Editorial

When Bluebell and Bortex, two textile firms now laying off workers, set up shop in 1964, the island was in its first year of independence, looking forward with excitement to the future and busy setting up the physical and institutional infrastructure required to build a new economy.

Despite serious handicaps, mainly in the shape of lack of resources and of experience, the island managed to break new grounds as it began to develop tourism and manufacturing industry. Horticulture did not flourish as some thought it would at first and the prospects held at the time that it could also contribute well to the economy were pushed aside.

But both manufacturing industry and tourism grew, and, over time, a new, strong economic force, financial services, blossomed, to gradually become one of the leading employers and contributors to the economy. In the early days of manufacturing, the stress was on the attraction of labour-intensive firms, which was why, as in other developing countries, Malta attracted a number of textile companies. But the country has moved on since then, branching out into areas which, in today's stage of development, are more suitable to the island: The making of goods requiring a higher added value.

In this context, the planned closure in August of the last denim manufacturing firm, VF Corporation, which had taken over from Bluebell, and Bortex's winding up of its production facility, may well be described as a natural development in the process of an industry in transition. Of course, it will not be easy for the workers finding themselves out of work to get a new job. It never is. Both firms are victims, as it were, of the new competition presented by low-cost countries.

In its own words, VF had no problem with the Maltese workers' level of efficiency, skills or dedication to the job, but it was only relocating to places where the salaries were much lower. The key word here is the "much". While, of course, it is important on Malta's part to ensure it does not outprice itself by, for instance, allowing wage rises that are not backed up by productivity, it would be self-defeating if, in the face of such developments, the country were to retract from its aim of moving on to a higher level of manufacturing.

The signpost ought to remain firmly directed towards moving forward, not backward. A most significant statistic in this respect that came out only a few days ago was that Malta has the second lowest number of workers on the minimum wage in the European Union. According to Eurostat, the EU statistical agency, the number of Maltese workers receiving only the statutory minimum wage for their job stood at 1.5 per cent of all the people employed. The only other member state in a better situation is Spain, where only 0.8 per cent of workers are on the minimum wage.

This is not bad but, on the other hand, the country has to work harder than it is doing now to reach a standard of living comparable to that found in EU countries. What will definitely help bring about a higher level of development is the planned expansion of the information and communications technology sector.

SmartCity and other positive indicators, such as the fact that 36 per cent of the foreign direct investment approved last year was ICT-related, show that in terms of development, the country is on the right track. Hopefully, VF and Bortex workers finding themselves out of a job will soon be able to reintegrate themselves into the labour force.