When the Finance Minister discussed the cost-of-living wage adjustment in an interview he gave to the business section of this newspaper a few days ago, he was quoted as saying that the country "should move away from the mentality that to become competitive we must have the lowest wages in the world. We need to address other issues, such as labour market flexibility and inflation".

The minister had a point, though raising unit costs without ensuring a parallel rise in productivity could cause problems to firms unable to pay the allowance laid down by the government. Sure enough, no one would want to see Malta have the lowest wages in the world. Indeed, the aim all along is to raise the standard of living to that found in the most advanced countries of the European Union. To be able to do that, however, the country would need to aim for greater economic growth.

The World Economic Forum, which has just published its global competitiveness report for 2009-2010 and which has ranked Malta in 52nd place out of the 133 countries covered, gives an exhaustive rundown of what competitiveness is all about before it gives the rankings for each country. "We define competitiveness as the set of institutions, policies and factors that determine the level of productivity of a country. The level of productivity, in turn, sets the sustainable level of prosperity that can be earned by an economy."

It draws up no fewer than 12 pillars of competitiveness and a glance at Malta's rankings in each pillar shows that the island's advantages outweigh the disadvantages. However, if the island wants to move ahead in its overall ranking, it would need to focus on ways and means to bring about an improvement in those areas where it still lags behind. Among those listed in the WEF report are: burden of government regulations (88); quality of roads (97); female participation rate in the labour force (115); and pay and productivity (55).

Although a number of roads have been redone, the state of a great number of others throughout the island is simply deplorable. More women are joining the labour market nowadays but, overall, the figure is still low compared to that in other European countries.

What is greatly ironic is that, whereas in the past the people were known for their propensity to save, the habit seems to have been eroded, as shown by the ranking in the global competitiveness report (106).

Besides the government deficit and debt, both matters that are of constant concern, especially now that economic pressures are having an impact on them, there are other negative points that have received attention in the report, such as, for instance, those over the degree of customer orientation and buyer sophistication. There is need of much greater improvement in these areas.

Taking a brief, overall look at Malta's assessment, the island may have held to its ranking this year but there is still much to be done to catch up with other countries that are ahead of us. Is it not incredible, for example, that, despite the difficulties Iceland has gone through, it still occupies a high place (26th) in the report? It may have dropped six places but, in the opinion of the WEF, its sound competitiveness fundamentals will hopefully help it bounce back more rapidly.

Clearly, Malta must work harder to see to other reforms that need to be carried out to bring about greater all-round efficiency.