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Impact of ­expatriate labour

Various figures are being bandied about concerning the number of expatriates living and working in Malta, but little effort is being made to determine the effect of this phenomenon. In a small country like Malta, the negative impact can be high, both in terms of employment as well as in terms of leakages of funds from the economy. On the other hand there are also positive effects.

The exact figures are elusive. A broad brush depiction suggests that there are some 30,000 foreigners living in Malta. Of these around 20,000 are said to be in employment.

Presumably the other 10,000 are made up of expatriates living but not working in Malta. Their effect should be positive. They should be transferring funds to Malta to finance their living requirements. The net effect of such transfers, after allowing for leakages of expenditure on imported goods and services, should be a positive factor. Similarly the allocation of such expenditure. They require a place to live, which they either rent or buy. That helps the property market and explains in part the continuing demand that has kept the market ticking while domestic demand was weak. They also provide work through their shopping and by requiring personnel to help with the housework and with maintenance when required.

The 20,000 or so who are supposed to be working suggest a mixed story. A number of them, going by details given recently in the House of Representatives, are doing low-skilled work. They act as cleaners, as companions, or work in the construction industry. Anecdotal evidence also suggests a large number of foreigners working in the hospitality industry.

It is difficult to go into an established bar or restaurant these days and not find a good proportion of the staff being foreign. The individuals doing such work also require a place to live and there are signs that they rent accommodation in flats included in the large pool that has not been sold. They also spend on nourishment and looking after their health.

If employed legally, as many of them are, they contribute to the revenue raised by social security contributions. Are they taking the place of Maltese workers? There is no manifest outcry to that effect. In which case they are filling a developing gap in the economy, a conclusion also fed by recent statements that two-thirds of jobs created are going to foreigners.

Suggestions that some of those on the unemployment register do not want to work, at least not legally, also shore up this conclusion.

As for the other net effect on the Maltese economy – what do they do with their net income after outlays – the reply depends on how much money they transfer abroad, for instance to help their relatives. This might be a negative effect, comparing a Maltese worker who puts his savings to work here in Malta, to an immigrant who transfers his savings or part thereof abroad.

One then moves to the other end of the scale: highly-skilled jobs which are being filled by expats. Surprisingly no significant estimate of this expatriate population has been given so far, possibly because such jobs tend to be filled by citizens of the European Union, who do not require a working permit.

Immigrant labour, made up of high- and low-skilled personnel is not a burden on the economy

Again, anecdotal evidence suggests that the incidence of such workers is high. Their impact would also be strong since they are high earners. They tend to pay income tax at a good rate, though a relative few get by on heavily discounted tax rates. They usually rent accommodation at the top end of the property market.

And their consumption pattern is also strong. Their savings transfer, or placing deposits in what become non-resident accounts, also tends to be high. But that probably does not count as a negative factor since they are not taking jobs which can be filled by Maltese personnel.

Many of the factors detailed above also apply to illegally-employed workers. They tend to be in low-skilled jobs no longer wanted by Maltese workers, which is why there is not much of an outcry against them. They do not pay social security contributions and, by probably being in precarious employment, increase the profit margin enjoyed by their employer.

Broken down in some detail, as is attempted in the above by no means exhaustive exercise, the suggested conclusion is that immigrant labour, made up of high- and low-skilled personnel is not a burden on the economy. Rather the opposite, it helps the economy to be in a better shape than it would otherwise be.

The indicated action is not to bring a heavy fist to immigrant labour, but to winkle out those areas where immigrants are employed in the black economy to make them and their employers pay social contributions and, if applicable, taxes on income.

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