The National Statistics Office last week published what it referred to as a set of economic indicators for the years spanning 1995 to 2003. This data provides information on medium term trends in our economy and provides quite a good indication of the changing structure of the economy.

Some of the picture that emerges provides good news while other parts of the picture are not so positive. So we can either claim that we still have not thoroughly restructured or modernised our economy after all the talk about restructuring; or we can claim that we have come a long way but still have some way to go.

Either way, one still reaches the same conclusion: Our economy has changed its physiognomy; it still needs to undergo further changes; but it appears that in general we are on the right track.

The many indicators provided by the NSO relate to the gross domestic product and its structure, trade and the balance of payments, employment and unemployment, agriculture and fisheries, investment, taxes, public finances, manufacturing and wages and salaries. This week's contribution shall cover only some of these aspects; otherwise one runs the risk of being superficial when assessing certain issues. Other aspects will be covered in coming contributions.

The indicators relating to the labour sector of the economy are fairly positive. They essentially show an improved position for what economists consider as one of the factors of production. One of the striking features of the changing economy is that over this eight-year period (that is between 1995 and 2003), the private sector's share of the total gainfully occupied population increased from 62 per cent to 65 per cent. This has happened not only as a result of the decision by government to release itself from its role as a direct operator in the economy such as in the banking sector, but also because of an expansion in employment opportunities in the private sector coupled with a period of consolidation in the public sector.

Employment has kept up with its upward movement, and increased by over three per cent during these eight years. In turn unemployment has also increased during this period but the current level is below the peak level registered in 1999, both in absolute numbers and in terms of the unemployment rate. One needs to analyse thoroughly why the increase in unemployment has occurred, especially in the light of a number of voluntary redundancy schemes in certain state-controlled enterprises as well as large private sector ones.

One of the indicators that the labour sector tends to look at quite closely is the inflation rate, as this eats away at the purchasing power of the wage and salary earners. During the eight years between 1995 and 2003, inflation was very much under control with an average yearly rate of around 2.5 per cent. This is much less than the rates that we had grown accustomed to during the whole of the 1970s, the 1980s and the first half of the 1990s. Moreover, the rate for 2003 (1.3 per cent) is much lower than the previous low registered in 1999, which was of 2.13 per cent.

Another aspect related to purchasing power is taxation. Taxes have been split up by the NSO into taxes on production and imports, taxes on income and wealth, taxes on capital (death and donation and property transfer duties) and social security contributions. The total amount collected in taxes has kept increasing over the years.

Additionally, the taxation as a percentage of the gross domestic product has increased from 30 per cent to 35 per cent in the period under review. This has occurred because of increased revenue from expenditure-related taxes, increases in social security contributions and increases from income tax. In particular revenue generated from taxes on income and wealth doubled during this eight-year period.

The final aspect relates to turnover per head and wages and salaries per head in the manufacturing sector. Wages and salaries per head show a continuous increase on a yearly basis. They have increased by an average of around six per cent per annum. However, the increase in 2003 compared to 2002 has been of 9.1 per cent. Turnover per head has increased at a slightly lower rate, and the 2003 increase over 2002 has been of 8.8 per cent. From the labour point of view this indicates that employees are taking a bigger share of the wealth produced by the manufacturing sector; however, it is also an indication of reduced productivity of around 2.5 per cent.

These changes in our economy are all part of a continuous process. They indicate an improved position for persons currently in employment and a reduced drag on the part of the public sector on the Maltese labour market. The expectation is that in the long term these trends would prove to be beneficial to the Maltese economy as they are bound to serve as an incentive to persons to seek work in the more productive sectors of the economy.

1995-2003 - key indicators

· Private sector share of gainfully occupied: from 62 per cent up to 65 per cent.

· Employment: three per cent increase over period.

· Inflation: average yearly rate of around 2.5 per cent.

· Taxation: (as percentage of GDP) from 30 per cent to 35 per cent.

· Wages and salaries per head: average increase of around six per cent per annum.