28 January 2004

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Toon this week: Strong demands deserve strong answers

It will have to get worse before it gets better

Yesterday in the late afternoon in the heart of Valletta, the GWU organised a public manifestation calling for jobs. The protestation by hundreds of union supporters and common folk is justified in view of the overwhelming threat to established jobs.
The GWU is obliged to raise these issues. To protest is the norm for any union in any democratic nation. Describing the protestations as freak events is taking matters far too far.
But the GWU has failed to realise its moment now.
This is not surprising considering that the GWU lacks the expertise in this field.
The union is calling for jobs and that in itself is a natural obligation on the part of a union.
What is required now are ideas to create new jobs.
The brains for such a project requires not only vision but a clear understanding that the issues at stake require tough decisions which can only be addressed with undesirable decisions.
The role of the opposition in this scenario is relevant only if it rises to the occasion and offers the government its support. That would be great brinkmanship for Alfred Sant.
The current economic problems gripping the islands with the manufacturing and tourism sectors taking a battering has been on the cards for several years and is likely to get worse.
The inaction of the government to restructure at the appropriate time should not go unnoticed, and while suggestions for re-training should have been heeded years ago, it does not mean they are not needed today.
The country is slowing to a standstill when many had a predicted pre-EU membership boom, and while not all is grey there is a general recognition that we have not reached the bottom of the trough.
The job losses and closure of hotels must not be seen in a vacuum and the entire economy - from retail to property sales - will be affected. January to March were always slower months business-wise and it would not be prudent to exaggerate Malta’s difficulties.
One ray of hope appears in the financial services sector, which is promising better things once Malta joins the EU and even before that date there could be some pleasant surprises. But even in this sector, the MFSA warns the costs of becoming competitive will probably be higher than the benefits in the short run.
What we have known for a long time is now biting, and it is clear that Malta must move away from some manufacturing sectors and boost its services industry. To achieve the change, however, will never be a smooth ride.
There is hardly any positive action government can take that will not badly affect some sector of the population. If public companies are to be run in a sustainable form, for example, more jobs must be shed. If tax reductions are put in place, the welfare state will suffer, at least in the short term. Even in the case of the
Malta’s tax regime remains one of the lowest in Europe and while suggestions to cut tax may have a populist ring to them, it is not clear that these will result in a proportional increased economic activity.
What Malta needs is concrete suggestions for job creation that does not adversely affect other sectors of the economy and does not further deplete any of its natural assets. If the solutions were easy, there is no doubt that the government would be proposing them. Because the measures needed are tough and will bring further unwanted suffering, it is important that all the social partners recognise the long term benefits and agree to promote them.
There is no ready available blueprint to boost Malta’s economy, but the time to debate and take decisions is long overdue. The country must learn to suffer, but on their part the authorities must deliver.

Copyright © Newsworks Ltd. Malta.
Editor: Saviour Balzan
The Malta Financial & Business Times, Newsworks Ltd, Vjal ir-Rihan, San Gwann
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