The issue that today appears to be of major concern for most Maltese is unemployment. This is not because the majority of the gainfully occupied population is threatened with unemployment, but because of the spate of redundancies that have been announced recently. The trade unions are expecting the government to do something about this issue. Exactly what no one seems to know. The organisations representing the business sector are also expecting the government to do something about it. However, nothing very concrete emerges from their announcements.
Some weeks ago I had argued that it is useless to blame others or these redundancies as everyone could be faulted in the way they have acted in the past. What is certain is that rallies and demonstrations do not create jobs and neither does our perpetual expectation that someone else (and not us) has to address the problem. I find John F. Kennedy's statement about not asking what your country can do for you but asking what you can do for your country is very apt in these circumstances.
Jobs are created if there is an economic rationale for them to exist. If there is not this economic rationale then it means that someone has to pay for inefficiencies. So the issue of unemployment could be turned into a question such as, "What needs to be done to create the economic rationale for jobs to be created?".
On the other hand, it is equally true that in order to achieve the required efficiencies, there is a price to pay. This price is either in the form of redundancies or in the form of increased productivity. The ideal situation would be achieving increased efficiencies through increased productivity; that is the same amount of people producing a higher level of output thereby achieving a lower cost per unit.
Many a time we do not manage to find the common ground to achieve this solution and therefore redundancies are resorted to, assuming that redundancies necessarily make us more competitive. It is worth finding out why we act so stupidly because in my opinion this is at the root of the whole issue of unemployment.
I do not believe that we are facing an unemployment issue but a productivity issue. In other words, we need to understand how we can increase productivity without increasing our cost base. Improving our productivity would mean creating more jobs. Tackling it any other way would only mean we are treating the symptom of unemployment and not the cause of unemployment.
Productivity can be crudely measured by measuring the amount of resources that are used in the production of our gross domestic product and compare it to the gross domestic product itself, that is the total of all the output produced in our economy. In our case, considering that our main resource is labour, we could calculate our productivity by dividing the gross domestic product by the gainfully occupied population. Admittedly one would be leaving out the part-time employees but including a number of full-time employees who contribute next to nothing to the wealth of the nation.
Even so, doing this rough calculation, one would note that the productivity (output per employee) had increased in the 1990s but has decreased more recently. This implies that what we have managed to produce is costing us more per unit. There needs to be a widespread recognition of the fact that improved productivity is of benefit both in the short-term and in the long-term to all sectors of society.
We can increase our productivity by releasing underemployed resources to do more productive work; or by dismantling monopolistic structures thereby allowing for an element of competition such that goods and services are produced more cheaply; or by changing our work methods to increase efficiency; or by cutting down on waste of resources that could be better utilised elsewhere in the economy; or by breaking out of antiquated attitudes that serve as a brake to the modernisation of the economy. We cannot and should not improve productivity by adopting anti-social measures.
The increased competition that EU membership brings about is likely to be a spur to improve productivity. On the other hand there needs to be a can-do attitude by all the social partners. Tackling this issue first is likely to help us address a number of other economic issues with greater ease.