if we encourage certain industries even more, including manufacturing, to go for the higher-value added output, which then needs to be tied to upskilling and the strengthening of transverse skills for employees to be able to transition better into newer requirements". He continued that the key is to keep moving away from mass production and low-end volumes into more quality and value.

"That is the direction we should be looking at. More quality and more technology, including AI. More automation, which will give us higher value-added, and using less resources, including human resources. So the dependency, I think, will start weaning off even as a result of implementing the new economic vision. Which, in simple words, is doing more with less. Ultimately, that is the direction we must all take if we want to grow in a sustainable and resilient manner."

On the matter of digitalisation and technological advances such as AI, The Malta Independent on Sunday asked the Malta Employers president which industries such advances are most likely to influence.

He responded that there is sometimes a misconception about this matter. "Some people fear it, and it is normally the fear of the unknown, but I think there should be more information for industry leaders to understand the benefits, and this will be across the board. In fact, there will not be a single industry that could not benefit from this. I mean, whether it is writing a proposal or creating something of higher value, I think there is still a lot of use. I think the intelligent part for going about that is to seek to utilise this positively and productively. So the ultimate aim will make the difference."

Refalo continued that the amount of retraining that is going to be needed cannot be underestimated, so that workers are able to work with AI to complement its benefits rather than being replaced by it. He said that it is about reskilling, and spoke of how in the past, similar concerns were present in regard to the introduction of PCs, with people being fearful of computers taking employment away from people. "It has actually created many more opportunities, and we look forward to seeing this coming with the same result."

Vision 2050

The government recently unveiled the Vision 2050 document for public consultation, and so the newsroom asked Refalo if the Malta Employers' Association was consulted in the lead up to the document being published, as well as for his thoughts about the economic plan detailed within the document.

He said that Malta Employers was among the primary proponents for the economic vision to which it contributed. He remarked that the association believes the document will help to discuss and put forward proposals for the new economic and social model.

"This is a long-term vision, and hearing that even the Opposition described the Vision 2050 as a step in the right direction, obviously saying that it must translate into tangible action for the common good and better quality of life, is encouraging." Refalo continued that this also sets a clear path so that "should there be a change in government, at least we continue in the same direction". He added that consistency is ultimately very important for Malta and the work environment if the economic vision is to thrive and improve as the country moves along.

As part of Vision 2050, the government stated that it is going to be moving from measuring national progress by GDP to instead looking at life satisfaction and medium disposable income, among other indicators.

Asked about this, Refalo replied that when one changes indicators and certain metrics, there needs to be enough confidence that doing so will give a true picture. He added that Malta Employers has been speaking about how despite a high rate of increase in GDP, the wellness of people did not seem to improve commensurately, "so much so that there is evidence to show that foreigners who come to work in Malta quickly decide to go elsewhere, and also Maltese, especially young people, have been saying consistently that they would rather live abroad - and in fact they are leaving".

With that said, he commented that the fact there are going to be metrics that measure people's quality of life besides numbers and euros is a very positive development.

Traffic issues

The Ministry for Transport recently detailed a list of proposals intended to address traffic congestion. Such proposals include offering people money to give up their vehicle and driving licence for some years in return for money, as well as offering 17-year-olds €1,500 a year for up to four years not to drive cars and to use scooters instead.

Asked if he believes such initiatives are potentially effective for addressing Malta's infrastructural and traffic challenges, as well as how they may potentially impact businesses, Refalo replied that the proposals are all well-intended, but on the matter of how they may affect businesses, plans such as that of going towards a 24-hour economy means that certain traffic can be shifted from peak hours to non-peak hours. The Malta Employers president said that through such plans, activities such as deliveries, waste collection and government cleaning, can all be done during non-peak hours. With that said, he stated that the Association is in agreement with this, and that members of the association have expressed that, for example, they know they can get much more deliveries done during night-time than if they had to start in the morning.

Another positive proposal, he said, is to have a dedicated maritime route between the Freeport, the Grand Harbour and Gozo, so that cargo can go directly from the Freeport to Gozo without having to clog roads, especially in the Mellieha and general northern area.

However, Refalo said that the Malta Employers' Association does not agree with the proposal for 17-year-olds and youths in general to postpone their licence, as such young people at the beginning of their careers may be unable to foresee their immediate future needs in terms of requiring a driving licence or otherwise. He continued that taking such an important decision in an uncalculated fashion may impact their employability, and added that such a measure may need to be studied in some more detail.

Discussing his targets for his tenure as the president of the Malta Employers' Association, Refalo said that he will seek to continue in the steps that have been established over the years by his predecessors. He stated that the idea is for the association to continue pushing itself as the leading strategic partner when it comes to social dialogue, and to push for ethical and innovative employment practices among employers and members.

The Malta Employers president concluded that he aims to lead the association toward greater relevance and a stronger voice.