Yippy-yippy-yayya foolishness

Malta is not about to become the poor man of Europe. Nevertheless the fact that the economy has, once again, dipped into recession should not be pooh-poohed away as officialdom is doing, led by the Finance Minister. His attempt to explain away the drop in economic activity in the December and March quarters was typical of the way the government looks at developments.

If data comes out that suggest we are doing somewhat better than most of the rest of the members of the EU, the government spin machines go into top gear to try to paint the island as an economic paradise.

If the news is not so positive, or is outright negative as with the recession, the top brass lead the spinners into making out as if nothing has happened. That is foolish.

The opposition is wrong to try to describe everything as black. The government is worse, because action depends upon it, to make out that everything is white.

The truth is that we have our successes, and we also have our problems. At times even positive data become worrying upon closer reading. Take registered unemployment. We do not have a horrendous situation like they have in Spain, with a quarter of the labour force and half its youth component unemployed.

Yet we do have a problem in the composition of our own unemployed. Too many of the registrants lack qualifications adequate to the changing structure of the economy. Too many have no qualifications at all. For them, growth in the financial services and the gaming sectors might as well not happen.

Also, the rate of unemployment among the young remains too high, at roughly double the national average. While registrants over 50 years of age are becoming long-term unemployed.

These facts are never mentioned by the powers that be. Much less are remedial measures discussed. The going is good for those who benefit from it. Others drop farther behind.

The large proportion of the population at risk of poverty increases, without the government paying any apparent heed. Even the opposition, though it is more conscious of this alarming situation, continues to focus its metaphors and address on the middle class, as if the lower classes are no more.

I find this reflected in the insistence of the Leader of the Opposition to refer to a “new government” when talking about his hope of electoral change. He never says a new ‘Labour’ government, as if the term Labour has become a dirty word.

I very much fear that in the race for electoral victory the wide and sad fringes of society are being neglected. The two major parties fight for the middle ground as if giving up on those in the lower reaches or taking them for granted.

The government is certainly taking for granted the yippi-yippi-yayya approach to the economy. The recession, said the Finance Minister, was caused mainly by two factors: ST Microelectronics exported less and the government absorbed the potential increase in water and electricity leaving Enemalta with an unfilled financial gap.

Such talk insults average intelligence. ST Microelectronics is the largest company in Malta. It accounts for a large proportion of our domestic exports, though less so of our value added in view of its high import content.

When its exports are up, they affect the Gross Domestic Product and the government pats itself on the back because it helped the company over heavy bumps three years ago.

Now that its exports went down up to March – hopefully they have since recovered – it is as if nothing has happened. Consistency is needed in the dough to make a good cake, let alone in economic analysis, on which remedial and other decisions depend.

Similarly with water and electricity tariffs. Officialdom had made much of its decision to go for full cost recovery, as demanded by the European Union and the International Monetary Fund. Then, because the Prime Minister was driven to suspect that he might have to call a general election out of season, he and the Finance Minister decided that the public account would absorb Enemalta’s increased fuel cost.

The barefaced contradiction following long months when the government called the opposition irresponsible over its stand on utility tariffs is now used as an excuse for the new recession.

Never mind that the Central Bank Governor, a former Nationalist minister and respected economist to whom statistics are stock-in-trade, thinks that the measurement of GDP is fuzzy in parts, particularly when it comes to inventories and what used to be called the balancing item.

He too was pooh-poohed. For all we know the study he commissioned the Central Bank professionals to carry out might show the GDP is understated, which would be bad news in view of Malta’s imminent exit from the Objective 1 category of the EU. Or it might mean that the GDP is overstated.

Either way we need to know the truth. The current truth is that we are in recession. That follows from aggregating the value of the output of the many economic sectors. Some did well, others not so well or badly.

Why can’t we leave it at that and try to arrive at an objective assessment of what is going on?

We live in dangerous times. Out there, in the rest of the EU and beyond as well, negative pressures are building up that, if unchecked, will negatively affect the Maltese economy as well.

We need to be prepared with the truth, not bloody politics day in day out.