In the decade since 2013, the over-riding mission of the Labour government has been to build an economy that generates as many jobs as possible. In this, it succeeded beyond the wildest dreams. But the focus of discussion about the labour market has recently turned rapidly to the question of quality jobs. People's well-being depends crucially on how good their jobs are. Now that unemployment is no longer an issue and the labour market is booming, it is only natural that the issue of quality will come to the forefront.
It would be a mistake to lose sight of the original objective, given that there is still potential for attracting more females to the labour force. However, focusing exclusively on how many jobs the economy generates provides only a partial perspective on the challenge with which policymakers have to grapple. Job quality can also be a key driver for increased labour force participation, productivity and overall economic performance.
First of all, though, one needs to be somewhat more specific about what quality means. It is surely not merely how good the pay is. I would say that quality jobs are those that are productive, can be sustained, adapt to changing economic and social needs, and promote employee motivation. Of course, some jobs are by their nature difficult or less pleasant, but even in this case, they could be called quality jobs if the negative aspects are minimised. Some may entail exposure to physical risks or a difficult environment, though they might still be good ones if there is full compliance with applicable labour and safety laws, and if there is a healthy balance between the demands of the job and the support given to the workers concerned.
Job quality in Europe is generally good, confirmed by a 2023 Eurostat study rating average job satisfaction at 7.4 on a scale of 0-10, though there are variations between countries and groups of workers. The number of Europeans who expressed high satisfaction with their job was 43.8% ̶ a considerable improvement on the 2017 figure. The lowest percentage was in Bulgaria (29.9%) while the highest was in Malta (75.6%). It is also relevant to note that Malta has one of the highest percentages of happiest self-employed workers ̶ 76%, beaten only by Denmark and Hungary.
One of the factors that makes employees happy today is the extent to which they enjoy flexibility in their work. The same survey reveals that Malta has the second-highest percentage (76%) of employees with a high level of job satisfaction owing to the flexibility they enjoy. The percentage improves further for employees who work more from home or for those who have greater flexibility than the average.
One observes that employees tend to suffer higher levels of job strains in occupations experiencing labour shortages and skills mismatches. The recruitment difficulties experienced by many Maltese enterprises are often linked to a gap between skills demand and supply, as well as to labour shortages in a context of demographic ageing. Addressing skills and labour mismatches is a crucial part of the answer to improve job quality.
Figures from the Labour Force Survey (LFS) indicate that more than half of the employed population in Malta (54.3%) experience a vertical mismatch, which occurs when the level of education of the person in employment does not correspond to the level of education required to perform one's job. The majority of these workers were over-educated for their job (35.1%), while a further 19.3% were under-educated. Additionally, there is a high turnover in the labour market: Dr Aaron Grech, chief officer in the CBM's Economic Division, has estimated the labour turnover as a percentage of employed persons to be just under 50.0%.
One of the statistics labour market experts look at when talking about labour shortages is the job vacancy rate (defined as the number of job vacancies expressed as a percentage of the total sum of occupied posts and job vacancies). According to Eurostat, the rate in Malta in 2023 was 2.8 % in industry, construction, and services, nearly matching the EU27 average. This rate increased by 0.2 percentage points compared to 2022, and it is above the 2020 figure of 2.5%. The sectors with the highest vacancy rates were human health and social work activities, education, arts, entertainment and recreation, public administration and defence, compulsory social security, administrative and support services.
Both the high labour turnover rate and the high vacancy rate indicate that the labour market is tight. To a great extent, this enables employees to insist on better working conditions and flexibility, forcing employers to play ball or risk losing employees. When they do so, they will find it difficult to fill vacancies, and will incur higher costs on training new recruits. An analysis of job vacancy rates and wages in 22 EU countries reveals that industries with the worst labour shortages pay 9% less on average than sectors where it is easier to recruit.
The European Commission's Quality Jobs Roadmap proposes three pillars through which to create good quality jobs: fair working conditions, digitalisation, and fair transitions. But its approach has been criticised by employers, who believe it is too narrow, missing out on measures such as encouraging productive investment, a much-needed focus on achieving higher productivity growth, and addressing labour and skills shortages.
They are right. Some of the most pressing labour market challenges include addressing the consequences of an ageing and shrinking workforce, the much-too-high number of inactive people across Europe, and structural mismatches between skills supply and demand that are leading to recruitment difficulties. This is as valid for Maltese employers as for others in the rest of the EU
It is also important to consider how different socio-demographic groups have access to different types of jobs and are affected by labour market inequalities. Both policymakers and employers need to be aware of the nature and depth of the disadvantages faced by some segments of society. Some socio-demographic groups suffer many disadvantages while others achieve good performance in all dimensions.
Naturally, low-wage jobs are normally associated with poor conditions of work and low job satisfaction. The share of low-wage earners in Malta is around 16.3%, more or less in line with the EU average. This percentage can only be reduced if the economic model is redirected towards higher-productivity jobs.
The population groups who are worst off in terms of job quality are youth and low-skilled workers. They suffer in terms of employment rates, with poor outcomes on the different dimensions of job quality. In contrast, high-skilled workers not only have easier access to jobs but also secure high-quality jobs along all dimensions.
The picture is mixed for women. They face some disadvantages. A gender gap exists in terms of earnings quality and employment rates (reflecting lower participation rates). Women also face a higher risk of low pay. On the other hand, they tend to work in higher-quality work environments and have lower insecurity due to unemployment. The gender pay gap in Malta in 2022 stood at 10.2% ̶ an improvement on the peak rate of 13.2% in 2017 but significantly higher than the average a decade or so ago.
Finally, a significant gap in job quality exists between formal and informal workers. Informal workers have lower earnings quality, face a higher risk of extremely low-paying jobs and a higher probability of working very long hours. Recent government efforts to bolster the legislative framework should be accompanied by robust monitoring and enforcement.
The government's socio-economic strategy should reflect the urgent need to prioritise the concept of quality jobs as a fundamental element of policy. This requires enhanced awareness of the multifaceted impact at various levels: on individual workers, on companies, and on society as a whole.
Frans Camilleri is an economist. He studied at Oxford and University of East Anglia, is a former corporate head at Air Malta, and has served on various public and private boards.