The creation of jobs is an important acid test for any administration. It is imperative, when jobs are being created but the number of unemployed people remains stubbornly high, to identify the cause of such an apparent contradiction.
Like any other market, the rules of supply and demand affect the dynamics of the labour market. Yet Employment and Training Corporation chairman Clyde Caruana, who is an economist, believes that “it is not the case that unemployment is going up because there is an increase in supply or a drop in demand”.
According to the ETC chairman, the reasons for the apparent contradictions affecting our labour market are not all that difficult to understand. He said “almost half of those on the unemployment register are seeking jobs that do not exist”. People registering for employment as cleaners are apparently turning down job offers to do exactly what they are good at because they would rather work in an office environment rather than in a hotel or restaurant.
The result of such unreasonable expectations of so many unemployed is that various local employers have to recruit foreign cleaners to cope with the demand they have for such services. This simple fact explains why unemployment “increased to almost 8,000 despite an economy that last year generated almost 5,000 new jobs”.
This cultural issue needs to be addressed if the economy is to continue growing at a fast rate and provide employment opportunities for local workers who want to earn a decent living by working, rather than depending on handouts financed by taxpayers. Mr Caruana did well to dispel the fallacy that “the economy’s inability to cope with a growing demand for jobs is fuelled by policies to encourage people to work, particularly women”.
There are other factors creating serious anomalies in the labour market. There is no doubt that in Malta, like in many other EU countries, there is a skills mismatch in the sense that, although the country is producing thousands of graduates every year, many of them are gaining skills for which there is limited demand in the labour market.
Many graduates in fine arts, humanities, media studies, as well as some social sciences are finding it difficult to find jobs that demand their skills.
On the other hand the country is not producing enough engineers, ITC experts and scientists that are so badly needed in the modern economy’s business ventures.
The result is that many graduates are either unemployed, or under-employed, while many entrepreneurs apply for permits to entice foreign graduates with the right skill sets to occupy critically important roles in their business.
In order to reverse this wasteful trend, job seekers’ expectations need to be managed so that those looking for a job understand what it takes to land the role they want.
A reform of the job seekers’ benefit scheme is probably the first thing that needs to be tackled. Both blue and white collar workers who are seeking ‘phantom jobs’ should be made to face reality by limiting the extent of support that they get from the unemployment benefits system.
Moreover, incentives are needed to make it more attractive to work rather than depend on the dole.
Retraining opportunities should also be encouraged to help people with unsalable skills to gain new skills that make them more employable.