Much is made of the fact that, notwithstanding the global recession and the weak recovery from it that is going on, the loss of jobs in Malta was contained despite the slowdown in local economic activity too. Unemployment did not soar, as happened in various other countries, where it remains high to this day.
Actually it has been gently falling off, as part one of the jobless register shows. It did rise slightly in July over the previous month (by 153). But on year-to-year basis at 6,828 those registering for a job in July were reasonably below 12 months previously, when the comparable total had reached 7,273,
The Maltese economy proved to be more resilient than most, especially those who suffered much more dramatically from bursting of the property bubble. Malta had its own bubble in that sector and it too deflated. But the dependency on the sector in terms of employment was less significant than, say, in Spain or Ireland.
Exports were hit but many firms preferred to retain a margin of excess workers trained by them rather than diminishing their ownership of human capital by making them redundant, in the hope of better times returning soon. A number of companies who were particularly hit were given assistance by the government on a direct basis, tied to retraining, jobs retention and eventual increase in investment.
The micro policy worked. Government intervention, in collaboration with the General Workers’ Union, eventually helped to maintain STM Micro Electronics, Malta’s largest employer, on an even keel, although the workers took a cut in their take-home package.
It has emerged that President George Abela, a well-recognised expert in industrial relations and trusted by the working class for many years, played an important part behind the scenes to secure eventual agreement by the workers.
Moving forward the outlook is that the change in the structure of the Maltese economy towards the services sector will continue. The shift is in line with a world-wide trend. In Malta it was particularly apparent in the financial services sector, a result of the bipartisan legislation in force and the promotional efforts of the practitioners and the accessibility of the Malta Financial Services Authority.
At the same time official data regarding the deployment of share capital invested in the sector show that most of it is redeployed abroad, in contrast with investment in the manufacturing and tourism sectors, where share capital is part of the financing of activities in the domestic economy.
Outside the pure financial sector the gaming industry too made a strong contribution. Jobs here were created more intensively (per operation) than in the financial sector. The advantages offered by Malta to the industry could come under threat through the determination of some EU countries to protect their domestic industry against online gambling. That is a matter for our authorities to tackle with vigour. Meanwhile, the sector remains strong.
The employment background is reasonable. Nevertheless there are factors that remain stubbornly present and are worrying. The main one is the number of registered persons by duration of registration on parts one and two of the register.
The long-term unemployed continue to account for over a third of the registered jobless. In July those who had been registering for work for more than a year numbered 2,558 (2,147 males and 411 females), 37.5 per cent of the total. The July 2009 total stood at 2,598 (2,177 males and 421 females), or 38.3 per cent of the total registering jobless in that month.
The year-to-year decline is welcome, slight though it was. But the absolute total is high. It tells the grim story that structural unemployment in Malta – out of work people not resulting from the economic cycle – is very significant indeed. These jobless persons tend to be above 40 – or even 50 - years old. Their chances of ever finding a job are very slim, given their age, skills and the way the economy is developing. Having exhausted their unemployment benefit the bulk of them draw social assistance. That makes them an almost permanent part of the social security bill.
The Employment Corporation offers extensive retraining facilities. But, even with retraining, the long-term unemployed stand little chance of being absorbed in gainful employment unless, for a small minority, by joining the self-employed category, a risk few might be willing to take at the risk of losing their social assistance.
This segment of the unemployed presents what seems to be an intractable problem which cannot be tackled directly. It can be eased through a high level of employment, and thus a correspondingly high level of individuals making social security contributions.
That may seem to be a negative conclusion. If there is another one, if the long-term unemployed are ignoring opportunities to ease the plight of those of them who are not moonlighting, it would be useful if it is given full publicity by the authorities.