Malta needs an economic vi-sion which is shared by all stakeholders if it is to achieve the targets set within the Europe 2020 strategy. This is the overall message of the Economic Vision 2014-2020 published by the Malta Chamber of Commerce, Enterprise and Industry.
The EU wishes that industry contributes for one fifth of the total economy by 2020. Malta is presently half way on that mark.
The Chamber laments that our country is no longer an attractive destination for foreign direct investment in manufacturing and proposes a strategy, which has to be perceived and managed in a ‘flexible manner’, to enhance Malta’s competitiveness.
The Chamber’s vision is that of a global hub, a ‘focused and diversified’ economy, underpinned by a dynamic and innovative private sector. Focused and diversified are usually incompatible but the report explains that resources must be focused towards those sectors that ‘will optimally leverage opportunities’. These sectors include financial services, ICT (including digital gaming), filming, maritime and aviation, tourism, health and education services, life sciences and advanced manufacturing.
The report notes that “political unity, constancy of purpose and a culture of cooperation within society” would greatly facilitate the achievement of the vision. Regretfully, partisan politics are not conducive to a national concerted effort.
The MCESD is criticised for not being pro-active and for the failure to achieve consensus on such a critical matter. This institution is described as a “rudderless, irrelevant and inconsequential national institution”. The Chamber’s report also states that it “can no longer accept the poor performance of the Maltese judiciary” as this is a deterrent to economic development.
If our country is to make a qualitative leap forward it has to nurture a ‘culture of excellence’. Our ‘good enough’ approach needs to give way to a ‘nothing but the best’ attitude. According to the strategic document, research and innovation have to become a “fundamental cornerstone” of our economy.
The Chamber acknowledges that there exists a deep gap between the country’s education and economic strategies. This is aggravated by the lack of structured, quality intelligence on the labour market and a shortage of national skills audit.
Furthermore, the report finds that the quality of labour graduating from tertiary institutions is inadequate, proposes more investment in tertiary education and favours foreign universities setting up campus locally.
The Vision document proposes that student stipends are linked to an Employability Index that would indicate the possibilities of employment and potential income for different courses, as well as to compulsory summer internship schemes, with both the public and private sectors.
Labour market inflexibility, COLA and the trade unions’ fight against ‘precarious work’ are blamed for the erosion of Malta’s labour cost competitiveness. The report, however, fails to present data or analysis to support this point.
The Chamber is concerned that younger employees often lack work ethos, discipline and soft skills, adding that particularlyworrying is the erosion of communication skills, especially in English.
Our ‘good enough’ approach needs to give way to a ‘nothing but the best’ attitude
Malta needs to attract global talent and to make better use of irregular immigrants.
The Chamber expects that the government plays a pivotal role as a partner in helping achieve the vision. Despite substantial investments, the public service is still a millstone around the neck of enterprise. The government needs to accelerate economic restructuring, upgrade the physical infrastructure and ensure a fair market playing field through proper enforcement structures (especially with regard to tax compliance).
The Chamber supports the introduction of a performance budgeting system but warns that pension sustainability, healthcare and education are still a big threat to Malta’s “economic and social model”.
Noting that the “the assumption that Maltese companies operate within the same conditions and economies of scale as those companies operating in mainland Europe is not correct”, the Chamber demands that the government supports enterprises by helping them address their technological inefficiencies, facilitating export market entry and leveraging its purchasing power to reward those that upgrade their quality.
The report is right in contending that, ultimately, competitiveness is about raising productivity and goes on to suggest the setting up of a Government-University of Malta-Enterprise centre that will conduct applied research on productivity and innovation.
With regard to access to finance by SMEs, the Chamber notes our country’s continued failure to develop alternative sources of finance and expresses itself in favour of a Malta Development Bank.
Other specific proposals made in the report relate to the privatisation of Wasteserv and the restructuring of the Grand Harbour Regeneration Corporation into a Malta Urban Development Corporation to channel local and foreign capital into the financing of infrastructural projects.
It is commendable that the Chamber has prepared such a study. It is a definite improvement on recent economic strategizing.
Generally, the report suffers from a lack of analysis and too much ‘in-the-box’ thinking. The implications of the ‘Malta model’ with its dependence on foreign direct investment in manufacturing and the economy at large are largely ignored.
The report fails to address effectively the ‘paradox’ facing a small economy: between the need to ‘specialise’, to enhance value added, as against the need for diversification, to minimise risks.
Productivity is perceived as arising from supply (technological, employee) considerations while the importance of externalities (arising from networking and clustering) is barely mentioned. Despite its shortcomings, the Chamber’s Economic Vision deserves much more public discussion.
fms18@onvol.net