The manufacturing industry is a major high-value contributor to the Maltese economy, generating almost 20 per cent of the total private sector jobs directly and many other jobs indirectly through its supply chain. Manufacturing and services in fact are closely tied together and the competitiveness of one is hampered by the absence of the other.
A common misconception is the extent to which manufacturing is actually in decline. Strictly speaking, it is not. Indeed, one thing which is often overlooked is that the manufacturing industry, as at 2008, contributed to about 16.5 per cent of the country's GDP, which is relatively high when compared to the other sectors of the economy. Furthermore, 15 per cent (2009) of the working population are employed in industry.
As with the rest of the world, the year 2009 was a very challenging one for the economy as a whole. In fact, prior to the recent crises, manufacturing output in Malta had continued to flourish. Within manufacturing, some industries experienced absolute declines, which declines have been offset, however, by significant increases in the value of output elsewhere.
The key to future economic success is in talent and intellectual property. The Maltese workforce is technically capable and flexible enough to embrace the process of change and, when considering Malta's limited resources, it emerges as a winner. We need to exploit this as this is our real competitive advantage. To sustain the role of manufacturing and science as the driving force behind the Maltese economy, we need to ensure that world class scientists, technicians and engineers are nurtured through the Maltese education system. Currently, however, demand for these skilled people outstrips supply.
Closing this gap requires not just change in the educational system but in society's view of manufacturing. We must also confront the deeper social issue that ours is an economy and a society where the manufacturing sector has long been undervalued. Negative stereotypes of dead-end careers in unclean, repetitive environments still remain. Society in general must realise that today's manufacturers are working in a fast-paced, sophisticated, technological environment, requiring workers with advanced analytical, technological, and mathematical skills to operate modern manufacturing plants.
In order to attract our brightest people into manufacturing-related careers we need to build far deeper and wider understanding, recognition and support for the achievements of the science and engineering communities, highlighting their attractiveness as a career choice for the most capable people. There still exist a number of gaping holes in the recognition of technical people. For instance, there is no formal licence for qualified technicians.
As well as focusing on getting more qualified scientists, technicians and engineers, attention also needs to be focused further down the skills hierarchy.
The beauty of manufacturing is that wages and productivity are not necessarily tied to education level. A person with secondary education can make a middle-class living in the manufacturing sector. By contrast, wages and productivity are much more closely tied to education level in the services sector. A person with secondary education or less will generally find it much harder to advance in the services sector.
Of course, it would be ideal if most of the workforce would have attained higher education qualifications and we should continue in our efforts to have a higher level of youths continuing to higher education beyond the compulsory school age. However, in reality, there is always going to be a significant portion of the population that does not advance beyond secondary education. This means that an economy with reduced manufacturing activity tends to generate a higher order of income inequality.
The government's Vision 2015 places high-value added and advanced manufacturing as one of the key priorities. While it is commendable and absolutely necessary that Malta really enhances its efforts in areas such as research and development, product design and the creation of new knowledge, it is also imperative to note that such objectives require a context of production through which the iterative processes between knowledge creation and market realisation can happen. We want Malta to remain the base from where this happens. We want to see more policies of facilitation to encourage manufacturing companies to undertake their international marketing from Malta, thus prompting local product (re-)design, thus research and, hence, the increased need to link with academia.
Our country today still depends on a strong and vibrant manufacturing sector and perhaps this is more so than ever before. But we have to believe that we can bring about this vibrancy by starting to celebrate our success and resilience. We, the industry players, are committed to working in partnership with the government, education institutions, professional bodies and policy setters to aim for, build and sustain world-class skills and a research base that will keep our manufacturing business competitive globally.
As the basis for an effective partnership, we believe that there is a powerful argument for a government-led national manufacturing strategy, a revisit of the industrial policy, to ensure manufacturing is given the priority it needs and deserves.
The author is chairman of the manufacturers and other industries economic group within the Malta Chamber of Commerce, Enterprise and Industry.