Editorial

Can there be anything more wishy-washy than a decision-maker arguing that decisions need to be made?

When Investments Minister Austin Gatt spoke at the House of Representatives' Social Affairs Committee recently, he stressed the need to move to more value-added industries, putting much of the blame for the delay on bickering, in particular political bickering and the intransigence of the social partners.

Unfortunately, there is a huge gap between the vision and the reality and, even if it is closing, it is doing too slowly, at least so far.

Ironically, given the direction of Dr Gatt's finger-pointing, it was the Labour representatives on the committee, Leo Brincat and Carmelo Abela, who had the right idea: What is required is more coordination between the ministries for investment, education and competitiveness.

Changing manufacturing is not a short-term plan. It needs to be drafted five to 10 years in advance so that work can start to prepare all the factors of production. It takes time to set up the right educational systems and incentives and to introduce the right courses. It takes time to identify suitable factory space and to ensure that the support services and sub-contractors are available.

The National Statistics Office reported that manufacturing turnover in the first half of this year fell by 9.4 per cent, compared to the same period in 2004.

Is there hope? Of course there is. It is all about finding new niches with higher value-added.

The textile industry is a good example of both the challenges and opportunities: The turnover in wearing apparel and clothes fell from Lm61 million in 2002 to Lm41 million in 2004 but the turnover in textiles and textile products increased, from Lm17 million to Lm27 million.

The new high value-added manufacturing sectors may not be as labour intensive as their predecessors but they eventually generate new demand for other products and services. The pharmaceutical industry may not have soaked up all the jobs lost from the clothing industry but it will create demand for new services, from printing labels to boxes. Yet, once again there is a time delay between the theory and the reality. Investment in manufacturing was down 22 per cent in the first six months of the year. In the meantime, almost 2,000 manufacturing jobs were lost between 2002 and 2004.

In addition, 20 factories closed down last year and so far this year.

In spite of Dr Gatt's "knowledge economy" rhetoric, Malta's ranking in the World Economic Forum's competitiveness index fell for the second year running. The country wants to feature in cutting-edge technology and yet it ranked 58th in innovation. It placed 102nd in collaboration between the university and industry and 96th in company spending on research and development.

Thus, there must be more coordination with the Education Ministry to ensure that, five or 10 years down the line, manufacturing will find the skills it needs.

The Competitiveness Ministry has a role to play because it represents SMEs that will provide the back-up services and products that manufacturing requires.

Dr Gatt argued that if employees were willing to move from one job to another they could end up with better wages. This involves re-training. That requires the courage to accept short-term pain for long-term gain. However, they have to be convinced that there will be long-term gain.

We all need to be convinced.