Education and Employment Minister Louis Galea yesterday underscored the government's commitment to raise the participation rate in the labour market.

He told Parliament at the opening of the annual debate on the Employment and Training Corporation (ETC) that it was unacceptable that Malta's participation rate was just 54 per cent - meaning that practically only half of those of working age were actually working.

Such a figure raised three basic questions. First, what were the consequences of this level of participation on economic growth and government revenue? Could such a participation rate somehow sustain a balanced budget? The clear answer was that having a small participation rate meant a slower economic rhythm, with fewer workers contributing to government revenue.

The second question was why Malta's rate was so low. Dr Galea said the main reason was that the participation of women in the labour sector was very low, to the extent that even if all men were in employment, Malta's participation rate would still remain low. Another factor was that too few people aged over 60 were continuing to contribute to the economy.

The third question, Dr Galea continued, was whether a participation rate of 54 per cent reflected the way the economy was currently performing. It was clear, he said, that while the majority of workers declared their employment and paid their taxes, another group were working illegally, not contributing anything and perhaps even receiving social benefits.

The government, he said, would wage a "merciless offensive" against this black economy. It was simply unfair that while most paid their taxes, others did not.

At the same time, the government would redouble efforts to encourage more women as well as people aged over 60 to work. Such measures included the assistance announced in the budget for child care centres, as well as provide new training opportunities through the ETC. At the same time, employers also needed to make it easier for women to return to work. Unless there was a change of culture, there might come a time when these employers would not be able to find the workers they needed, Dr Galea warned.

In his speech Dr Galea said the ETC would for next year have a budget of Lm2.5 million and it would receive a further Lm2.3 million from the European Social Fund and European Regional Fund.

Focusing on economic performance, he said that as explained in the Economic Survey published with the budget on Monday, the economy was managing to ride the waves, mainly caused by outside factors and a gradual but consistent turnaround was evident, with GDP growth registered in the last two quarters.

The Maltese economy was heavily influenced by the performance of its main trading partners and the situation, particularly in Germany, France and Italy, was not rosy. The challenges of globalisation and the impact of the Asian emerging economies also had left a major impact, Still, the financial deficit was being controlled and Malta's unemployment was at 4.5 per cent, well below the EU average.

Dr Galea said part-time jobs had increased by 10.3 per cent up to September with over 41,000 people working part-time as their main job, an increase of 2,190 over last year's figure.

Although many saw this as a negative factor, it was a phenomenon of all advanced economies and it also gave a strong contribution to the economy. Part-time jobs usually gave one a good income and provided flexibility in the economic system which increased the competitiveness of enterprises.

The number of workers registering on the first part of the unemployment register, dropped by 11.8 per cent, of close to 900 over the past year.

The government, he said, was investing heavily in education as a means for developing the employment market.

The ETC itself was continuing to introduce more training courses and schemes such as the employment training placement scheme, the redeployment scheme and the active youth scheme. It had also continued to improve its job matching processes.

Between October 2004 and September 2005, the ETC had made 4,000 job placements.

The authority was also working to weed out illegal employment, Over the past year, 2,142 persons were struck off the employment register either because they were caught working and registering at the same time, or because they refused the services offered by the corporation. Only 15 per cent of those struck off the register appealed and the ETC decision was confirmed in 75 per cent of the cases.

A total of 3,850 inspections were made at places of work, 38 per cent more than in the previous year and 2,000 cases of breaches of the law were identified.