Issue link: https://maltatoday.uberflip.com/i/981272
| SUNDAY • 13 MAY 2018 maltatoday 9 NEWS ITS DEVELOPMENT MALTA'S labour market is not yet in a position to sufficiently provide for the de- mand for labour that could be generated by the City Centre high-rise project on St George's Bay. An Economic Impact Assessment con- ducted by KPMG states that a "number of employees will be sourced from abroad". The City Centre project at Pembroke, set on the former site of the Institute for Tour- ism Studies, will comprise a 464-room five- star hotel, 162 luxury apartments inside a 37-storey tower, commercial office space, a shopping mall and a casino. The project is expected to create over 1,600 new employment opportunities within a number of sectors including the hospitality, gaming and retail sectors. Dur- ing construction the project will require an average of 940 workers each month. While the project may create opportuni- ties for Maltese workers it is also expected to attract more foreign workers to Malta, "particularly EU nationals originating from countries that are currently experiencing an economic slowdown", KPMG said in its report. The project is also expected to push wages for skilled and professional work upwards. The increase in demand for skilled labour will push up the wage bill for this type of la- bour, because specialised and professional skilled labour is limited in its supply and a higher demand for such labour would push up salaries. "This may result in a cost-push inflationary spiral, leading to an increase in the price of other goods and services in other sectors of the economy." But the project is not expected to push wages in the hospitality sector upwards. Instead the increase in demand for un- skilled labour is expected to "stabilise" wages in a sector where wages are de- scribed as "typically sticky" – a term used by economists to refer to a situation where workers' earnings don't adjust quickly enough to changes in labour market con- ditions. "As wages are typically sticky, an increase in unskilled labour supply may result in a stabilisation of salaries particularly in the retail and hospitality industries." The project is expected to employ a num- ber of unskilled and semi-skilled labour in- cluding housekeepers, maintenance work- ers, waiters and salespersons. According to the report the increase in foreign workers is expected to have a posi- tive impact on public finances as foreign employees would also pay income tax and National Insurance contributions in Malta. Malta recently registered the second low- est unemployment rate in the eurozone, with the Czech Republic keeping top bill- ing. Among EU member states, the lowest unemployment rates in March 2018 were recorded in the Czech Republic (2.2%), Malta (3.3%) and Germany (3.4%). Immigration has helped accommodate a rising demand for labour in Malta, to the extent that without foreign workers, Mal- ta's working age population would have declined instead of risen. Between 2000 and 2014, dependence on foreign workers in elementary occupations and in clerical and support duties rose from 0.5% to 14.1%. Industry and the public sector are domi- nated by the Maltese, while foreign work- ers are more likely to be employed in other services, mainly remote gaming, profes- sional services and administrative support and in tourism. Other foreign workers are also present in 'other services' (29% of workforce), 23% in professional services & administrative support, 21% in tourism, 18% in real estate, 16% in information & communication and 13% in construction – according to a 2014 report by the Central Bank. The same report found that tax revenue from foreign workers rose to 10.1% of some €984 million in 2014, a growth of nine times during the period 2000 to 2014, whereas that from Maltese workers dou- bled. City Centre to increase demand for foreign workers Project will 'stabilise' wages in hospitality and retail while pushing up wages at higher end