Engaging Malta's potential

Looking at the employment data provided by the Labour Force Survey, published by the National Statistics Office, one would note that 175,000 persons aged 15 years and over remain inactive. This represents 49.9 per cent of the total number of persons within this category. There can be a number of reasons why such people are not employed or are not seeking work. Some of these reasons could be related to their personal situation and this has to be accepted. On the other hand we also need to appreciate and accept that a number of these 175,000 persons, many have the potential to be employed.

If we were to limit ourselves to the labour force, that is those aged 15 to 64 years, the activity rate was 59.4 per cent in December last year. In December 2008 it was 58.7 per cent, thereby showing a slight improvement. We need to put this data into a very specific context. Population ageing is already leading to the departure from the work force of an increasing number of Maltese and the number of those that retire is greater than the number of those that join the work force. So unless we do something fast, sustained economic growth will be constrained by what will become chronic labour and skill shortages.

It is for this reason that we need to achieve a higher activity rate among our population. An increased activity rate would mean an increased supply of people willing to work, an increased supply of skills and increased economic wealth. The inactive population represents untapped potential which needs to be unleashed in our economy and the policy decision that needs to be taken is how to engage this potential.

We need to appreciate that the issue of an ageing population is not confined to Malta. Where we are different to all other EU member states is that our participation rate is so low that we still have great deal of head room that would enable us to tackle the issue of the aging population. The problem is evidently among females. In fact the participation rate among males is very close to the EU average at around 72.5 per cent, while that among females is at just under 40 per cent compared to an EU average of 59 per cent. This was one of the challenges highlighted in the document Vision 2015 and Beyond.

On the other hand we would be naïve if we were to believe that the issue is just limited to females. Apart from females there are also other specific groups where participation is low. These would include those who are able to work but face disincentives or barriers such as those who care for children, the disabled and the elderly. They would also include those who are marginally attached to employment and so spend long periods of time out of a job. Then there are those significantly disadvantaged such as the disabled and single parents. Very often we do not consider these groups because they are not very large in numbers and our national unemployment rate is low by EU standards.

Admittedly, our unemployment rate is low and this is something that we should all be happy about. However this does not mean that we are near full employment. There are those who argue, and I tend to agree with them, that our employment goal should be reworded into "making Malta a full participation economy". This would require an increase in participation levels in the medium-term for groups that are currently outside the economy, such as the ones I referred to. The beauty of a small economy such as ours is that targeting these groups should not prove to be a very difficult task.

What we need is the conviction that such groups are part of our country's potential and we need to engage this potential for their own benefit as well as for the benefit of the whole economy. In broad terms this would mean targeting those groups where the participation rate is lower, focussing on retraining those persons that are at risk of dropping out of the labour force, and developing new approaches to facilitate the participation of those individuals that face barriers to entry into the labour force.

The Employment and Training Corporation is already doing a great deal on these fronts - it would pay us to make this a priority not just for ETC but for the country as a whole.