28 Feb. - 6 March 2001

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Maximising the human resources potential

By Roger Ellul Micallef

University Rector, Roger Ellul Micallef, recently spoke at the Federation of Industry's annual conference. In his address, he highlights the role of the University in providing the vital human resources required by Malta, in its aspirations to present itself as an integral part of the New Economy. Mr Ellul Micallef emphasises that the University is prepared to collaborate with all social partners in order for the country to optimise its store of human resources potential.

Empirical work on economic growth has consistently shown that improvement in human capital is a major contributor towards productivity gains. Although physical (or tangible) investment is important in this regard, the growth registered by many economies would not have been possible without improvements in education, health and skills (the so called intangible investment). This is especially so in small countries like Malta that are poorly endowed with natural resources.

The importance of the human factor is even more evident when one considers that although resources like oil, coal and metals are important, what really matters is how people utilise these resources. This argument applies also to the so called "new economy." It is not communication and information technology per se that matter, but how people use them. Obviously, great advances in these fields would never have happened without the human catalyst. Developments in these areas have, undoubtedly, given rise to more efficient use of resources leading to improvement in the economic welfare of many societies.

The New and the Old Economy
It is evident that the new economy has placed knowledge accumulation at the centre of economic development and growth, leading to a sharper awareness of the benefits of investment in human capital. The knowledge-based economy has brought into sharper focus the reality that productivity improvements and education are directly interrelated. It is for this reason, that institutions engaged in education, including, of course, the University of Malta, are important not only in the imparting of knowledge but also in the securing of a better economic future for all of us.

When referring to the "new economy," one should not jump to the conclusion that the "old" economy and the "old" economic fundamentals are no longer important. Thus, steel prices are still of major importance for Malta's shipbuilding industry; timber prices are vital for the furniture industry; and changes in the price of oil still influence the profitability of Enemalta's operations and have an impact on the Maltese economy as a whole. Even in this dot.com era, the old economic basics remain very important. The trade cycle is still with us (as we can see from the United States reality) and economic bubbles – including the current high-tech one, could burst like any "old" economic bubble.

The efficient use of the human resource is such an economic fundamental. It was a necessity in the old economy and will remain even more so in the new. In the Maltese economy, dominated by services production, the importance of this resource cannot be overstated.

In recent decades, Malta, like many other countries, including the OECD members, has experienced a shift towards services production and employment, with rapid growth rates being registered in banking and finance, telecommunications, distributive trades and personal services. In Malta about 45 per cent of the gainfully employed are engaged in the production of services, and if the government were to be included, the percentage would rise to about 70 per cent. Even in the manufacturing sector, which accounts for about a fifth of the Maltese GDP, a considerable proportion of employees is engaged in services such as accounting, sales promotion, personnel and production management, and ancillary services.

Hand in hand with this tendency, there is a process of upskilling - where unskilled or low-skilled workers are finding it increasingly difficult to find employment and in order to do so, find it necessary to improve their skills. There is no doubt that the type of economic development we are experiencing will usher in a higher demand for the skilled employee. It goes without saying, that in this scenario, education, including tertiary education, will play an increasingly important role.

Tertiary education and investment in human capital
Education is considered by economists as an investment in human capital. There is no disputing the fact that human resources are fundamental to economic development and growth and there is no doubt that the more quality human resources a country has, the better are its chances to move ahead. In addition, education has other important externalities such as personal and social development and the reduction of social inequality.

Universities are fast being asked to become institutions, which turn out graduates who are trained to carry out specific jobs. A recent article in The Times Higher Education Supplement (January 26 2001), clearly states that a comprehensive quantitative survey of full-time undergraduate and postgraduate students published by MORJ the previous week entitled The Student Living Report, found that only 21% of the respondents had gone to university to learn more about the subject in which they were interested. Most of the students said that they had gone to university to "gain qualifications or to improve their chances of "getting a good job."
There is still the misconception in some quarters that a University produces only academic intellectuals, skilled in thinking but not in doing, far removed from the economic realities of society. This is, of course, not a correct picture of what a University does. We have heard employers complaining that they have to re-train graduates when they employ them, suggesting that University education should prepare a ready packaged student. This is not what University education is all about.

The provision of qualifications should not be disassociated from the objective of encouraging the pursuit of interest in an academic subject. The mere acquisition of credentials should not become the be-all and the end-all of University education. Human resource potential, the contribution our graduates can make to the country, cannot be measured solely in terms of the jobs they find themselves doing when they graduate. Thinking is not the opposite of doing, rather, it is a prerequisite for doing things better. Through the sharpening of thinking skills, university education will produce graduates who are capable of acting on their own initiative and intuitively. They should be versatile and flexible. This was the theme of Dr Joe Micallef's (Head of Department of Microelectronics, Faculty of Engineering) paper to the Graduate Potential Seminar last April.

This is the view to which I – and I presume most of us here – subscribe. Although the University is not, and should not be, solely a job training institution, University education should enhance the employability of graduates and should aim at upgrading the human resources of society.

This view is in line with The Sorbonne Declaration of May 1998, which called for the harmonisation of the architecture of higher education qualification systems in Europe whereby areas of convergence were identified so as to establish a "European Model" in higher education most suited to the needs of the host society. It was also particularly concerned with the employability of graduates and the relevance of their skills to the world of work.

Further to The Sorbonne Declaration, The Bologna Declaration of June 1999, was a solemn undertaking by twenty-nine Ministers to establish a "European space" in higher education thereby enhancing a "Europe of Knowledge" in which the role played by a university sensitive to the needs of an ever changing society and market forces is central.

Is the University of Malta doing a good job?
There is an ongoing debate as to whether or not the University of Malta is meeting the needs of our society. Aware of this, the University organised the Graduate Potential Seminar in collaboration with the Federation of Industry, the Chamber of Commerce and the Employment & Training Corporation in April last year. The aim of the seminar was to forge stronger links between the University and the world of work in general so as to develop a mutually beneficial dialogue with potential employers whether in business, industry, the public sector or other institutions. Whilst acquainting them with the knowledge and skills acquired by students at university, the seminar sought to assess the needs of the various facets of the labour market. And in the same spirit, each year, Engineering and Information Technology students mount exhibitions of their final year projects. This provides an opportunity for the general public and in particular, those working in the field, to view the projects and become acquainted with the expertise acquired by tomorrow s engineers and IT experts during their years at University.

The non-homogeneity of the labour market
It should be kept in mind that the labour market is not homogeneous. For example demand and supply in the graduate market has its own special features. This market segment itself has various sub-divisions. A case in point relates to the saturated market for certain graduate teachers and a very tight market for graduate accountants. The problem is of course not due to lack of demand for graduates per se, but to demand and supply mismatches (market frictions). Some would argue that the University should try to eliminate these mismatches by restricting education facilities in those areas where graduate supply is excessive and expanding those areas where graduate supply is short.

I do not have the time here to elaborate on the difficulties of implementing such a policy. Suffice it to say, that it has two major shortcomings. First, with a rapidly changing economic structure, it is not easy to predict the future and to produce exact numbers to meet demand for graduates and secondly, the University does not generally restrict courses for which there is adequate demand. It should be noted that there is a self-adjusting mechanism in this regard, since demand for courses, which lead to unemployability generally attract fewer students. Admittedly, there are time lags involved in this mechanism and some mismatches are to be expected. Fortunately, it appears that graduate unemployment is currently not a major problem, in fact, as already indicated, there is a shortage of graduates in some areas.

I do not wish to convey the idea that I am complacent about demand and supply mismatches in the graduate market. The main thrust of my argument is that the University should never be seen as merely a job training institution, since a rigid regime of training for particular jobs would usher in more market frictions. Our main task is to improve the employability of graduates through timely response to new social and economic directions. A case in point is the introduction of an e-business area of specialisation in our MBA courses to meet current and future demand for graduates in this area.

One suggestion that has been put forward to enhance the employability of graduates is to establish a Careers Office at the University - a possibility that is being seriously considered. The office could work closely with the ETC and its board could have representatives of the FOI, MCC and MEA. Its brief would be to look for job vacancies and inform industry about prospective graduate supply. The most important advantage of such a structure, would be to improve the availability of information and enhance mobility in the graduate market.

We are all aware that the Maltese economy is changing rapidly and we should try to adjust accordingly. We are witnessing the decline of "bureaucratic" careers. Traditional "bureaucratic" careers based on a long-term commitment to an organisation which, in turn, would provide an incremental career progression, are being phased out. What is happening is the development of a labour market portfolio of skills and jobs involving regular job-changing or self-employment. These changes make it imperative that the University produces graduates who are flexible, adaptable and self-reliant and we are prepared to collaborate with all social partners so that the country optimises its store of human resources potential.

The Business Times, Network House, Vjal ir-Rihan San Gwann SGN 07
Tel: (356) 382741-3, 382745-6 | Fax: (356) 385075 | e-mail: editorial@networkpublications.com.mt