Editorial | Rethinking the labour market policy

Finance Minister Clyde Caruana has just launched a consultation process on a new labour market policy, which he wants to be finalised by October.

The timing of this exercise could not have come at a better time.

Just before COVID-19 struck in March last year, Malta was feeling the strain of a labour market inflated by a growing number of foreign nationals.

Caruana was the mastermind in 2014 of government’s employment policy that sought rapid economic expansion through targeted fiscal and social measures, including the introduction of free childcare, the tapering of social benefits and the importation of foreign labour.

Malta experienced above-average economic growth between 2013 and 2019, saw unemployment drop and government finances returning a surplus.

The economic performance of the past few years gave Malta enough breathing space to be able to cushion the impact of the pandemic.

Now, as finance minister, also responsible for work, Caruana wants the country to adopt a new employment policy in time for October’s budget.

It will be a policy that targets the new challenges created by the economy’s rapid expansion, the difficulties caused by the COVID-19 pandemic and the reality of a changed global environment.

Foreign workers are just one facet of such an exercise but nonetheless an important one because of the consequences the population influx had on society.

There have been voices over the past few years who raised concerns about the economy’s increasing dependence on foreign workers and the negative impact this was having on social cohesion, the housing market, community services and infrastructure.

Former Opposition leader Adrian Delia was one such voice, even if the rhetoric was at times peppered with a hint of xenophobia.

It was important for Caruana yesterday to acknowledge what he described as the “unintended consequences” of rapid economic expansion.

Dealing with the consequences of a sudden increase in population will be important and three of the 12 challenges identified in the government’s planned reform specifically deal with foreign labour.

The situation is not clear cut. Malta cannot simply shut its doors to non-EU workers because it would otherwise stifle growth in certain key sectors such as healthcare, and the provision of services to the elderly.

Similarly, other sectors of the economy such as the gaming industry require specialised foreign labour necessary for their operation.

However, the time has come to take stock of the situation and determine whether in the new post-COVID reality Malta should adopt a different game plan.

Caruana floated a few suggestions that he put up for discussion such as the introduction of quotas for non-EU nationals, limiting foreign labour to certain sectors only, or allowing foreigners only to be employed with companies that have a minimum number of Maltese and EU nationals already employed with them.

But the policy must go beyond this issue. There are other matters that require addressing such as the phenomenon of underpaid work, the dynamics of the gig economy, improving wage structures without burdening industry with uncompetitive costs and incentivising more family-friendly measures to reduce the gender pay gap.

UĦM CEO Josef Vella pertinently pointed out the need to reduce the stress factor on working parents, who struggle to find quality family time with their children.

The next few months will prove to be crucial and honest dialogue between the different stakeholders is essential to map out a direction that will serve the country well for the next few years.