In my last article, I argued that Malta's demographic decline was foreseen, and that only immigration has kept the headline population from drifting towards the 390,000 that the 2004 pension model projected.  I promised to look at what that immigration actually does - what work it performs, and why the Maltese were not there to perform it.  The answer begins not with migrants but with us, and with two transformations we deliberately engineered and then declined to think through together.  This article describes them.  The next describes their consequence.

Begin with a number that ought to stop the reader.  In 1987, the entire University of Malta held just under 1,500 students.  For the previous decade or so, entry had been rationed by the student-worker scheme, introduced under Labour in the 1970s: a young person could not read for a degree at all unless an employer agreed to sponsor them, and the academic year was split in two - five months in the lecture room, five months at a desk in a firm.  

Many degree courses were a numerus clausus.  And carrying out a postgraduate degree was limited to those few who a foreign government had awarded a scholarship.  Most Maltese never went near the University.  

A school-leaver in 1985 expected to enter work by 18 - into a hotel, a workshop, a ward, a shop, a building site, a factory floor or with an insurance or accounting firm.  Or in the positions of entry with the Government.  That was the ordinary shape of a Maltese working life.

That world is gone, and its passing is a triumph.  With the refoundation of the University in 1987, the sponsorship requirement was dropped. Student numbers rose roughly fivefold within a decade, to some 7,500 by the late 1990s; by 2023-24, around 22,000 people were in tertiary education in Malta, and the Malta College of Arts, Science and Technology, with a thicket of further and higher education providers, sits alongside it.

The share of the Maltese population holding a tertiary qualification almost tripled between 2005 and 2020, from one in ten to more than one in four. Among those aged twenty-five to thirty-four, it now stands at 46%, above the European Union average. A child of working-class parents could, for the first time on a large scale, expect to become a graduate and a professional - social mobility in its most tangible form, achieved within a single lifetime.  This was the purpose of the reforms.  They worked.

The climb did not happen in a vacuum.  It was the labour-supply half of a deliberate economic strategy whose other half was the remake of the economy itself.  From the late 1980s, and faster through the 2000s, Malta moved up the value chain - away from the low-cost assembly, textiles and basic manufacturing of the post-war economy, towards high-value services and advanced manufacturing.

The results are now the architecture of national prosperity.  Malta built itself into a financial-services centre, drawing in banks, funds and insurers far larger than its size would suggest.  Malta was among the first in Europe to regulate remote gaming, and iGaming is now a significant share of the economy, with a multiplier effect reaching well beyond it through the suppliers it sustains and the people it employs.  

Aviation followed: Lufthansa Technik Malta, established in the early 2000s as a joint venture with Air Malta, now carries out heavy maintenance on the latest-generation wide-bodies; work as exacting as any performed on the islands. Pharmaceuticals, information technology and aircraft leasing filled in around them.  Services now account for more than 80% (MacroTrends) of national output, and across 2014 to 2021, the economy grew at close to 6.5% a year (FocusEconomics), among the fastest rates in the Union.

Hold the two transformations together, because they are the same project. A country decided to build a knowledge economy and to educate its people to staff it.  Both halves succeeded - and that is precisely where the difficulty begins. For a society cannot educate half its young into degrees, move four-fifths of its economy into services, and still expect those same young people to clean the wards, drive the buses, wait the tables, lift the elderly and pour the concrete. The base of the labour market did not vanish when the Maltese climbed past it.  

On the contrary, the growth of the new economy made that base larger and hungrier - more hotels, more restaurants, more construction, more elderly people needing care.  Demand at the bottom rose at the precise moment the domestic supply to it collapsed. Something had to fill the gap. What filled it is the subject of the next article.

To be continued.

David Spiteri Gingell is a Governance, Institutional, and Digital Transformation Consultant