On job creation

The latest data on the labour market shows once more interesting trends and maybe, if taken at face value, contrasting trends. It must be stated at the outset that at present we have two primary official sources for labour data. One is the Labour Force Survey which, as its name implies, is based on a survey conducted by the National Statistics Office. The second source is the data supplied by the Employment and Training Corporation, which collates administrative data based on actual engagement and termination forms supplied by employers and self-employed.

So the ETC data is based on a headcount. Moreover, the Labour Force Survey collates data on persons aged 15 to 64 years; while persons in Malta can only start working at the age of 16 and nearly all finish working by age 61.

With these considerations in mind, one can understand why sometimes data obtained from the Labour Force Survey does not tally with data supplied by the Employment and Training Corporation.

However, whichever source one uses, the indication that one obtains is one - the economy has been successful in creating jobs during 2005.

Assessing the Labour Force Survey data, one notes that the number of gainfully occupied dropped between 2004 and 2005; thereby resulting in a drop in the activity rate.

The number of persons in employment went down by nearly 1,000 to 147,735, while the activity rate went down by 0.6 of a percentage point to 57.7 per cent. The unemployment rate remained the same at 7.3 per cent, even if the total number of persons claiming to be unemployed dropped by an odd 170 persons to 11,614. This is the first issue that needs to be considered.

I believe that at a time when persons fear there is an unemployment problem to a greater extent than possibly in the more recent past, the decrease in the number of unemployed persons is already something more than positive. Moreover, one needs to remember that in 2005 there was the highest number of persons who retired from work.

This is only the start of a trend that will continue in the coming years, unless the retirement age is raised. In effect this explains the drop in the number of persons in a job and if one were to eliminate this figure from the equation one would note an increase in the number of persons in employment.

One indicator that points to a healthy labour market is the fact that job creation has essentially happened in the private sector.

The number of males working in the private sector increased by around 600 persons while the number of females increased by 600 persons, thus the net increase in the number of persons working in the private sector was of 1,500.

Conversely, the number of persons working in the public sector dropped by around 2,450 persons. At a time when it is recognised by all that what we need to create is productive jobs and that the public sector employs too many people, this is all very good news. It means that we are not resorting to the practices of the 1970s and early 1980s to create jobs, when job creation was driven by public sector employment.

Another good piece of news is that the number of employees (as opposed to self-employed) increased by around 800 persons. This is not to mean that an increase in self-employment is a negative phenomenon but it is known that, if there is an unemployment problem, people tend to move into self-employment to remain economically active. Thus, when one takes the two developments (the increase in private sector employment and the increase in the number of employees) together, it becomes more than evident that the economy is indeed creating jobs.

There is no doubt that having even one unemployed person is something that no one should be proud of. This is for one main reason. An unemployed person implies a waste of resources both from an economic point of view and from a social point of view.

It is traumatic for the person and his or her family. However, one also accepts the fact that having zero unemployment is a target that is impossible to achieve.

This is why any government would seek to reduce unemployment to a minimum and to increase employment.

The available data shows that unemployment is being reduced and productive jobs are being created.