During the hot summer months, when a substantial part of the economy is on overheat because of the peak tourist season and when manufacturers come under increased pressure to keep up with their production schedules, it becomes very easy to throw jibes at the public sector for working on a half-day system. To this one must add that whenever the issue of the competitiveness of companies operating in Malta becomes hot, invariably the size of the public sector and its work processes are mentioned as one of those factors leading to a loss of competitiveness.
The statement that Maltapost needs to shed a number of workers for it to become viable, and the news that a number of persons previously working for the Posts Department, later seconded to Maltapost, have decided to rejoin the public service, serve to accentuate the issue.
The conclusion that is very often drawn is that the public sector must be reformed; others even claim that it must be gutted out. One may claim that we have been undergoing through a reform in the public sector for the last 16 years. However, the sheer size of the public sector is such that any change must be gradual and therefore reform is not easily visible.
Such persons would ask us to take a snap shot today and compare it with a snap shot of 16 years ago and we would easily note the progress that has been made over these years. They also claim that public sector reform is ongoing and one can never really stop.
The size of the public sector and the need to reform it is not an issue that provides headaches to just us Maltese. This is because the money that is needed to pay for the public sector is obtained through our taxation. In return we get a number of services that otherwise would prove too costly for us to obtain.
The issue then becomes one whether we are getting value for money for the taxes that we pay, and if the answer is in the negative, the claim is soon made that the public sector should be cut to size.
There are three variables that one could look at to determine whether the public sector does need indeed to be reduced in size, both in terms of the number of persons employed and in terms of the wages and salaries that are paid out.
One such variable is the contribution that what is termed as public administration makes to the gross domestic product.
The percentage contribution of public administration (which is in effect the public sector wage bill) to the gross domestic product stood at 16.44 per cent in 2002. We have had a consistent drop in this contribution between 1996 and 2000, but since then it has started to creep up again.
The European Union average is estimated to be at just over 10 per cent. The contribution to the employment income component (that is excluding the profits component) of the gdp stood at 31.2 per cent in 2002 compared to 29.4 per cent in 2000. In 1996, the relative figure had been 32.6 per cent.
In terms of number of persons employed, the Labour Force Survey carried out by the National Statistics Office shows that in March this year, there were 28.7 per cent of all those persons in employment (including both part-time and full-time employment) that were employed within government departments and ministries, the armed forces and what are termed as independent statutory bodies, entities that are also part and parcel of the public sector.
The data supplied by the Employment and Training Corporation shows that the number of persons in full-time employment within the public sector represented 29.1 per cent of total full-time employment in December 2002, while the corresponding figure for December 2000 was 29.4 per cent.
If we compare ourselves to a country like Portugal, a country that must also go through an extensive reform of its public sector, we find that the Portuguese public sector workforce represents 15 per cent of the national workforce.
The public sector wage bill in Portugal is 15 per cent of the gross domestic product. This data clearly suggests that the size of the public sector in Malta is too big when compared to the rest of the economy.
The third variable is the wage differential between the public sector and the non-public sector. This non-public sector would include companies that are governmentcontrolled through a majority shareholding. At best there are only some guesstimates of this and so the data in this regard cannot be seen as conclusive.
However, what emerges is the average public sector pay per annum of Lm5,465 while average pay outside the public sector is Lm4,857. This means that there is a wage differential of 12.5 per cent in favour of public sector employees.
In Portugal, average public sector pay is 45 percentage points higher than it is in the private sector.
The overall indication that one gets is that we have an over-populated public sector. However, it may well be that there is excessive manning in certain areas and under-manning in others.
The use of public sector employment as a tool to win votes and to control unemployment, used extensively in the 1970s and the beginning of the 1980s, is the primary cause of this. However, there should be no doubt that the social partners need to find ways and means of how to trim down the size of the public sector in this country and to make it more efficient, such that it can be sustained by the rest of the economy.