Issue link: https://maltatoday.uberflip.com/i/1462882
maltatoday | SUNDAY • 27 MARCH 2022 9 INTERVIEW our economic ecosystem' And there are others, such as the need to climb up the value chain of agricultural produce through processing facilities: which still are lacking locally. In Aquaculture and Fisheries, too, there has been a lot of invest- ment in R&I to see how they can improve their productivity: new hatcheries, different technolo- gies, and so on. So the demand for 'medium-to-high' skills exists, even in primary industries. The potential and possibilities are there right in front of us. Yet there is still a perception that local wages have not really increased, in step with qualifi- cations. University graduates often complain that their de- grees do not, in fact, translate into the higher salaries they might have expected: or that they might actually receive, for the same work, in other coun- tries. Don't they have a point? Wages are set on the basis of various factors, such as: the rate of unemployment; the quality of supply and demand of the work- force; the country's economic, political, social, and environmen- tal situation; the industries we are attracting, the type of companies investing locally. It also depends on the local standard of living… like everything else, however, it ultimately depends on demand and supply, in line with the over- all productivity and our national competitiveness. In terms of wages in Malta, the reality is that we've actually come quite a long way. Wages have certainly increased, over the years. This needed to take place also because our labour market is in competition with that of other EU countries. If we remain with the sort of economic diversification that we have today, without attract- ing any new value-added indus- tries… then the likelihood is that we will stall, in terms of wage-in- creases. But if, on the other hand, we enhance better industry-link- ages – like I said earlier: by in- vesting more in R&I, in industries such as agriculture and fisheries, and so on – and if we look at how each individual sector can grow, within the economic ecosys- tem… then better job opportuni- ties will be created; productivity will be increased; and as a result, we will see better wages in future. But doesn't the wage discrep- ancy, between Malta and the EU, create the risk of a brain- drain? Yes, it does. But I also believe that the risk of a brain-drain is not only related to wages. Here, we are talking about the aspect of 'talent-attraction', and 'talent-re- tention'. And this is an issue that I believe needs to be properly in- vestigated; because while it is im- portant to look at wages, it is also important to look at what can elevate those wages and thus the determinants of talent attraction and retention which also include the state of the environment around us. Why are people leaving Malta, for instance? We know of cer- tain industries which successful- ly attract foreigners to Malta… but then, many end up leaving after a short while (the average is around three years). Why is this happening? This is something we need to look into: because talent retention is just as impor- tant, as talent attraction. Meanwhile, there are many young Maltese students, or graduates, who leave to gain ex- perience abroad. Don't get me wrong: that is something pos- itive, in itself; but… what are we going to do, to attract them back? Again, this is why it is so im- portant that we attract new industries. Just yesterday, for instance, Energy Minister Dalli announced that government is investing in a new research and innovation hub in Birzebbuga. Now: I haven't had time to look into the details yet, so I can't comment about this particular project in detail. What I can say, however, is that this is the kind of investment we need; the kind that has the potential to create exciting new job opportunities to attract, and retain, young people. Other investment that we need is, for example, in the 10 sectors mentioned by the Na- tionalist Party. So I think that both parties are realizing that it is important to start thinking about how to at- tract, and retain, talent, if we want to remain competitive and productive in future. This is important, also because Malta is still considered as a 'moderate' innovator by Euro- pean standards. If we compare our R&I expenditure to the rest of the EU, we are still at a very low level. So these are the kind of opportunities that will help in retaining talent: because we need to create jobs that are in- teresting enough, for young peo- ple to choose to remain in Malta. I always say that: OK, it's good that we talk about the I-gaming and Financial Services sectors so much… but the rest of the world is not 'waiting for us to catch up'. The global economy is changing, as we speak; there is a lot of in- vestment already happening, out there; and locally, there is a lot of potential, and a lot of things we can do… This brings us to another issue: competitiveness. It is an open secret that Malta's preferential taxation system – which has been instrumental in attract- ing new economic sectors, in the past – is now under threat by the global drive towards 'tax harmonisation'. If we lose that competitive advantage… how are we going to keep attracting new industries? Well, this is why I think that we need to reassess our eco- nomic ecosystem. We need to have a proper rethink, about what makes Malta attractive and competitive in the first place. Let's face it: if you look at Mal- ta only at a national level… our economy is small. Our land is limited; we have no natural re- sources, to speak of; we are ex- posed to competition… so our only resource, really, is our peo- ple; our human resources. So if we want to remain at- tractive, we need to invest in our main resource – our people. We need to invest in building up our human resources, from the ground up: which implies revis- iting our education system, and asking ourselves how it can be enhanced to meet the current and future depends of the econ- omy. We need to constantly in- vest in building, and re-building, the skills of our workforce… and above all, the flexibility of those skills: because they have to be flexible enough, to adjust to the environment out there. Let's not forget that the econ- omy is constantly changing: people's demands change all the time; and so do the types of investment we make. In the re- cent years there has been a lot of debate revolving around the construction industry: the way we build, the materials we use, etc. So even people employed in the construction industry need to reskill themselves, and to be flexible in terms of the skills other employees in this industry (architects, surveyors, builders, draughtsmen, etc.) have. So basically, we need to focus more on our human resources. We need to market our human resources: to advertise ourselves, as a workforce that is capable of being productive and agile, and integrating into the new eco- nomic reality: digitalisation, the 'green economy', and so on. We also need to start seeing the economy more as ecosystem whereby fragmentation causes sub optimal results. Therefore the whole supporting infrastruc- ture becomes critical such as banking facilities, physical infra- structure, entertainment facili- ties, quality of life and regulatory quality. When looking at Malta's eco- nomic development over the years, regulatory and jurisdic- tional innovation were key to our performance. The maritime and aviation registers, the gener- ic pharmaceutical industry and the financial services and insur- ance sectors were all based on innovative laws. Malta used its jurisdictional power innovative- ly and effectively. I believe that we need to refocus on rebuilding this capacity to not only design, but more importantly, imple- ment such innovative develop- ments in a holistic manner. And this is why I keep stressing on the need for skills. It's not just about having degrees, or diplo- mas; it's also about understand- ing that we really have to adapt to the new economic realities of today's – and even more so, to- morrow's – world. PHOTO: JAMES BIANCHI / MALTATODAY