In recent weeks and days, a number of job redundancies have been announced, mainly in the manufacturing sector. Moreover, a number of hotels have announced that they would be ceasing operations. Not surprisingly, this has sent the shivers down the spine of a number of persons.

The trade unions see this as the start of a process that is sending the economy spiralling downwards, with employees being those that shall suffer most. The business sector see this as a sign of the loss of competitiveness of companies operating in Malta, be they foreign or Maltese-owned. Both expect the government to do something, but neither seems to feel that either is expected to do anything.

On the political front, it is an opportunity to criticise the government for not doing enough to create jobs (as if governments ever created jobs unless when it is decided to recruit persons into the public sector).

The government, on its part, feels helpless in preventing these redundancies as the decisions on closing down or downsizing of operations are taken in the boardrooms of private companies whose main objective is to give shareholders a satisfactory return on their investment. This situation begs the question: "Then whose fault is it?"

I have always believed that Malta has managed to weather the storm brought about by the international economic slowdown fairly well. With our exports of goods and services reaching close to 100 per cent of gross domestic product (hence an economy that depends very significantly on the fortunes of the international economy, on which we exercise no control whatsoever), this result is not to be underestimated.

In fact, in public pronouncements, this was constantly underestimated, but when words were transformed into action, it was overestimated. Various interest groups have ignored the issue of competitiveness and sought to advance positions that have continued to dent the competitiveness of our business sector.

Let us take three individual issues. The first is the tourism sector. It is generally recognised that Malta is pricing itself out of the market. One needs no reminding that, in this case, we are talking of a situation where costs are in the main generated locally.

There is very little that is imported in this business; be it wages and salaries, be it contracted services, be it ancillary services like transportation, these are all generated and delivered locally. So, if we really lost our competitiveness in the tourism sector, we did it single-handedly. The international economic slowdown and events like the Iraqi war have only helped to depress prices, which made things worse.

In this sector we have had the decision by some hotel operators to cease operations. This may be considered as a weeding out, given the alleged over-capacity there is in hotel accommodation. However, it may well have happened that some of those that have stopped their operations may well have been profitable ones. This would mean that such operators would rather put their investment where the risks are less and where the return on investment is greater.

Does not all this imply that the loss of competitiveness and the job redundancies that have resulted is the consequence of a number of decisions that have been taken mainly by individual entrepreneurs, the management of enterprises, trade unions and other interest groups?

Another issue is the supposed "crowding out" that is taking place in our economy. When people speak of "crowding out", they refer to the influence that the government has on the economy and to the possibility that this influence is not leaving enough space for the private sector to operate effectively.

The reference is very often to two aspects. The first is the labour market. Increased employment in the public sector would reduce the possibility for the private sector to recruit suitable persons at sustainable wage rates. With increasing unemployment and a practical stop to recruitment into the public sector this aspect of "crowding out" will be severely reduced if it ever existed.

The other aspect of "crowding out" relates to public finances. With the government absorbing a significant amount of liquidity through its borrowing, there is the claim that the private sector is not finding the necessary funds to support its investment.

However, with interest rates having gone down to levels unheard of in the last 40 years, it can hardly be stated that the government's level of borrowing is not leaving enough funds for the private sector. So could it be that this claim of "crowding out" is not as significant as thought?

This brings us to the third issue. It is a known fact that if the government were to seek to reduce its expenditure or to control public sector employment or to make entities it controls more efficient, all hell would be let loose. The debate on the sustainability of our welfare system has been going on for years, with no one showing any signs of budging from the original positions held.

So has the debate on making public enterprises more efficient. There is the expectation that no one who works in the public sector (be it in the public service, or in government-controlled entities) can be made redundant.

It is very convenient when the going gets tough to blame everyone else for the situation one finds himself in. It is probably part of human nature.

Could it just be that the situation our economy is in is the result of lobbying done by interest groups, of decisions taken over the years, and of the priority we give to achieving social consensus above everything else?

We have all enjoyed the benefits of this social consensus; it is now up to us to stop blaming each other and seek to find solutions jointly to face the challenges that lie ahead of us.