As if the problems posed by the loss-making shipyard are not troubling enough to the country, new difficulties are arising that may well slow down the rate of economic progress by more than the rate already forecast. Clearly, it is difficult to imagine that the shipyard will be able to slip into profit by the expiry of the time limit at the end of this year. Apart from this, however, the price of crude oil is still shooting up and food prices are rising too. On top of all this, the island's largest manufacturing plant and biggest exporter, STMicroelectronics, is said to be planning to close down its Malta operations.

It may well be said that Malta has faced similar circumstances already and that if the firm were to relocate to Asia, or elsewhere, it would not spell the end of manufacturing industry. It would not, but it will definitely deal a blow, not just to the industry's make-up and to the island's export trade but also to its 2,200 workers not to mention, too, the effect that relocation would have to the firm's suppliers. It has been estimated that closure could hit no fewer than 5,000 workers in all, including part-timers. The dangers of over-relying to this extent on one employer had been well known to all but when the going is good few would think of the prospect of coming face to face with a downturn or a situation that could easily reverse a steady rate of progress.

However, STMicroelectronics is not a charitable foundation and, as other firms have done before it, it is not surprising for it to consider moving out to a more profitable location.

What is most unfortunate in this case is that the new situation facing STMicroelectronics comes at a time when Malta is promoting the island as an ICT centre and when it has managed to attract SmartCity.

The problem is the cost of labour, which is higher than in other places where the firm can relocate its Malta plant. The government is prepared to help out, in the shape of investment aid but, according to newspaper reports, the firm is asking for much more than the government is prepared to give. Finance Minister Tonio Fenech is right in arguing that there is a limit to what the government can be expected to offer.

Is the firm prepared to stay in Malta if it is given enough financial incentive to introduce new lines that can be more profitably made here than elsewhere? Are there any such prospects in the first place?

Investment aid for such purpose would make sense but, again, the Finance Minister is right in arguing that the government cannot be expected simply to subsidise a wage differential that equals practically the full wages paid out to the workers, "especially if we are simply told a few years down the line that the company is still moving away. It simply does not make economic or social sense".

If the firm intends moving out and has no plans to restructure its local operation, then phasing out the workforce gradually may help ease the problem for the well-qualified employees to find jobs elsewhere in the sector. But it is time for the firm to publicly spell out its intentions first. Why not?