Editorial | Moving beyond unbridled economic growth

Clyde Caruana was a key technocrat in pushing forward the Labour government’s ‘making work pay’ mantra after 2013.

The multi-faceted policy was intended to encourage people to enter productive employment, whether these were inactive women or people on benefits caught up in a cycle of dependency.

Several policy decisions, not least the free childcare service for preschool children, the tapering of unemployment benefits and the in-work benefit, targeted pockets of idle adults and encouraged them to join the labour market.

From being a laggard in the number of gainfully occupied women, Malta shot up in EU statistics as more women took up employment and thus improving their personal situation and that of their families.

Additionally, dependency on social benefits was cut drastically as employment became an attractive option.

Increasing Malta’s workforce by using untapped potential was important to stimulate economic growth.

But government also adopted a more liberal approach to the importation of foreign labour as companies required more workers to meet the growing demand. This rapid increase in foreign workers created a vicious cycle of economic growth fuelled by population growth, which in turn required more foreign workers to sustain the higher demand.

Yesterday, when launching the skills survey that will be carried out by the National Statistics Office, Caruana, now in his political role as minister, said the policies adopted over the past 10 years were necessary to fuel economic growth but acknowledged that the recipe created challenges to Malta’s quality of life.

While people experienced better incomes, urban environments witnessed an unprecedented assault from the construction of new buildings. Basic infrastructure creaked under the weight of a rapidly expanding population. Communities experienced demographic changes that created social tensions and the consumption boom left its mark on the environment.

All the while, Malta had above average economic growth, zero unemployment and public finances that returned to black.

Caruana yesterday admitted that the recipe he himself championed – he described himself as a cheer leader of it – for 10 years, will not be adequate to take the country through the next decade.

People want their quality of life to improve and to do this, the model of unbridled economic growth is no longer feasible, he said. Malta must target economic development instead.

This does not mean that the doors to foreign labour will be shut. Too many sectors are dependent on foreign workers to continue offering an array of services that in turn contribute to an improved quality of life, such as healthcare and elderly services.

But aiming for economic development means targeting jobs that pay better and create less stress on the country’s physical and social infrastructure.

It means understanding the skill levels of the Maltese workforce and trying to anticipate the skills necessary to face the next 10 years.

This requires a holistic plan that touches on education, infrastructure, energy, social development, the creation of safe, beautiful spaces for people to enjoy their free time, better worker protection within an environment that fosters productivity and a strong rule of law regime.

Malta is at a crossroads and it requires a plan that looks to the future. Getting there is best achieved through dialogue with stakeholders and communities.