Not too long ago, the buzz was all about creating jobs. Slowly but surely, however, situations developed in particular industries, like pharma, where the sectors were so successful and grew so fast that there were simply not enough human resources available. This resulted in poaching - which drove up wages and undermined the competitiveness of these companies.

But no sooner were these shortages been tackled through new educational opportunities and incentives than new sectors started to lament that their stream of recruits was drying up as the flow was diverted to sectors like pharma, IT and accountancy. Sectors like manufacturing are finding it harder and harder to fill technical vacancies.

The construction industry and the leisure industry are turning to foreigners.

The question has suddenly become: Is Malta nearing full employment? The Times Business asked some constituted bodies for their opinion.

Gordon Cordina Economist Federation of Industry

In traditional economics, a country would be at full employment level if everyone who can be productively employed has a job. A country would be above full employment if there are also workers who are unproductively employed, leading to higher inflation or deficits in the balance of payments. Therefore, if a country is at full employment, there could still be a substantial amount of people who are unemployed, namely those who do not possess the skills for productive employment.

By this definition, Malta is probably above full employment, as evidenced by insufficiently productive jobs in the public sector which contribute to persistent deficits on the external current account. The latter indicates that the Maltese workforce is still not capable of generating sufficient exports to cover import expenditure. This situation has been significantly alleviated in recent years, mainly due to the narrowing of the fiscal deficit, but further progress is warranted.

From a wider and more modern perspective, full employment can be defined as the level which is consistent with the economic aspirations of the country. As a relatively new EU member state, an important long-term goal is to achieve the EU average per capita income, up from the level of around 76 per cent expected for 2008. The latter is the result of two considerations. One is the fact that the percentage of the population in employment in Malta is at around 55 per cent compared to an EU average of 65 per cent

The other is that the average productivity of the Maltese worker is around 92 per cent of the EU average.

Important progress has been registered on each of these variables in recent years. Yet this does not warrant complacency. For Malta to converge with the EU average per capita level of income in the long term, around 30,000 additional jobs must be created and the productivity of each job in the economy (not merely that of the new ones), must be around 10 per cent higher than it is at present.

These considerations call for continued emphasis on the promotion of competitiveness through innovation, education, cost-cutting, productive efficiency and aggressive marketing.

Restructuring must continue throughout the economy so as to enhance productivity in all sectors, while promoting the development of new ones.

Joseph Farrugia Director-general Malta Employers' Association

Last November, the theme of MEA's annual general conference was Dealing with Labour Shortages.

The topic is a reflection of the feedback that the association is obtaining from its members, namely, that many companies are facing difficulty in recruiting employees to fill the increasing number of vacancies in many areas of economic activity.

Contrary to popular perception, this shortage is not limited to personnel in the IT sector but is a phenomenon that is emerging in practically all sectors of the economy and across all levels of employment.

This is a result of the strong influx of foreign direct investment over the past three years, the recovery experienced by sectors such as tourism, and a general confidence in the country's potential that is encouraging the private sector to employ more people. This is an extraordinary situation given that during the past two years, public sector employment has been on the decline and the economy also had to bear the brunt of a number of closures in the low-end manufacturing sector, which resulted in thousands of lost jobs.

The shortage of labour is evident in the official unemployment statistics and also in the number of vacancies for all types of jobs currently being advertised.

This situation calls for strategies that complement the efforts being made for job creation - which are bearing fruit - with others to increase labour supply. Among these is the promotion of active market policies to stimulate participation in the labour market. Two main segments that need to be targeted are the retired segment and non-working housewives.

The incentives to pensioners that were announced in the last budget should serve as a positive stimulus for people reaching retirement age to remain active in the labour market. Government-induced measures, together with the availability of atypical work arrangements in the private sector, can be an effective means to increase the number of working women.

Although priority should be given to utilise domestic human resources, more foreign labour may be required if Malta is to sustain and improve the current trend in GDP growth and to face the reality of demographic challenges that Malta will face in the years to come. The demand for foreign employees at all levels is a reality that needs to be supported with less bureaucratic procedures to meet employers' needs.

On the other hand, wage determination mechanisms, such as collective bargaining, have to be sufficiently flexible to prevent brain drain in sensitive areas.

Continued investment in education will play a major role in providing a supply of young, flexible and qualified employees to fill the current and expected number of vacancies, and also to retrain employees who may have become redundant in declining sectors of the economy.

In spite of considerable achievements in the education sector, Malta still falls short on critical targets of the Lisbon agenda and no effort should be spared to develop our human resources to match the employment opportunities that are being created.

Kevin Borg, Director-general, Malta Chamber of Commerce and Enterprise

In my opinion, it is not a matter of whether Malta is nearing full employment but it is whether our available human resources are being used to their full ability and capacity, and whether there is space for improvement.

The current situation as far as employment is concerned stems from a healthy track record of achievements in our economic growth, particularly inward investment flows. It is expected that when a country - especially as small as Malta - goes through a period where the economy gains strong momentum, market forces in the labour market undergo certain strains to the effect that idle labour resources are exhausted. As a chamber, we do get regular feedback from our members, especially those in the service sectors, that they are facing certain difficulties. These are not only linked to the problems in recruiting adequately-trained human resources but more so in being able to retain those who are already in their employment.

This makes it pivotal for us to dedicate all our energy, as a nation, to education - in all its various levels, from tertiary education, vocational and specialised tuition to the much needed re-training and life-long education concept.

Malta must ensure that its human resources are of the highest quality possible, as this will bring about more flexibility in the labour market.

This flexibility, in turn, will make it possible for local employers and foreign investors alike, to find suitable persons to employ in their enterprises, rendering the islands a more attractive possibility for investment.

This is of crucial importance if we are to ensure that salaries are not artificially inflated. Rises in the cost of labour are only justified when they are commensurate to increases in productivity. It is only in this way that Malta can ensure that its national competitiveness is neither compromised nor undermined.

Sign up to our free newsletters

Get the best updates straight to your inbox:
Please select at least one mailing list.

You can unsubscribe at any time by clicking the link in the footer of our emails. We use Mailchimp as our marketing platform. By subscribing, you acknowledge that your information will be transferred to Mailchimp for processing.