Few objective economic analysts dispute the need for major changes in the labour markets of the various EU countries as it is becoming more evident that the current economic crisis is the result of major structural weaknesses that is making Europe less competitive in the world. Reforms in labour markets are often associated with less regulation making it easier for employers to hire and fire employees than is the case in most EU countries.
Perhaps the most important reform that our labour market cries out for is that relating to our educational system- John Cassar White
However, the experience with deregulation in the labour market has so far not produced impressive results. Rather than create new jobs many employers have used the measures of deregulation to shed workers and improve their profitability without really creating any new jobs. Moreover, in countries like Italy where the Monti government is proposing the abrogation of Article 18 of the Statuto dei Lavoratori thereby making it easier to discharge new employees there is a risk of having a two-tier labour market – one in which workers’ rights are protected, and another where workers will have little legal protection and more debilitating precarious conditions of work.
The energising of the labour market to ensure that the over 77 million of working-age EU adults that today are inactive do find employment has to be achieved by other measures. One such measure is an honest attempt to tackle the shadow economy where millions of worker do in fact work but contribute little to the public purses that have to finance health, education, pensions and other social services. Admittedly, tackling the black economy is no simple task. But the task is made even more complex by the apparent lack of political will to get to the root of the problem. Malta is reported to have one of the largest black economies and the government is not very convincing on how it intends to tackle this issue.
Another much needed reform is that in the welfare system. For many unemployed people it is still more attractive to survive on benefits than to earn a living the hard way – through work which initially may not be well paid. Reducing tax rates for low-wage households in a bid to increase incentives to seek and accept work is an overdue measure that will restore some equity between taxpayers who finance our social welfare system and the beneficiaries of this system.
Perhaps the most important reform that our labour market cries out for is that relating to our educational system. The European Commission in one of its reports on the Maltese economy in 2011 had recommended that the government should undertake a study to identify the causes behind our low educational achievement in the last two decades. They even insisted that this study should be completed by end 2012. So far, I have not heard anything about how we intend to implement this recommendation. If we are not prepared to engage in some soul searching about our failures in achieving high levels of educational achievement for the great majority of our students, then we are destined to keep repeating the expensive mistakes of the past.
There are other reforms needed to make our educational system more relevant to the modern economy and the demands it makes on our labour market. We need to ask ourselves whether our university and other educational institutions are really preparing our young future workers for the realities of the workplace. The major disagreements expressed publicly in the rare but important debate on our national curriculum is an indication that we still do not have a clear enough sense of direction in what we want to achieve in the field of education in the next decade and beyond.
Employers need to do their part to energise our labour market. It is depressing to see how little flexibility most employers are prepared to allow in their workplace to encourage more women raising a family to cope with the conflicting tasks of building a career and raising a family. The tax incentives given by the government are an important element to mobilise more female workers in the workplace. But this effort needs to be complemented by more flexible work practices like tele-working, flexitime and job sharing to assist young mothers in the critical stage of balancing family and work responsibilities effectively.
Finally, trade unions have to focus more on encouraging employers to employ new workers rather than defend to extremes the “hard earned rights” of those already in employment and paying their union fees.
johncassarwhite@yahoo.com