The Malta Federation of Industry held a successful conference on the theme "Europe - most competitive economy by 2010? How will Malta benefit from this process?" on October 31 at the Corinthia San Gorg Hotel, St Julian's.
FOI president Anton Borg delivered a detailed presentation comparing Malta's current performance under the numerous Lisbon statistical indicators in relation to those of the EU 15 and the other nine EU accession countries together with Malta. Several eminent speakers, economists and politicians also discussed the various issues that proved to be more than a mouthful for a half-day conference.
The FOI was honoured with the presence of Dr Philippe de Buck, secretary general of the Union of Industrial and Employers' Confederations of Europe (UNICE), who discussed UNICE's stand and contribution to the Lisbon Agenda; Jussi Mustonen, director and chief economist of the Confederation of Finnish Industry and Employers (TT), who questioned how achievable the Lisbon Agenda indicators are; Dr Lawrence Gonzi, Deputy Prime Minister and Minister for Social Policy, who presented the social aspect of the Lisbon Agenda and the developments in Malta as an accession country; John Dalli, Minister of Finance and Economic Affairs, who focused on the possible ways of developing a competitive knowledge-based economy in Malta; and Gordon Cordina, from the Economics Department, University of Malta, who discussed how the Lisbon Agenda targets could be met.
Towards the end, the FOI conference took the form of a discussion led by a panel. Former minister and well-known TV and radio personality Joe Grima chaired the highly-animated discussion panel who included Gejtu Vella, secretary general of UHM, economist Professor Edward Scicluna and some of the conference speakers.
More timely information needed
Some reflection on the points discussed and the urgent action needed on the Lisbon Agenda. The EU estimates that an average annual GDP growth rate of 3% for the European economy is necessary to achieve the Lisbon criteria and to work our way towards making the EU the most competitive economy in the world.
Unfortunately these growth rates are unlikely to be reached in the EU in 2003-4. According to recent forecasts Malta will barely achieve 0.8% growth of its economy this year with the chance of a 2% growth rate with some luck next year.
Although emphasis was made in the FOI report, which was distributed to participants at the conference, on benchmarking Malta with the EU 15 average, it will be inopportune to ignore the competition that Malta will face from the other nine acceding countries, which very often have different levels of performance and competitiveness to those witnessed in the EU 15.
The FOI is looking into the possibility of further in-depth analysis of the various economic indicators considered in this report, as well as additional micro indicators at sector level that would specifically concentrate on industry's performance compared to that of industrial enterprises in the same sector in other competing countries.
Access to timely, accurate statistics is an important factor for business to plan ahead. This is especially important in the context of measuring Malta's economic performance in relation to the Lisbon Indicators. The efforts of the National Statistics Office (NSO) in recent years has seen a welcome improvement in its collection of statistics in line with EU (and international) norms.
However, the FOI report comparing the Lisbon Indicators with Malta's performance has revealed that certain statistical data are still missing. Some of the figures should be the responsibility of Eurostat rather than the NSO. Considerable work still needs to be done in certain fundamental areas to achieve the desired level of information.
Certain recommendations found within the FOI report therefore have to be viewed against this background of incomplete statistical sets for Malta. With Malta's entry into the EU next May, and increased NSO-Eurostat statistics compatibility, it is hoped that this anomaly will be eliminated completely in the short to medium term.
Information at a cost
This notwithstanding, the FOI is also aware of the absolute cost, in terms of human, financial and technical resources, needed to compile these specialised statistical indicators. In certain instances, the cost involved might not justify the end result due to the very specific nature of the data and the extremely limited use of the results, locally and internationally.
The FOI is also aware that small countries such as Luxembourg enjoy certain derogations to help them avoid compilation of certain statistical data of this nature. Economies of scale work against Malta even in this case. However, it is a question of prioritising and ensuring timely compilation of the more important indicators that are needed constantly to judge the economy's progress in relation to developments in the social and environmental fields, besides the need to conform to basic Eurostat requirements.
The federation must stress that its members are very concerned about the increased burden of increased and more frequent requests for information by the NSO arising from the Maltese EU membership obligations. Fulfilling these information obligations is taking up more and more time for private industry and presents considerable difficulties for the smaller firms to comply.
Hence, the FOI urges the authorities to rationalise these requests and avoid duplication. On the other hand, the national authorities should make a strong case for reduced statistical obligations on the basis of cost-benefit where this is justified, and to concentrate resources on the more important figures. The rationalisation (and reduction) of the range of Lisbon statistical indicators is also happening as a result of very recent and important developments.
Most observers of the Maltese economic scene must certainly be asking: But how does Malta compare to the EU 15 (and other acceding countries) under the different Lisbon Strategy indicators? The answer is that the report has presented mixed results, depending on the sector or area being examined.
Overall Malta compares relatively well with the EU 15 average (and especially with the acceding countries) under a number of different important benchmarks. The FOI encourages Government to improve on national policies that have given relatively positive results in certain areas.
Malta lagging behind
On the other hand, the statistics clearly show that Malta still lags significantly behind in a number of equally important areas. For example, there is the low average retiring age of 52.7 years registered, against the proposed 65 years mandatory pension age that is being proposed.
There is a serious situation in the education and training drop-out figures for 18-24-year-olds that surpasses even the situation in most acceding countries. The overall female participation rate in the labour force at 30% is low by any standard, as is the R&D figure and patent registrations.
Both general and specific indications of our environmental standards are similarly at the lower end. These are just a few areas where urgent action is needed to catch up with the EU 15 average (and very often also with that of some of the more advanced among other acceding countries).
At the same time the situation is being monitored increasingly by the European Commission to make sure that the Maltese commitments made during both the negotiations and in the various sectoral reports that were due to be closed by the end of last month, will help ensure that Malta steps up its implementation efforts.
These should in themselves help stimulate Malta's performance in the various indicators across the board. However, there are economic issues involved that are not easy to resolve. The FOI is conscious that, with EU entry, Maltese industry will be competing across the board with operators in the other member states.
Hence it is important to have access to a well-qualified, highly trained workforce, utilised for high-level manufacturing and service sector jobs that will generate higher value-added to the economy if the country is to have a successful future. This goes hand in hand with a modern infrastructure and competitive utility, transport and port handling costs that represent the critical factors for success, which the FOI strongly believes will serve to contribute to industry's improved competitiveness.
The authorities need to take various fundamental decisions in the instances where statistics show that Malta lags behind. It is unnecessary to go into more detail as the different thematic chapters within the FOI report give much more detailed recommendations on how the federation believes that these areas can be tackled effectively.
Private sector's role
It is clear that the private sector in Malta has an important role to play in the improvement of Malta's performance as assessed under the different Lisbon Indicators. This contribution can be ensured through continuous consultation and practical measures that will contribute to keep the economy vibrant and growing, to everyone's ultimate benefit.
The FOI has stated on a number of occasions that transparency and the flow of information between national and European authorities and the private sector representative organisations is indispensable to achieve this aim. Throughout the report there is a reference to a large number of technical documents issued by European Commission, the Council and other European institutions, as well as the Maltese authorities.
Although the review of these documents was quite comprehensive, it was not possible to enter into great detail on each issue in the Lisbon Indicators. Hence, although this report does not claim to include information on all the documents/work programme or initiatives related to one aspect or another of the Lisbon Strategy, it can act as an effective pointer and precursor for further in-depth analysis of any of the different section headings as the need arises.
Analysts of the economic scene in Malta should remember that statistical information and benchmarking are being updated continuously by Eurostat and NSO. For the purposes of the FOI report, the cut-off point for statistics (unless otherwise explicitly indicated in the notes) was May 2003.
But benchmarking is an ongoing exercise. It is also the FOI's intention to follow up this report with others in future that will serve to show whether Malta is succeeding in the reform process and that we are moving ahead in the competitiveness race.
It should spur the decision-takers to further effort to render the country more competitive and attractive to those investors who are about to take decisions. The Lisbon Indicators are gaining more recognition in European circles and the progress we register in the various areas should help to make Malta a country that inspires confidence in potential investors.
'Change of attitude' needed
The ground is now set and the FOI also intends to use the findings under the different headings to create policy/position papers covering the issues highlighted and to instigate further debate in the run-up to certain momentous decisions about economic reforms that are in the pipeline.
As stressed in the final remarks of Mr Borg's presentation at the conference: "A close examination of how Malta compares with other countries in the various indicators shows clearly that our country has a challenge ahead of it that has to be taken in hand without more hesitation.
"The decision-takers in government, the trade unions and all other stake-holders in the economy should think about how they can help to bring about the necessary changes that will contribute towards the sustainable development of the country's economy. There is a backlog of reforms that are urgently needed, but the biggest change that is needed is in our attitude.
We need to be clear in our minds and convinced in our ideas about what constitutes the country's competitiveness and who is responsible for achieving this. We should feel a responsibility to fix goals and time-frames for ourselves and do our best to attain these reforms sooner rather than later.
"I appeal to ministers, the Opposition, the heads of government departments, the other employer organisations and union leaders. Between us all we need to explain the magnitude of our problems, their effects on our spending power, on retaining present jobs and securing new ones.
"We have gone beyond the finger-pointing stage trying to pin responsibility on someone else for our past mistakes. This country needs to rally around its leaders and make the effort. Sacrifices cannot be skimmed over. Hard work cannot be avoided. Competitiveness has to be the guiding light when we go through difficult times.
"All of us need to be conscious that for Malta Inc. to be competitive it is not just the level of wages on its own that counts, or the port charges, or the high taxation to finance an impossible level of pensions, social benefits and health services. It is the attitude of each one of us, from the shop floor to the boardroom, from the local council to the highest authority in the land.
"There has to be a strong leadership that consistently sends the same simple messages that are convincing enough and that are understood at all levels. Everyone needs to play their part to get the economy of the country through this difficult patch."
Readers wishing to obtain copies of the presentations delivered at the FOI conference or a copy of the important FOI report are to contact the FOI Secretariat on tel: 2123-4428 or 2122-2074.