Malta at the crossroads – Evarist Bartolo

At the risk of being branded a prophet of doom, I feel that I have to admit that I am worried about the viability of our microstate. I believe that as a nation we are failing to seriously address how we are going to earn our living in the years ahead. Even the election campaigns, that we had during last February and March, did not shed any light on how we are going to remain viable as a nation state in the coming years.

We find time to discuss politics, religion, and cost of living, but there is no serious discussion about how we are going to have sustainable social and economic development, as substantial parts of our economy are maturing and dying, and new sectors are being born to replace them. Is mine much ado about nothing? I hope so.

Whether we like it or not, we have to change our business model, due to many factors beyond our control: European and international regulations regarding tax, aviation, energy, banking, anti-money laundering ... Our global and regional value, as well as supply chains, are changing, due to Covid and the Ukraine war.

We have to manage the transition away from fossil fuels, without hurting our businesses and families. The lack of skills available for the jobs created locally, the high rents making Malta unattractive, as well as expensive, to come and work here, together with the high energy costs involved in putting up production costs, all hit our existing businesses, as well as inward investments in manufacturing, financial services and iGaming.

It is obvious that businesses remain in Malta, or decide to locate themselves here, only if this makes sense for them.

In our history, we have had to reinvent ourselves over and over again, so as to ensure that we can survive and live on these islands. When for some reason or other, we did not manage to create jobs and economic growth, our people have had to live in misery, or else emigrate to the Mediterranean, and all of the four corners of the world.

We need to reinvent our business model, and we can only remain viable if we fully participate in the global and regional economy, as well as attract investment, mostly for products and services with overseas markets. We cannot depend only on our construction and tourism sectors. We also need other economic sectors, if we are going to have enough jobs and revenue to be able to support a strong welfare state and public services.

Why invest in Malta? What do we have to offer? In which areas? We have had to answer these questions before. We need to do that again. The answers cannot be the same as to how we answered in the past, since the world has changed. We need new answers.

I ask again, is mine much ado about nothing? “Of course, it isn’t”, says a person who has dedicated most of his life attracting businesses to Malta.

Another person who is involved in nurturing start-ups told me: “I fully agree that we need to answer the questions you raise. I have been wondering since the post-Muscat era how Malta envisages its economic future. I see nothing! No vision, no plan, no idea. Just warm air. This train is going down a dark tunnel and there is no light, or at least hardly any light, at the end.”

He believes that our political parties, business organizations, as well as the unions and civil society, need to address this serious issue. He complains about business organizations: “They only want good ideas as long as they don’t cost anything, and ignore how much work, time, and knowhow would have to be put into it. That’s a sad status and outlook.”

Another person who has retired a few years ago, after spending a lifetime developing the local insurance industry told me: “As a matter of priority, Malta must revisit it’s future strategy within the EU and the rest of the world. Malta’s much needed 2050 macro plan should be based on the concerns which you’re raising.”

And finally, a business leader who is still very active: “We have a miracle economy. People get lazier every day. No foresight. We keep each other busy eating out and building rubbish. We try to get some tourists to keep going. Luckily, we are small enough that a drop of the global tourist market is enough to flood us. And when someone tries to do something more intelligent, we make it very difficult for him, because we have no clue what he’s talking about, and we suspect that it’s a sham.” Towards a demographic suicide? “A deafening silence surrounds Europe’s demographic suicide, projected for 2050. Unlike North America, which should see its population rise by 75 million inhabitants (two times less than the number for South America), the EU could stagnate in 2050 at approximately 500 million people, while losing 49 million people of working age (20-64).” (Foundation Robert Schumann, European Issues, No. 462).

Sources : Population : UN - World Population Prospects 2015 Scenario medium GDP per capita : World Economic Outlook - IMF - April 2016

A similar silence surrounds Malta’s low birth rate. Malta will have no other choice but to keep bringing in foreign workers, or shrink it’s economy, unless more babies are born. European statistics show that Malta currently has the lowest fertility rate in the EU (with an average of 1.14 births per woman), while our population is forecast to rise to 668,000 by 2050.

Only 4,414 babies were born in Malta in 2020, with around a third of these being born to foreign parents, compared to the 10,281 babies who were born in 1950.

A few thousands have entered Malta irregularly, but most foreign workers come here because we don’t have enough Maltese people to fill up the jobs that are being created. We create 12,000 jobs every year, while 4,000 people are born every year, so the other 8,000 workers that are needed come from other countries.

Our population is currently 516,000, out of whom 98,918 (21%) are foreigners. If our population increases to 668,000 by 2050, how many of these will be foreigners?

We must decide – if we complain about foreign workers without increasing our own birth rate, isn’t it natural that more foreigners will end up working here? Or do we want to shrink the economy?

The local use of more robotics and AI will not mitigate the demand for human workers. Even technologically advanced countries like Japan had to encourage more women and elderly people to enter the labour market. How can it be that we have never had a serious discussion about our birth rate?

Will the birth rate automatically decrease as a result of more women in the labour market? What can we do to increase our birth rate? Should more Maltese couples have children? If so, how can we help them?