Retrain, retrain, retrain
The decision to downsize the ST Microelectronics Kirkop plant was long in the making, but it was never in doubt. It was a matter of convergence between the depreciation of the plant's equipment and a deep change in the market situation. The latter...
The decision to downsize the ST Microelectronics Kirkop plant was long in the making, but it was never in doubt. It was a matter of convergence between the depreciation of the plant's equipment and a deep change in the market situation. The latter factor has arrived with a vengeance.
The microchips market has been going through cyclical fluctuations, softening at every turn. The crunch came with the outburst of the global recession. Electronic equipment is facing very depressed demand in a context of ruthless competition. The impact is being very quickly reflected in the profit and loss account of giants such as Sony.
The knock-on effect on microchip suppliers was inevitable. The local STM had weathered earlier storms, including the sharp decline in the exchange value of the US dollar relative the company's trading currency, the euro. Some reprieve arrived in that area with the strong recovery of the dollar.
It was not enough, taking into account the drop in demand for the company's output. The writing was on the wall even if the core global unit where decisions are ultimately taken had kept the reality from the government, as well from STM's own management in Malta.
Corporate giants have their own harsh rationale and method of operation. It would be a mistake to try to pin any blame for that either on the Malta government or on the General Workers' Union. Before the fatal news finally broke out both had been doing their best to stave off the looming disaster.
They still have a lot of work to do. As things seem to stand at present, though they could change at short notice, the 1,200 jobs STM will be shedding in Malta will not go overnight.
Early reports suggest that it will take years for the loss to work through. I do not see it happening in short bursts, but to speak of years may be to express too much hope.
The basic point is that jobs will be shed and that these will be workers who have been many years in their jobs. Initially they will not find it easy to adapt their skills to what the market might be bringing up.
Will the market, in fact, bring up anything at all? Is there hope for STM and other workers in the manufacturing sector who have already been told they will lose their jobs soon? Is there hope for employees in the tourism sector who are already being eased out, particularly part-timers, as some hotels, following discussions with the unions, work out flexibility schemes, such as banking hours now, when demand is weak, to be used in the summer months, which hopefully will see higher occupancies?
Hope does spring eternal. But nothing will happen on its own. The government is putting a brave face on the unfolding events, even if such events soon outrun positive expressions, as they did in regard to the claim that some factories opted for a four-day week rather than outright discharges.
The four-day week, Trelleborg employees found out to their dismay, was only a first step. The next step was slimming of the labour force through scores of discharges. As the weeks turn into months it is very possible they will show that the Minister of Finance was overly hopeful when he forecast a pick-up in economic activity in the third quarter. One would dearly love to see him proven right, but that's unlikely.
As the winter rolls out into spring more discharges will surface. The distribution and retail sector is also going to be hit. Aggregate demand will decline as discharges increase. Along with that, people still in employment, mercifully a very substantial majority, will be more and more careful with their spending decisions.
They will buy essentials, but will think twice and then twice more about discretionary spending.
Taken together the manufacturing, tourism and distribution and retail sectors will be weaving a stark story as the months progress. Turning that situation into political capital will not move it forward one bit. Nor will pointing out that the financial services sector continues to attract new investment interest, notwithstanding the gloom, help those who will be losing their jobs.
There will be a mismatch. New jobs created in the financial services sector will not fit easily on those becoming jobless in manufacturing, tourism, and distribution and retail.
More than ever focus will have to turn to retraining. The present and coming doldrums will not last forever.
We are back to business cycles, with the current and approaching one perhaps the deepest the global economy has ever seen. But new investment will be taking place, for, hackneyed as the expression seems, every situation, no matter how bad, will contain opportunities.
And meanwhile much activity will continue. Fifty million jobs may indeed be lost in the global economy. But billions will remain in employment, and among them vacancies will be created regularly, not least through retirement.
That applies to the local scene as well. There may be little that can be done to stave off the loss of more jobs, other than to ensure that we remain as productive and creative as can be. The important thing will be what to do with those who become unemployed. There is no other answer besides retraining. Hopefully no one will say that's already being done.
The composition of the unemployed will be changing. Retraining programmes have to change with them.
The microchips market has been going through cyclical fluctuations, softening at every turn. The crunch came with the outburst of the global recession. Electronic equipment is facing very depressed demand in a context of ruthless competition. The impact is being very quickly reflected in the profit and loss account of giants such as Sony.
The knock-on effect on microchip suppliers was inevitable. The local STM had weathered earlier storms, including the sharp decline in the exchange value of the US dollar relative the company's trading currency, the euro. Some reprieve arrived in that area with the strong recovery of the dollar.
It was not enough, taking into account the drop in demand for the company's output. The writing was on the wall even if the core global unit where decisions are ultimately taken had kept the reality from the government, as well from STM's own management in Malta.
Corporate giants have their own harsh rationale and method of operation. It would be a mistake to try to pin any blame for that either on the Malta government or on the General Workers' Union. Before the fatal news finally broke out both had been doing their best to stave off the looming disaster.
They still have a lot of work to do. As things seem to stand at present, though they could change at short notice, the 1,200 jobs STM will be shedding in Malta will not go overnight.
Early reports suggest that it will take years for the loss to work through. I do not see it happening in short bursts, but to speak of years may be to express too much hope.
The basic point is that jobs will be shed and that these will be workers who have been many years in their jobs. Initially they will not find it easy to adapt their skills to what the market might be bringing up.
Will the market, in fact, bring up anything at all? Is there hope for STM and other workers in the manufacturing sector who have already been told they will lose their jobs soon? Is there hope for employees in the tourism sector who are already being eased out, particularly part-timers, as some hotels, following discussions with the unions, work out flexibility schemes, such as banking hours now, when demand is weak, to be used in the summer months, which hopefully will see higher occupancies?
Hope does spring eternal. But nothing will happen on its own. The government is putting a brave face on the unfolding events, even if such events soon outrun positive expressions, as they did in regard to the claim that some factories opted for a four-day week rather than outright discharges.
The four-day week, Trelleborg employees found out to their dismay, was only a first step. The next step was slimming of the labour force through scores of discharges. As the weeks turn into months it is very possible they will show that the Minister of Finance was overly hopeful when he forecast a pick-up in economic activity in the third quarter. One would dearly love to see him proven right, but that's unlikely.
As the winter rolls out into spring more discharges will surface. The distribution and retail sector is also going to be hit. Aggregate demand will decline as discharges increase. Along with that, people still in employment, mercifully a very substantial majority, will be more and more careful with their spending decisions.
They will buy essentials, but will think twice and then twice more about discretionary spending.
Taken together the manufacturing, tourism and distribution and retail sectors will be weaving a stark story as the months progress. Turning that situation into political capital will not move it forward one bit. Nor will pointing out that the financial services sector continues to attract new investment interest, notwithstanding the gloom, help those who will be losing their jobs.
There will be a mismatch. New jobs created in the financial services sector will not fit easily on those becoming jobless in manufacturing, tourism, and distribution and retail.
More than ever focus will have to turn to retraining. The present and coming doldrums will not last forever.
We are back to business cycles, with the current and approaching one perhaps the deepest the global economy has ever seen. But new investment will be taking place, for, hackneyed as the expression seems, every situation, no matter how bad, will contain opportunities.
And meanwhile much activity will continue. Fifty million jobs may indeed be lost in the global economy. But billions will remain in employment, and among them vacancies will be created regularly, not least through retirement.
That applies to the local scene as well. There may be little that can be done to stave off the loss of more jobs, other than to ensure that we remain as productive and creative as can be. The important thing will be what to do with those who become unemployed. There is no other answer besides retraining. Hopefully no one will say that's already being done.
The composition of the unemployed will be changing. Retraining programmes have to change with them.