Is it not hugely ironic that, while the economy is doing so well, the national minimum wage is below the European Union’s average? Healthy economic growth rates are bringing out income inequality in sharper focus.

Minimum wage earners and pensioners may have received increases lately but these are nowhere near what they actually require to raise their living standard to a decent level. This is not to mention the plight of those who are in poverty or on the brink of poverty and those who are no longer able to afford house rents being asked for today.

At €762 a month, the figure given by Eurostat, the national minimum wage is considerably lower than the EU average of €924 and a glance at the rates in more advanced countries shows a huge disparity. When an agreement was reached last year among the social partners for a rise of €8 per week in the minimum wage, it was remarked that this was the highest that could be given without endangering the country’s competitiveness. However, it fell far short of the social campaigners’ expectations. Some, like the Democratic Party, argued it was too little and others felt it was insignificant.

If the country is doing so well, how much stronger would the economy have to become to allow for a more reasonable and sustainable rise in the minimum wage and social benefits? If a minimum rate higher than that agreed upon last year could endanger competitiveness, what can be done to strengthen sectors that may be lagging behind?

Closer to what ought to be the kernel of the national discussion, is the present economic model the right one for Malta or does it need to be tweaked to provide for a more diversified base that would allow for a higher living standard and healthier welfare benefits? Selling passports and fuelling further the building boom may have given the economy the boost it badly needed to revamp the country’s finances, cut the national debt and unemployment and, even, to save for a rainy day. But for how long can these two money-spinners reasonably last? The country now needs to think long term to ensure a healthier balance of economic development.

We are told that to sustain the kind of economic growth the island is experiencing it has had to rely on foreign workers. Their number has shot up to a staggering 55,000. This is causing very serious problems because there had been absolutely no advance planning for the country to meet the impact such a sudden big inflow of foreign workers is having on housing, education and general infrastructure.

Away from the political scaremongering that has characterised much of the Prime Minister’s recent Sunday speeches, the issue is not over whether or not the country ought to shut the door to foreign workers. It is about whether Malta could have concentrated more on improved ways and means to promote greater economic diversification that could sustain long-term growth.

Concurrently with its short-term strategy, the government could have at least made greater efforts at attracting capital investment that boosts value-added output. While it is obviously important to protect and expand existing profitable sectors, it would seem equally essential to tap new ones to avoid, insofar as this is possible, any future hiccups.

This is a Times of Malta print editorial

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