In every sphere of human activity, there is always a risk that too much of a good thing can come with a high price tag. Sustainable economic growth is the Holy Grail of any government as it provides people with the things, especially jobs, they need to live a decent life. But overdevelopment comes with a high cost because a country’s and its people’s prosperity cannot be gauged just by the GDP growth or by the rate of unemployment.
Malta’s above average GDP growth in the last five years is a result of various factors including the encouraging of foreign direct investment especially in the financial service and gaming sectors, and local investment in the construction industry as the scrutiny of investment projects became arguably less tight. The quantity of growth generated has prevailed over the quality and sustainability of the underlying economic model.
In the last few weeks, two business constituted bodies sounded the alarm about the possible adverse effects of rapid growth that may one day prove unsustainable. The Malta Hotels and Restaurants Association and the Malta Employers Association have shown concern about the economy’s dependence on foreign workers. MEA president Dolores Sammut Bonnici has argued that Malta’s population may grow to 700,000 as more foreign works are recruited to cope with the growing demand for qualified labour. She rightly frets about the environmental and social repercussions if such a scenario were to become a reality.
The costs of overdevelopment are indeed high. In the labour market, we are already experiencing wage inflation in the sector of highly qualified personnel that will eventually cascade into other segments of the labour market. The MEA is rightly worried about the reality that they are already facing when they do not find suitably qualified workers for their operations. Poaching of employees and easing of controls on discipline are some of the consequences of a labour shortage.
The rapidly increasing population as a result of over 40,000 foreign workers migrating to Malta is creating other problems that are affecting many people’s lives. To this, one must add the over two million tourists that visit our island throughout the year. The grossly inadequate road system that has suffered from decades of neglect cannot be remedied in the short term. Besides the mental stress that road congestion is causing to all road users, the physical health risks to which most people, especially children, are being exposed will have a depressing effect on the health of the nation for years to come.
The construction industry, in particular, seems to be enjoying the boom years while they last, without worrying too much about the effect that overdevelopment is having on Malta’s fragile environment. Acres of land in previously designated non-development zones are being lost every year. With the shortage of social housing, as well as affordable housing to meet the needs of the influx of foreign workers, the pressures on the physical environment are bound to increase.
This Labour government does not seem to acknowledge the costs that ordinary people have to pay as a result of overdevelopment. The most socially unacceptable result is the growing inequality in society. Of course, this is not just a local phenomenon. While some are indeed becoming much richer, many others are suffering from the social neglect of an administration that is focused intensely on economic growth. The increasing cost of renting property, for instance, is creating a new underclass of socially distressed families who can no longer afford to have a proper roof over their head.
This neglect may not be accidental. Certain aspects of public services are failing, and there seems to be little interest or willingness to discuss these warts on our society’s face. One out of four of our young people is leaving the compulsory education system without any formal qualifications or skills. This failure is unacceptable in a country that has enjoyed consistent economic growth in the past few decades but still lags behind ex-communist nations in educational achievement.
Our health system is also showing signs of stress as a local ageing population, and an influx of migrants and other foreign workers, as well as more capital intensive health services, are being financed by an unsustainable model. It now seems that operational problems are also affecting our hospitals as is evidenced by the shortage of consultants in the Gozo General Hospital and nurses in all hospitals. Our mental health system has similarly not benefited much from the economic bonanza of the last few years.
There is ample evidence that the current economic boom is not a result of a well-planned strategy that promotes sustainable and balanced growth to benefit the vast majority of people. When boom turns into bust, as it inevitably does, we will be left repaying the high cost of the present overdevelopment.
This is a Times of Malta print editorial