Entrepreneurship and employment are complementary. The entrepreneur is the innovative and creative side of all economic activity. Innovation and creativity need risk capital. Once the feasibility of the innovation or project proves positive and the financing is available, then the employment side enters the production cycle. Within the market economy, innovation should be dictated by consumer demands. Products must be the right quality, have the right brand and the right price. All these factors contribute to the competitiveness of a product. Collectively they contribute to the competitiveness of the whole economy.
The term competitiveness today has a most vital meaning to world economies due to the breaking down of trade barriers and protectionism and the emerging globalisation of manufacturing areas and markets.
Europe today is facing this dilemma. Despite the Lisbon Agenda, we keep reading about redundancies, relocation of companies to the Far East and decreasing economic growth. Malta is not much better off than the rest of Europe. Our islands are nowadays no longer a colony and our manufacturing and agricultural sectors are no longer protected by import tariffs or levies. Malta has a liberalised market in a globalised scenario and must use its imagination to survive in such a competitive environment.
The Malta Chamber of Commerce and Enterprise does not expect the government to tackle the challenge on its own. Rather, it expects to be amply consulted together with the other social partners. The latter must realise that Malta's competitiveness is struggling within a European Single Market where competitiveness is also under threat from other economic blocs. They must utilise the existing fora to foster a cooperative stance rather than confrontation. Healthy dialogue is required for establishing a culture of entrepreneurship and SME development.
On the employment aspect, it is vital that such measures are combined with improved employment, education and training policies to sustain the overall blue-print. The social partners must enter this discussion with the pre-condition that both entrepreneurship and employment will gain out of similar collaboration.
Discussions must take place within the framework of Malta's overburdening national debt and deficit which continue to hamper its economic activity. In this scenario it is up to the social partners to convert words into action and revive the Maltese economy to be able to face the progressive competitiveness of other competing economies.
Another decision relates to public expenditure and a leaner public sector. Public expenditure may be significantly reduced without this exerting a notable effect on the operations of the civil service. At the last budget, the Chamber commended the announcement that those retiring from the public service will not be replaced unless in exceptional circumstances. This, together with efforts to apply public private partnerships to other areas, will certainly serve to decrease the government wage bill, foster entrepreneurship and safeguard long-term employment opportunities.
Decisions are also awaited on the sustainability of the current system of subsidies and social services provided by the state. The Chamber has repeatedly expressed itself to the effect that a new system must focus on giving all that is required to those who are genuinely in need and nothing where no assistance is required. The current system of subsidies, coupled with the general mentality in the country, is open to widespread abuse. The Chamber is encouraged by the fact that the Prime Minister took up the Chamber's budget proposal to start subjecting persons who register for unemployment benefit to full-time training as this measure is also conducive to higher employment.
By curbing its expenditure, the government may also afford to decrease both direct and indirect taxation thereby incentivising, investment and consumption. Furthermore, by lowering tax rates, people will be less prone to evade taxation. In this manner the government will be able to increase revenue and with the concurrent decrease in expenditure will be able to bring the state finances on a positive level.
It is pertinent to mention that, at the time of the last budget speech, the Italian Prime Minister Silvio Berlusconi stated in an interview that "the only way to increase competitiveness at both national and European level is through tax cuts". He added that "recovery can only be achieved by reducing the tax burden, increasing labour market flexibility, modernising the civil service and infrastructures".
In fact, these measures can also be applied to the European administration. In controlling waste, over-expenditure, bureaucracy and over-regulation the EU will absorb fewer funds from respective members, thus allowing more scope for economic growth.
Entrepreneurs should strive to become more innovative and seek new markets. Trade unions should advise their members about their duties and responsibilities at work and not keep on persisting only about their rights. Employees should give a fair day's work and be productive to make their job competitive. Employees do not only have a duty to be diligent at their work place but have also the responsibility to safeguard the jobs of their fellow colleagues. Job protection and productivity keep away unemployment and also resulting social problems.
The time for complacency is over. We are a nation forming part of a huge economic bloc that gives us untold opportunities. If we want to be called European, we have to live up to these expectations. Unless we stop discussing and contradicting ourselves and instead pool our respective resources to overcome this economic impasse we will not survive. Nonetheless, the Maltese have always ably turned challenges into opportunities and risen to the occasion. United we shall overcome.
Mr Apap Bologna is president of the Malta Chamber of Commerce and Enterprise.