The contributions of the last two weeks have dealt with the Lisbon Agenda, the first in broad terms, while the second focused on our economic policy and the link that has to be established with the economic policy guidelines set out in the recommendation made by the European Commission to relaunch the initiative.
It needs to be restated that the Lisbon Agenda aims to transform the EU into "the most dynamic and competitive knowledge-based economy in the world" by 2010. This week's contribution is focusing on the employment policies contained in the recommendation of the European Commission and the link that these have with our own employment policies.
Achieving full employment has always been one of the key economic and social objectives of successive governments. This has been especially so since we could no longer depend on income earned directly and indirectly from the military base and we needed to develop an economy based on productive activities. The lack of any natural resources only served to accentuate the fact that any economic development could only be achieved through increased employment, thereby creating an indissoluble link between employment and economic growth. Employment generates economic growth and economic growth generates further employment - a cycle that feeds on itself but that can also starve itself.
With time we started to have slight but important shifts of this paradigm. While full employment remains top priority on the government's agenda, the importance of higher value-added processes in the economy and of exporting activities started to become increasingly significant as a means of achieving sustainable employment growth rates. This has been the spur behind the drive to develop service activities aimed at non-residents such as financial services, or the drive to penetrate market niches in the tourism industry that go well beyond the sun and sea holiday, or the drive to promote foreign direct investment in the manufacturing sector.
All this has led to increased employment, with a lower dependence on the public sector and a significantly higher participation rate of females. However, for the last few years, we have been combating with a very difficult international economic situation which has remained uncertain and with increased competition from countries that had so far not represented any important threats to our efforts to develop export-oriented economic activities.
The economy has demonstrated itself to be very resilient against these threats but has experienced difficulties in generating the type of employment growth that we had experienced in the last half of the 1980s and first half of the 1990s.
During those years we experienced little to no unemployment among young people and campaigns aimed at promoting employment for persons with special needs were successful. By and large the Maltese employment market was becoming inclusive also thanks to active policies that sought to improve the skills base of those persons still in education as well as those persons whose skills needed improvement to maintain their employability. I believe that today we still need to focus on these issues as part of our employment policy, even if the tactics to be used definitely require changing.
Another important aspect is that employment growth was also seen as an important vehicle for sustaining our welfare system. The fact that the government could count on increasing revenues from social security contributions through more people being in gainful employment and through an increase in incomes has meant that it had additional resources to allocate to social policy initiatives. This explains why in this country full employment is not seen as just an economic policy target but also a social policy target.
A look at the employment policy guidelines recommended by the European Commission as part of the Lisbon Agenda finds complete consonance between these guidelines and the various initiatives taken by the government and the targets set by the government as part of its efforts to meet its objective of full employment. For example, the employment policy guidelines speak of the need to achieve full employment by increasing the employment rate, to improve productivity and to strengthen social cohesion.
The guidelines also speak of the need to tackle aggressively youth unemployment, to adopt family-friendly policies at work and to eliminate gender gaps in employment, unemployment and pay. It is also very significant to note that these employment guidelines highlight the need to have wage policies that do not hinder the creation of new employment opportunities, to improve the adaptability of workers and businesses to current economic realities, to promote flexibility of the labour market, and to improve the skills base of employees further through investment in education and training.
Delving deeper into the various documents that have been written on the Lisbon Agenda, one cannot help noticing that there is still a great deal of scope for an open discussion on a social pact among the social partners in this country. There is no doubt in my mind that Malta needs to embrace the objectives set in the Lisbon Agenda. However, the attainment of these objectives can only happen if we have a meaningful social pact.