Economist Gordon Cordina said on Thursday that Malta needed to take a much more responsible attitude towards construction activities.
Speaking during a business breakfast organised by The Malta Business Weekly about sustainable employment, Dr Cordina said the construction industry’s share of the economy was actually decreasing as growth in other sectors outstripped it.
The economist quipped the best was yet to come for the construction industry judging by the number of permits approved last year.
Dr Cordina augured that these permits would translate into more regeneration projects.
He said that the construction industry might eventually have to return to more sustainable levels, and the country had to be ready to absorb any slack from construction into other areas.
He said that the housing stock and prices were not rising faster than economic growth. The Maltese population was amassing wealth and there was no big drive for credit.
All these factors pointed towards talk of a housing bubble being incorrect.
Dr Cordina said a sharp correction in housing prices could be generated by other shocks, but the sector would not inherently implode.
Turning to the manufacturing sector, Dr Cordina said that far from dying a natural death, manufacturing was relatively thriving thanks to an increase in productivity.
On the public sector, Dr Cordina said the economy and society needed to obtain excellent value for money from public administration.
He said he was not worried about growth in the public administration sector if this was what the country needed.
The quality of the services provided by public administration had to be analysed before simply criticising its growth, he said.
Dr Cordina pointed towards the declining public debt to GDP ratio as one of the indicators that Malta was in good stead to weather an eventual economic downturn.
He said this flexibility was an essential insurance policy for the future.
Dr Cordina said that on the tourism front, Malta might be reaching its capacity limits.
This required even more focus on the shoulder months as well as the quality of the product on offer.
‘Ageing population makes foreign workers necessary’
Jobs Plus chairman Clyde Caruana said that the demography and dynamics of the workforce in Malta had evolved.
He said that workers of 65 years of age would have changed two jobs on average during their working life, while those 30 years and under would have already gone through 9-10 jobs.
In the coming decades the younger generation will be very mobile in the labour market, he said.
He also warned of a decline in the amount of young, Maltese workers.
“Ten years ago the number of 24-year-old natives stood at 6,000. In 15 years’ time, the figure will be around 4,000. In a short period of time that demography would have decreased by at least one-third”.
Mr Caruana said this trend was expected to remain.
To retain a sustainable and increased level of output per capita the labour supply had to be increased.
He said the choice was stark, either the number of foreign workers increased or economic growth slowed down.