Malthusian theories coming to haunt us

Sociologists remind us of the Malthusian theory based on his observation of conditions in England in the early 1800s, Malthus argued that the available farmland was insufficient to feed the increasing population. More specifically, he stated that the human population increases geometrically, while food production increases arithmetically. However, he thought that families during a good harvest would then abuse their newfound abundance, particularly by producing larger families.

At some point, their numbers would exceed their ability to provide the necessities of life.  Malthus derived this conclusion from the Law of Diminishing Returns. Modern theorists disagree, saying his theories based on 18th-century Britain do not prevail now. It is true that Europe developed new streams of production and efforts to reduce poverty. 

This may be true, however there are many economic and cultural problems in parts of the globe where people are seeking mobility to escape poverty and better jobs.  We have a strong economy as our growth rates outpace those of the EU and the euro area. Credit agencies rate us with flying colours. Next year, our economy is expected to grow further, with a real growth rate of almost shy of five per cent. 

The government’s labour migration policies are being revisited. The aim is to align migration with the actual needs of the labour market. Examples of migrants include millions of boat people who risk their lives sailing on dingy craft sometimes departing from Libya or Tunisia to cross the Mediterranean in search of a new future. Not surprising, there are a number of local temping agencies, which against payment relocate third country nationals from India, Pakistan, Bangladesh, Nepal, Serbia among others. Quoting one recent case of Rahman Khan.

He paid €6,000 to come to Malta for a well-paid job but will return home heavily in debt after he was not given work as promised. The Abroad Study Plan YouTube channel has over 16,000 subscribers. It includes videos titled “Malta work visa success stories”. One video posted in January last year garnered 175,000 views, while other videos regularly have more than 10,000. “I didn’t know anything about Malta before seeing the video”, said Anilkumar Ghanta.

In this promotional video there are many vacancies in Malta, with high salaries you can earn, but these were all lies, Ghanta said. In a particular case, one man said he paid the equivalent of €6,820 to work in Malta. The 45-year-old is among several who feel cheated by “Abroad Study Plan”, an Indian employment agency that sends people to Malta and other European countries promising decent jobs.  Other problems relate to residence permits. In a quoted case, three Turkish men employed on a government construction project yet they faced deportation after their employer failed to apply for their residence permits. 

Statistics show how the exponential growth of foreign human resources can be justified as no locals want to be seen doing menial jobs such as cleaning, dishwashing, driving cabs, delivering fast foods on scooters, and tough jobs on building sites. One is tempted to ask - how does such extra manpower effect our productivity and cost of operations? Regulations have recently been drafted in parliament to regulate temping agencies and tighten on abuses. Ideally, we weed out rogue agencies abusing by recruiting TCNs charging €12 per hour for their service but in reality, only paying them €5.6 (sometimes, without standard conditions such as annual bonuses, health insurance and public holidays). 

There is a pressing need to look into our demographics starting first by determining the country’s ideal carrying capacity.  For example, in 2007, Guernsey moved to introduce a population cap and amid considerable controversy, the island’s parliament voted to keep the population at its current level of around 60,000. The local government’s remedy to dampen inflationary pressures is to spend over €320m on energy and cereal subsidies (now this is trimmed to one half for next year).

These subsidies, the IMF argued, disincentivise energy savings and green investments and contributes towards 40% of the deficit. IMF also observed that poverty risk appears to be on the rise, with the elderly population showing signs of being increasingly at risk since the pandemic.  Simply put, the gap between high and low earners - has risen above the EU average since the pandemic. Yet on a positive note, one appreciates that based on a population of circa 560,000, the number of unemployed persons turns to register a mere 9340.  Add to this, a number of intensive training schemes for unskilled helpers via Local Councils and the GWU jobs regeneration scheme. Is this anathema to the panegyrics of Malthus and his theory of over population and fewer jobs?  

Experts advise us to forget Malthus theory as it is not applicable in the 21st century even though we suffer from the lowest fertility rate in Europe of under 1.08 when studies point that a healthy replacement rate is a minimum of 2.1. A future dilemma takes a different twist, when the finance minister announced that at the current rate of expansion in GDP, the population will explode to reach 800,000 by 2040. It is here that Malthus theory starts to make sense.

Will there be enough workers placing their shoulder to the wheel to generate such a high GDP to sustain and accommodate such a population explosion? Are we competitive enough and do our education facilities train enough workers to meet present challenges of A.I and digital literacy? Mismatch of skills is creating shortages of skilled labour such as technicians: because a dirigisme educational system is not generating enough candidates qualified in STEM subjects.  In such a spirit of rejuvenation, Castille had appointed a hand-picked team of experts in a think-tank.  

This is expected to be working with the ministries, regulators, enforcement agencies, NGO’s and the private sector to reach equilibrium in the management of change in both human and productive resources. Officially it came up with 175 action points, which are being carefully mapped for a cross-cutting impact and pragmatic implementation, starting from quick-wins to more complex ones which require crucial investment, resources and time. Pray that the dire prognosis of the nineteenth century Malthusian mercantilist writer will fly past our shores.