The possibility for a chief executive officer of a public employment service to address a wide cross-section of employers is an opportunity not to be missed.
Both my organisation and yours, collectively, and you employers, individually, operate in the same playing field, and yet the need to improve our communication channels cry loudly and constantly for improvement.
Government, the Employment & Training Corporation (ETC) and all employers have at least one very important common customer: the human resources of our country. Indeed, even when we discuss how we can narrow the labour market mismatch in Malta, we are talking about the whole array of the Maltese workforce.
I am a firm believer in the endless potential of human resources. A constant today is continuous change. I also strongly believe that positive change is only possible through human resources. My philosophy urges me to add immediately that one will only exploit the full potential of the human resources available if they are treated with dignity, fairness and respect.
A very important instrument of Maltese labour market information is the Employment Barometer, which is organised by the ETC every six months. The latest Employment Barometer results, those for January 2004, show that:
¤ 26% of the employers surveyed said they face skill shortages or recruitment problems;
¤ 52% of employers facing shortages/recruitment problems claim to have experienced a slow down in their operations;
¤ 35% of employers facing shortages were caused by the absence of the necessary qualifications - a qualification is a certified academic or vocational accomplishment;
¤ 47% of employers facing shortages blame the lack of skilled human resources for their shortages - a skill is a practiced ability which can be demonstrated;
¤ 18% of employers facing shortages claim other reasons, such as lack of committed or flexible candidates;
¤ 66% of employers facing shortages solved their problems through: longer recruitment procedures (32%), an internal redistribution of work (32%), recruitment of foreigners (6.5%), outsourced services (4%), and other reasons;
¤ 34% of employers facing shortages said they did not solve their problems because: necessary skills were lacking (48%), available persons were unsuitable (12%), available persons were inexperienced although qualified (10%), available persons were expensive to hire although skilled (7%), available persons were not qualified (4%), and other reasons;
¤ the effects of shortages on operations were: skill shortages forced 20% of the surveyed employers to increase their overtime costs; 18% had to reduce their output/service and a further 8% had to turn down their orders; 4% had to outsource their production or service provision and 7% postponed their expansion plans. Only 2% seriously considered to move all or part of their production abroad.
Mismatches in our labour market are not a local phenomenon. Labour markets throughout the world prove that a perfect labour market, where supply and demand balances each other, is a utopia. However we can do a lot to minimise these problems.
Now what are the priorities that the Maltese labour market has to address? The latest independent assessment of the Maltese labour market is found in the Report of the European Employment Taskforce led by Wim Kok, published last November. Significantly, this report makes this pertinent remark: "Low levels of education among the workforce and skills mismatches are a matter of concern." This remark was made in the context of three key messages for all of us to act on:
¤ the need to increase adaptability
¤ the need to make work a real option for all; and
¤ the need to invest more in human capital.
The Maltese labour market has been described as follows in this Report: "The employment rate in Malta is particularly low. Unemployment has increased slightly over the last two years. The employment rate of women is the lowest in the EU25: only a third of women of working age are at work. The employment rate of older workers is also particularly low. Addressing the restructuring of the economy is a particular challenge."
Notwithstanding this grim picture of the Maltese labour market we still have unfilled vacancies; persons seeking employment who refuse opportunities for training; jobseekers who refuse decent job offers; employees who resign from their job of their own accord; 2,000 foreigners working in Malta with a valid work permit; and hundreds of applications from construction companies requesting to employ foreign workers. In brief, mismatches in our labour market persist.
But what effectively do we mean by mismatching in the labour market? Mismatching can take various forms. Such as:
¤ no available supply of workers in occupations requested by employers;
¤ available persons do not possess the employers' required qualifications, skills/competences or experience; and
¤ to some extent, underemployment of qualified persons for available jobs.
A number of factors can change the number and types of jobs available in the economy - expansion or contraction of industries in response to changes in the demand for goods and services; new technologies introduced into the workplace; or organisation of work.
The supply of labour is also affected by a variety of factors. These include demographics, participation rates, skills upgrading and geographic mobility. The latter should not exist in Malta, at least in theory. Consequently, the demand and supply sides of the labour market are constantly changing and it is not surprising that imbalances occur. It is inevitable.
I think I would be failing my duty if I do not point out that a number of job vacancies can also remain unfilled because the characteristics of the job such as low pay, irregular hours not adequately compensated, unsafe and unhealthy working conditions, may make it difficult to attract and keep employees in such jobs.
There are three main determinants of job mismatches: individual characteristics such as the educational level of a person; job characteristics such as the nature of employment, being full time or part-time, and the conditions of employment; and structural characteristics. For example, in times of restructuring mismatches are more likely to occur in the labour market.
In modern societies, education is probably the most important characteristic in the allocation and selection process on the labour market. Research shows that workplace-based and - to a somewhat lesser extent - apprenticeship-type vocational education decreases the selection and allocation costs for employers.
This is an important finding as further research determined also that employers seek to employ the best available candidate for their vacancy, at the least training costs. They use educational qualifications as a signal for trainability.
Moving from theory to practice and focusing more on mismatching in the Maltese labour market, the last issue of the Employment Barometer in January 2004 listed the top 20 occupations causing a slowdown to employers in the period between June and November 2003.
Reviewing this list one cannot fail to note that a number of these occupations are unskilled or low skilled jobs for which we have an overabundance of jobseekers registered with the ETC. For example, in December 2003, the ETC had no fewer than 3,299 persons registering for elementary occupations which could easily fill vacancies such as chambermaids, cleaners/ maids, and kitchen hands.
In the same period the ETC had 881 persons registering for clerical jobs and yet the Employment Barometer indicated that employers were finding it difficult to fill clerical vacancies. The same applies for service workers/shop and market sales workers. We had 890 persons registering for jobs in this category. However the Employment Barometer also showed that we encountered unfilled vacancies in this sector. So the question becomes obvious: what are the reasons for these mismatches in our labour market when human resources seem to be available?
First, one has to analyse generally the profile of the stock of persons registering for employment. At the end of December 2003, ETC administrative records showed 8,175 persons registering for employment with the following profile:
¤ 81% were males, 19% were females;
¤ 30% were aged under 25 years, 31% were aged 25-44 years, 39% over 45 years;
¤ 8% of jobseekers were Gozitans;
¤ 64% have been registering under a year, 36% were long term unemployed;
¤ 16% of jobseekers claim to be illiterate;
¤ 83% of jobseekers have qualifications lower than 'O level';
¤ 15% have an education level lower than Diploma but higher than 'O level'; and
¤ 2% had an education level higher than Diploma level.
Besides the educational aspect one has to point out other factors causing mismatches in the Maltese labour market. Among these factors one has to point out low wages and unattractive conditions of employment offered by a number of employers; the narrow gap between the minimum wage and social benefits providing an inadequate incentive to lure unskilled or low skilled jobseekers into the labour market; deficiencies in the law compliance system which give rise to abuses by a limited percentage of jobseekers who may enjoy unemployment benefits while working in the black economy; willingness by a very limited number of employers to employ foreign unlicensed workers or refugees instead of Maltese on substandard wages and conditions of employment; and deficiencies in the matching processes between employers requirements and available jobseekers on the part of the public employment service.
What is the ETC doing to narrow labour market mismatches? In the past few years we have made a tremendous effort to create and maintain a healthy dialogue with employers. We have organised a number of client fora and recently created steering committees for employment and training initiatives. The response to these initiatives was at times poor from the side of employers, although I must thank the FOI representatives for their continous support.
We have introduced a number of employment initiatives such as the Job Experience Scheme (JES) and Job Clubs for young job seekers; the Employment and Training Placement Scheme (ETPS) for long-term unemployed where we subsidise half the minimum wage for up to a year; the Training and Employment Exposure Scheme (TEES) for jobseekers over 40 years old whom we train and pay their wages for a year; the Gender Action Plan to encourage female employment; the engagement of partnerships with a number of NGOs, such as the Eden Foundation, Richmond Foundation, Paolo Freire Institute for Literacy, and Caritas and to provide a specialised service for various disadvantaged groups. We are currently concluding an in-depth profile of all registering unemployed.
In the field of training we have been very active in the national apprenticeship schemes. On our initiative an Apprenticeship Board was established bringing together all the actors in the field.
We have introduced a shorter and more flexible type of apprenticeship by way of Traineeships in a number of occupational sectors responding more efficiently and in a timely way to the needs of our economy. We have expanded and upgraded our Night Institute for Further Technical Education. We have introduced a variety of short courses and invested heavily to assist our workforce to become IT-literate.
At the moment the ETC is heavily engaged in the drafting of the National Action Plan for Employment (NAP) as required by the European Employment Strategy. I strongly believe that the best opportunity we have to address the priorities of our labour market is the implementation of the ten guidelines of this strategy.
The practical measures to implement these guidelines will be incorporated in the NAP which will be proposed and implemented on an annual basis. If we seriously had to implement the NAP, every year, we would have engaged ourselves in a silent revolution of our labour market. The content and process of the European Employment Strategy will be discussed further in the near future when we discuss the NAP's first draft.
To conclude, I wish to make the following recommendations:
¤ Let us improve communications between all players in the labour market. The ETC needs to double its efforts to reach out to employers. We have very limited financial and human resources, but the situation will improve tremendously if the two-way communications between the ETC and employers is enhanced. We need feedback on the employers' needs, the response of job seekers when we submit them for vacancies, and on an early identification of skills requirements.
¤ I appeal to employers to make better use of ETC schemes and programmes. The number of programmes we have launched is considerable. Although lately we had to curtail these programmes due to budgetary constraints, hopefully most of these programmes will be revived shortly in the process of implementing the NAP. However these initiatives will remain a dead letter without the full co-operation of employers.
¤ Let us invest more in human capital. Soon we will have to include it in the balance sheet of our enterprises. If you want to reduce shortages for your enterprise participate more in national apprenticeship schemes or tailormade traineeship programmes.
On the other hand the Apprenticeship Board has to ensure that the callings for apprenticeships have to reflect the needs of the economy and not strictly the availability of teachers in government employment.
¤ Let us make our workplaces more gender friendly. In our country we have only a third of women of working age engaged in the formal economy. In the meantime the female student population at the University and MCAST have surpassed that of males. We need to attract thousands more women in our labour force. Our places of work have to be more gender friendly; we need to introduce a number of family friendly policies in our enterprises, create the support structures so women can exercise freely their option to work and raise a family; and educate and sustain a culture of work and life balance.
¤ Let us all use the full spectrum of our labour force. Employers would be doing a disservice to their enterprise, their country and the creation of an inclusive society if they ignore the potential of some members of our society who are normally found on the fringes of the workforce spectrum, for example older persons and the disabled. Tapping this potential is a corporate social responsibility for all of us.
¤ Let us consider training as an investment and not as a cost. We still meet employers who think that Government exclusively should pay for employees' training. We are living in an era of lifelong learning and both employers and employees should embrace this concept and make it a living feature of our enterprises. On the other hand, it is time that the Malta Professional and Vocational Qualifications Council really takes off.
¤ Let us declare a war on illiteracy. In this day and age it is unacceptable to have 16% of jobseekers declaring themselves illiterate. It is hard for them to make a living today; imagine how precarious their situation will be as time passes. Government is doing a lot in this field. We need patience as results in this field can only be of long-term duration. Even employers can give a hand in this war.
Our workplaces are changing fast. The concept of a job for life has long vanished from our discourse. Until recently we used to say that a person is expected to change five/six jobs in his/her working life. A recent article in The Observer stated that "in future our careers are likely to span 50 years; we will change jobs, on average, 20 times".
Today's challenge of narrowing the mismatches in the labour market is daunting; tomorrow's challenge is fearful. However who dares wins. If we are bold in our decisions we will be on the winning side for a better quality of life for all of us. My final thought is borrowed from a Chinese proverb: "When planning for a year, plant corn. When planning for a decade, plant trees. When planning for life, train and educate people" (Guan-zi, c. 645 BC).