When the National Statistical Office updated its measure of the economy, the Opposition launched an orchestrated reaction to express outrage. They have charged the authorities with tampering, a pretty serious charge.
Alfred Sant repeats the accusation, while totally ignoring the explanations presented by the NSO. Typically, he talks and writes with his blindfold and earplugs on, counting on an audience that will not check other information sources. But it gets worse. Dr Sant has now announced the preparation of a Labour Party report that will show how the authorities have been tampering with official statistics.
The MLP wants to choke off any strengthening of the feel-good factor. They want to ram down everyone's throat that things are getting worse. They are not about to tolerate any correction in the statistics that does not square with their message of doom and gloom. It gets worse. In undermining the official statistics, they foul up the path toward the adoption of the euro.
A few months ago Dr Sant did one of his big U-turns, conceding that, as Prime Minister, he will not mess around with the euro adoption timetable. This about-turn was his way of recognising a simple political reality: Dr Sant would never become PM if the public expected him to abort the adoption of the euro.
What has followed is the typical socialist tendency to destabilise an entirely normal situation. While professing acceptance of the euro adoption process, Dr Sant now wants to show that the statistics can't be trusted. If they can't be trusted, who's to say that Malta is eligible to join the euro area? Is he out to undermine Malta's adoption of the single currency?
The presentation used in the NSO's December 29 press conference, available on the NSO's Website (www.nso.gov.mt) shows that the only significant corrections were the adjustments to post-2001 inflation-corrected GDP, and that they were due to two considerations. The first was the NSO's adopting new methods of measuring the GDP in line with Eurostat parameters. The second is the elusive nature of the very things the NSO tries to keep an accurate track of, especially a variety of services whose emergence and growth occur mostly below the statistical radar.
The statistical progress in the recent past owes nothing to Labour. Before Malta's EU membership, the official statistics were frozen in the methods of the Stone Age and the economy was measured using mostly a statistical system introduced in 1955. In fact, it was only in the last few years that Malta upgraded its measurement of GDP to the internationally recognised European Standards of Accounts.
Outside the EU, our catching up with the statistical sophistication of the rest of the world would not have happened. Had Dr Sant been re-elected to power in 1998, we would still be outside the EU. Without an EU obligation to clean up our statistics, we would still be measuring the national statistics in obsolete ways. A re-elected Alfred Sant would have had far more pressing needs than to modernise the official statistics. The change in government meant that ahead of EU membership and in its aftermath, the official statistics were finally brought out of the middle of the 20th century - with EU help, of course.
This is not the first time that the socialists have acted cynically. In the case of the unemployment statistics, they exploited the new alternative methodology. Before EU membership, the jobless figure was collected only from the unemployment register of the ETC. Post-EU, the statistical authorities were also required to sample the population and ask about the employment status of the respondents. The results from this regular sampling are then extrapolated to the whole population. This Labour Force Survey (LFS) estimates an unemployment figure that is higher than the unemployment register, and it is not hard to figure out why.
When the surveyor calls on a household, each member who falls in the relevant age group is asked whether he or she is looking for work. In other words, all it takes for a respondent to be pigeonholed as unemployed is a self-declaration of unemployment. Able-bodied males who are only active in the black economy would avoid admitting that they are not searching for employment. Similarly, housewives who are fully occupied at home would not refrain from asserting that they are looking for employment, even though they are not registered as unemployed.
The two ways of measuring the unemployed have their pros and cons. In every country that applies both methods, the survey method reports a higher unemployment figure than the register and the two numbers are not directly comparable. But that is what Labour's propaganda machine did initially. They would compare the ETC figure of, say, 6,000 in the number of unemployed in July of one year to the LFS figure of 8,000 a year later! If the temperature rose from 10°C to 50°F, only an idiot would claim that it has got hotter. But that is how Labour's rocket scientists went about to comment on the unemployment figures.
Labour are now going on the attack on the GDP statistics. They must be sensing that the pick-up in economy is here to stay and therefore it is time to undermine the credibility of the statistics.
It is obvious that they feel they are on a winning trajectory. They reason that the party in office has been there for an excessive number of years. Fatigue alone, apart from the expected electoral memory loss of previous Labour government failures and incompetence, will therefore help to get them elected. In addition, the current government has restructured the economy as fundamentally as Dom Mintoff ever did, although this time the reform programme moved the economy forward, not backward. Such radical reforms hurt in the short run and Labour is betting this pain will not be over before Election Day.
But the economy hit rock bottom a year or two too soon for Labour's comfort. It has been shifting away from labour-intensive manufacturing, while the public sector has become leaner. The industries that survived thanks to import restrictions have shrunk. The tourist sector is shifting towards four- and five-star accommodation. Although the transformation has yet to run its full course, the fact that unemployment has been fairly stable throughout this transition suggests that the economy is resilient and that new jobs are being created. The outlook is improving, and that is bad for Labour.
When Labour was in power in 1971-87, the public sector dominated the economy. Public enterprises were run on a mini-Stalinist scale and change was obvious. Then, it was far less difficult for the statisticians to stay au courant. Now growth takes place mostly in services and it is largely export-oriented, facilitated by Malta's membership in the large European single market. The footprint of the new entrepreneurs is light not least because there is no obligation to repatriate funds earned from export activity. The statistical services find it hard to stay abreast of continual change.
These are circumstances that necessitate statistical revisions when new information emerges. Those Labourites who are shocked by such corrections are still stuck in the way things were done in the Seventies. Even worse: Labour's ploy is an insidious attempt to disrupt the euro adoption process.
Note: this article was written before MLP deputy leader Charles Mangion's press conference on Friday.
micfal@maltanet.net