Malta has slipped a place in the World Economic Forum's Lisbon Strategy ranking, down to the 19th position. It is not a great fall but in the context of all the developments that have taken place since the last survey two years ago, it is somewhat surprising that the country lost a place rather than improving its position. Even so, despite the drop in ranking, the European Commission has considered Malta's performance as positive.
The World Economic Forum describes the Lisbon Strategy as "an action and development plan aimed at improving Europe's productivity and competitiveness through the formation of various policy initiatives". Areas of concern include achieving an information society for all, establishing a European area of research and development, creating a business-friendly start-up environment, ensuring more and better jobs for Europe, modernising social protection and enhancing sustainable development.
A recent study by the European Commission estimated that if Europe were able to reach the Lisbon goals within the targets set, gross domestic product could rise 12-23 per cent and employment could increase by as much as 11 per cent.
According to the report, Malta is the worst performing member state when it comes to investment in innovation and research and development and in sustainable development. Another negative point is that the island is not doing enough to facilitate the business start-up environment.
By contrast to these conclusions by the World Economic Forum, the European Commission has said that Malta's strongest points this year were the ongoing development of essential research and development and innovation strategies, a new scheme to foster entrepreneurial skills and a promising set of comprehensive initiatives with regard to training. Such conflicting assessments are bound to blur the correct picture.
On the other hand, Malta placed eighth in the "information society" ranking drawn up by the World Economic Forum, with one of the highest internet penetration rates in Europe. This is a most significant placing, showing how well the island has taken to new means of communication and information. The advance made in this line within so short a time reflects the changing times in Malta today, with the young in particular breaking away from the isolationist mentality of past generations.
Although the European Commission has given a positive assessment in its separate report, it has also pinpointed areas where the island is lagging behind, or "where more should be done". It particularly brings up the need to strengthen competition, notably in professional services, reduce state aid, step up efforts to attract more people into the labour market, particularly women, and intensify and implement changes to the tax and benefit system to make working more attractive.
These are all matters that have been taken in hand but, generally speaking, progress in their implementation has been somewhat slow. As to recipients of state aid, for example, the first that come to mind is the dockyard where despite all the reforms that have taken place there, performance, as measured by the profit it makes, still falls short of expectations. In fact, according to official information given in Parliament, productivity has gone down.
Earlier this year, Investments Minister Austin Gatt had warned that if targets were not met, the consequences would be either a cut in take-home pay or redundancies. This may have sounded a bit too harsh as neither of the two is desirable, but in the opinion of the minister, and of the country, it is time to face facts. Keeping afloat, through subsidy, firms that do not perform to expectations rob the administration, Nationalist or Labour, of funds that can be usefully utilised elsewhere.