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Demographic numbers game - Martin Scicluna

Photo: Shutterstock

Photo: Shutterstock

The average age of the Maltese population has been rising steadily due to a falling birth rate, a decline in those aged 50 years and under and increases in those aged 50 to 64, 65 to 79, and 80 years and above. Nineteen per cent of the population is over 65 and this will increase to about 25 per cent by 2025.

Advances in social conditions and healthcare are increasing life expectancy and adding to the size of the non-productive section of the population. Moreover, a smaller workforce is increasingly unable to provide for the health and social services of a growing retired sector. What this means in practice is that a smaller working-age population is incapable of replacing the chronic labour shortages which have already arisen without resorting to huge influxes of foreign workers.

But Malta’s demographic challenges do not stem only from the need for foreign workers to sustain the current rate of burgeoning economic growth. They also require a fundamental understanding of the consequences of the demographic numbers game if Malta’s development as a prosperous and homogenous island State is to continue.

According to Eurostat, the EU’s institute of statistics, Malta’s population increased by almost 16,000 last year, bringing it to over 475,000. When adjusted for the size of population, this was more than 15 times the rate of increase in the EU, its highest percentage population growth.

Foreign nationals settling in Malta last year outnumbered the natural Maltese population increase 20-fold. Malta’s population in 2013 stood at just over 422,000 with net immigration then accounting for 6,000. Within two years, net immigration rose to 10,000 and reached 15,000 last year. It is a trend which is set to continue.

The 18th century economist, Thomas Malthus, famously advanced the theory that the rate of increase of the population tends to be out of proportion to the increase of its means of subsistence. He therefore advocated that controls on population were essential to prevent catastrophe. The key question for Malta now, therefore, is how many imported foreign workers should be added to Malta’s working-age population before serious problems ensue?

The government has approved plans to import thousands of workers from non-EU countries, such as Serbia, the Philippines and Montenegro (known as Third Country Nationals), to pre-empt a labour shortage problem and to maintain the current rate of economic growth which has averaged around 6.4 per cent over the past four years. The key gaps to be filled in the work-force are construction labourers, transport workers, IT professionals and even cleaners.

We appear to be paying a high price for our present prosperity and for sustaining the current economic gains

But there are also some 30,000 EU nationals working in Malta, with Italians topping the list at almost 8,000 (of whom about 1,500 are in the catering industry), followed by just under 5,000 from Britain. With over 5,000 foreign EU nationals, the arts, recreation and entertainment industry (i-Gaming predominantly) attract the highest number.

While the economic benefits in a booming economy are obvious, the social, environmental, economic and cultural impacts are difficult to weigh with certainty. Interestingly, a recent Malta Today survey found that 42 per cent of Maltese had “no concerns” about having foreign workers in Malta. But equally, 30 per cent felt “they were taking our jobs” or “they are invading us”. Over six per cent were concerned about “property prices and rents rising because of them”, while nine per cent expressed “other concerns”.  

As Malthus pointed out, the strategic issues arising from large and rapid population growth are fundamental to what kind of country Malta will become over the next 20 or 30 years. And it is not entirely clear that we have a properly formulated plan – other than the immediate short-term imperative to maintain the rate of economic growth.

The Malta Employers’ Association’s extrapolation that Malta’s population could grow from 475,000 today to 700,000 “in a few years’ time” may appear apocalyptic. I do not know the basis of their calculation, but David Marinelli, a human ecology and sustainability researcher, has calculated that within 12 years “the number of people on a daily basis will be around 835,000”. The Malta Hotels and Restaurants Association has rightly expressed concern about “the maximum number of tourists that Malta can cope with” and asked for a carrying capacity study.

The social and environmental consequences are plain to see. The property and rental markets are already beyond the reach of many Maltese. At the cost of repeating what everybody knows, the rate and intensity of construction development is ugly, uncontrolled, adversely affects the quality of life of everyone and is unsustainable. The country’s infrastructure, from congested roads to public transport, water resources, waste disposal and landfills, is already creaking. The natural environment is under unprecedented stress.  

We appear to be paying a high price for our present prosperity and for sustaining the current economic gains. JobsPlus chairman Clyde Caruana has stated that at the current rate of growth, Malta needs up to 35,000 foreign workers in the next five years.

Economist Gordon Cordina rightly cautions that the subject of population growth must not be addressed in an “alarmist” way.

The country needs to find solutions which encourage growth, but “managed in such a way as to be sustainable and lead to genuine progress”. A phased and controlled approach is needed.

Even ignoring the complex business of raising existing workers’ productivity, two policies can greatly alleviate the effects of a shrinking working-age population. The first is to encourage more women to do paid work. Although the number of Maltese women in employment has increased in recent years, their participation in the labour market stills lags behind men’s. More needs to be done.

The second option – and the one the government has focussed on – is to lure more EU and non-EU migrants in their prime years to join the Maltese labour force. This is what countries such as Australia, Canada and New Zealand have done. Their working-age populations are expected to keep growing for decades by openly courting qualified migrants – in a controlled manner, it should be added.

But it is a path which could be fraught with problems unless it is based on a coordinated, sustainable and holistic plan which draws together all the sometimes competing economic, environmental, social and cultural strands. Policy of this magnitude cannot be made on the hoof.

Malta urgently needs such a plan.

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