Issue link: https://maltatoday.uberflip.com/i/1462882
maltatoday | SUNDAY • 27 MARCH 2022 8 INTERVIEW Raphael Vassallo rvassallo@mediatoday.com.mt 'We need to reassess our The 2020 National Employment Policy (which you co-authored) states that: "Both the Govern- ment and the opposition cur- rently oppose [an EU directive to raise minimum wage]… This is noteworthy given the fact that Malta's economic growth and performance over the last five years has exceeded that of most of the other [EU] coun- tries." Am I right in understand- ing, then, that there are no real economic impediments to in- creasing wages in this country? Let's start with this: when we discuss 'economic growth', we tend to talk about it mostly as an indicator of economic well-being. Basically, it's a case of: "so long as the economy is growing, it means that everything is doing just fine." But I always bring up the argu- ment that we need to look at two elements, at a national level. Yes, there is economic growth; but then, there is also the element of inequality, and social growth. This is something that also emerges from the National Em- ployment Policy, as well as other research on the subject: despite all the economic growth we have experienced, inequality has increased throughout all these years. Now: why did this happen? Mainly, because wage increases for highly skilled people have in- creased at a much faster rate, than wage increases for people with relatively low skills. And why, in turn, did that happen? Because today's economy demands more highly-skilled, than lower-skilled jobs. This might not seem fair, but it's a reality; a fact that we need to get accustomed to. Now, you might ask: does that mean we no longer need low- er-skilled jobs? No, of course not. The reality is that all jobs are still needed, across the en- tire spectrum. But in terms of proportionality, the fact remains that there are fewer people with high skills; and the demand for those skills is higher, in today's job market. On top of that, there is also a correlation with produc- tivity. Higher-skilled people tend to be more productive, vis-a-vis lower-skilled people; therefore, their salaries are higher. It is how economic forces work. So the question becomes: what can we actually do, to address the issue of inequality? This is what I meant, when I said [in another interview] that: 'education is the key to better wages, and better quality of life'. Yes, we can always discuss ways to further improve the distribu- tion of income – even though we still have to be careful, there. Because while there are sectors with relatively high productivi- ty, which today already provide higher wages… there are also sec- tors, like agriculture, where pro- ductivity is relatively low. So how can you have better distribution of income, in those sectors which are already under such high pres- sure? That's another issue, right there… But still, the key to addressing this inequality remains educa- tion. Now: when I talk about ed- ucation – and I am very passion- ate about this subject – I don't mean that 'everyone should get a degree, or a diploma'. But ideal- ly – wherever possible, of course – everyone should at least have some sort of skill. This is because education leads to a better qual- ity of life, by providing the indi- vidual with more autonomy, to think and to take everyday deci- sions. When we look at Malta's statis- tics, vis-à-vis the EU, we see that our levels of people with lower skills are higher than the Europe- an average; and at the same time, we have lower levels of people with moderate skills. Now, when you look at job openings in Mal- ta – and especially, the job open- ings that are expected to arise in future – 'medium' and 'high- er-skilled' jobs, represent a high- er proportion than 'low-skilled'. This could imply that at some point we might even have a low supply of medium to high skills; and a high supply of low skills in relation to demand. So the first step there, is to try to get as many of those lower-skilled people as possible, to acquire in- termediate, or technical, skills… Is that always possible, though? You mentioned agriculture, for example. What would 'acquir- ing intermediate skills' really mean, in practice, to farmers? That they should learn a differ- ent trade, to command a better salary? And if so: wouldn't that also spell out the end of agricul- ture, sooner or later? No, I didn't mean that they should 'learn a different trade'. Skills give you the possibility to be more flexible in terms of your job and thus adapt to changes in the economic environment more easily. Let me put it this way: all along, over the years, we have talking about the importance of building up a 'knowledge-based economy'. We have been stressing the need to invest more in R&I [Research and Innovation], and so on. What we are fundamentally talk- ing about here is that we need to transform our current economic model, in order to future-proof it by integrating technology and innovation. Applied to agriculture, that could also mean creating new op- portunities in 'vertical farming', for instance. That would be one way – involving R&I – to increase productivity, as well as overcome the problem of limited space, etc. There was much talk, in the election campaign, about 'attracting new industries' to Malta. But as economist Dr STEPHANIE FABRI points out, we also need to discuss what makes Malta 'attractive' to begin with