A warning given by a former SR Technics' worker to prospective employees of the firm in Malta about the way the company treated its workforce in Dublin, Ireland, after the closing down of its operations there, has brought about an immediate reaction from the firm's head of communications. Basically, the nub of his argument is that the firm's plan for the opening of an aircraft maintenance facility in Malta ought to be looked at on its own merits and in isolation of their decision to close down the Dublin plant. One may agree or disagree with this statement but in the light of all that has been said so far by the government - and a lot has been said already about the contribution the company is expected to make to the economy - it is not out of place to pick on a point made by the firm's head of communications.
When Malta is seeking to move away from low-wage labour intensive firms in preference to companies whose goods or services have a high value-added content, one comment made by the SR Technics' spokesman may sound a bit ironic, considering the high-added value nature of it activity. The firm's head of communications has been reported saying that the high-cost base in Ireland and the customer situation - not only wages but the cost of everything in Ireland - made operations there unviable whereas the relatively low wages here and other attractive factors led the company to decide in Malta's favour.
It is, of course, still very important for Malta to remain cost competitive if it wants to attract more direct foreign investment but undue emphasis on "relatively low wages" may not match the people's aspirations to move upscale in economic activity generally and to reach a higher living standard. True, the company said "relatively low wages", not low wages, and, to be fair, it also mentioned other "attractive factors" but, again, an emphasis on relatively low wages, irrespective of whether this was made intentionally or not, may give the wrong impression.
Yet, having said all this, it bears repeating that the island has to remain cost competitive as otherwise it would not be able to attract new investment, and could even force existing subsidiaries of foreign companies to move out, as one or two did not too long ago, and as SR Technics in fact did in the case of its Dublin facility.
Working for a higher living standard is a gradual process. But growth will not come about if the country loses its competiveness. A balance would therefore have to be struck between wage growth and productivity, a matter that does not seem to be given enough importance by trade unions. Only a few days ago, the Governor of the Central Bank, Michael Bonello, stressed the need for higher productivity when he spoke about the challenges facing the economy. He said that, between 2000 and 2008, productivity grew by 3.6 per cent but nominal wages increased seven times faster, by almost 28 per cent. As a result, he remarked, unit labour costs rose by more than 23 per cent, compared with 15 per cent in the euro area.
Clearly, Malta has a long way to go before reaching the standard of living of the island's major partners in the European Union. Hopefully, however, as economic activity abroad picks up further, Malta too will come out of recession.