The labour scene and social security payments. Though covering different areas, they are intrinsically linked and require further analysis and policy proposals by the planning authorities. The first item came out of a study for the Union Ħaddiema Magħqudin by two economists covering the labour supply and the opening for jobs.
A fresh look at human resources policy would not be amiss- Lino Spiteri
In essence they centre around a question: how come that the Employment and Training Corporation reports 10,000 unfilled vacancies when there are more than 6,000 individuals registering for employment?
Labour force surveys have been an issue for at least 40 years, with successive governments trying to forecast job requirements which would arise out of economic planning. Much useful work has been done but, I believe it is fair to say, no study through the years got it quite right.
The anomaly noted in the UĦM study has a possible early explanation. The registered unemployment rate is a stock statistic – it measures registered unemployment at a moment in time. That for job vacancies is a flow statistic – it indicates changing vacancies on the ETC books.
Allowing for that possibility, there is still room for deeper analysis. This column has attempted a cursory look at that on more than one occasion. Each time my premise has been that, to say that we have a low unemployment rate could be misleading.
For one thing, an unemployment total of more than 6,000 individuals is no mean figure. It equates the size of various small villages, and probably of each village in Gozo other than Victoria. More to the point is the composition of the registered unemployed.
In quality terms, that largely reflects individuals who do not have the skills required by the growth segments of Malta’s changing economy. Growth is coming from the services sector, which has come to mean much more than the tourism and domestic banking sub-sector. The new demand for jobs is in IT, new financial services, gaming and related activities.
The unemployed do not fit, or fit very poorly, into that demand structure.
Then there is the age of the registered unemployed and their duration. A chunk is made up of applicants aged 50 and over, with a considerable proportion of them being on the ETC’s books for close to one year.
Young applicants without modern marketable skills also take up a considerable part of the unemployed total. The job openings at ETC probably do not correspond to these unemployment segments, recording frictional rather than medium- or long-term unemployment.
The ETC is trying to address the situation with an extensive range of training courses. At the educational level too MCAST throws out a large net to entice younger people to subscribe to one of myriad courses aimed at matching supply with demand. Still the mismatch is felt, as the UĦM reminds us. It is still not certain that removing the old trade schools completely was a good idea.
It is right for MCAST to offer a wide range of courses, but the trade schools had a dimension which is not necessarily covered by MCAST. Lest I be charged with laying down a fallacy, I am not saying that trade schools would provide human resources which could fit into the new services sector. But they would fit more easily in the traditional parts of the economy, in particular SMEs.
A fresh look at human resources policy would not be amiss.
The other item of news concerning social security baldly observed what has been obvious for a long time – our impressive network of social services places a considerable number of able-bodied individuals in a poverty trap.
They tend to be unskilled, so if they find work it would probably pay the minimum wage or close to it (now even because of the immigrant supply of labour). It barely pays them, therefore, to find a job, which would approximate to their social services receipts, especially after deducting 10 per cent for the National Insurance contribution.
This creates a conundrum – what can the authorities do? One obvious answer is to increase the minimum wage, thereby broaden the gap between it and social services payments. As well as to meet the Caritas objective of helping those on the minimum wage to be able to cover their requirements more than they are at present, when they are bumping under the poverty line.
The political response to Caritas, or rather lack thereof, has not suggested that a review of the minimum wage is in sight. Another alternative is to reduce, or at least freeze social security payments.
That is a non-starter not simply because it is politically impossible, but primarily because it would be inhumane.
What needs to be done is to consider a policy whereby more inducements would be given to the able-bodied among those living on social security to get training which would make them suitable for employment at rates above the minimum wage.
Critics of the system will say that among social beneficiaries there moonlighters.
The authorities have been quite strict about that. Perhaps more can be done. But that is a side issue to my suggestion.
Others may have better proposals. It is time that analysts start speaking out in a louder voice.