Businesses finding it increasingly difficult to find people to meet work demands

I have followed with interest the 2017 Budget presented by Finance Minister Edward Scicluna.  By now the media has analysed this document from all possible angles, so I will not attempt to do a similar exercise myself. What I would like to do instead is to put forward some thoughts about the announced budget measures which in one way or another are connected with labour supply.

It is an undisputed fact that economic operators are finding it increasingly difficult to find people to meet work demands. This is a feeling which cuts across all sectors of our economy and applies to all categories of employees. The high levels of employment achieved in these last few years are pushing employers to seek employees from other EU member states and beyond. This is an expensive process and, when third country nationals are concerned, also a bureaucratic and time consuming route. However employers have no other options but to embark on such a process; yet, despite the number of EU and third country nationals working in Malta, it is still a struggle to find sufficient people.

This situation is leading to an increase in salaries and is possibly allowing employees to feel that they do not need to fully pull their weight in order to keep their job or to get a salary increase.

There is also the question of quality. Finding people with the right skills, experience and educational background is another huge challenge which is bound to become more difficult as our economy continues to attract local and foreign investment in specialised areas.

The 2017 Budget has a number of initiatives which focus on strengthening two fundamental pillars - education and training. These initiatives are aimed at reducing illiteracy, helping non-Maltese nationals learn how to communicate in Maltese and English, building new schools, extending and developing parts of the University campus and MCAST, increasing and extending student stipends and extending these to more people, investing further in technology and others. 

Another important initiative is the setting up of a Skills Council which will provide a forum for economic operators to meet educational institutions with a view to determining the skills required of our future workforce. In this way our educational system can channel, to the extent possible, students to embark on paths which lead to skills and qualifications that, once their courses of instruction are completed, will be in demand. 

The above are all important initiatives which will hopefully lead to a greater supply of a better trained workforce in the years to come. But are these enough and what can we do to help fill the immediate job vacancies?

Facilitating the issue of work permits to third country nationals is one of the solutions. I have already mentioned that recruiting non-EU nationals is a bureaucratic and time consuming process which can take up to nine months. I believe that it will be a great help to employers if Government manages to simplify and shorten the process to the extent possible. One needs to bear in mind that certain parts of the overall process, such as procedures relating to EU/Schengen area rules, cannot be changed locally. But there are other parts which are entirely within Government’s control and which can be improved. A particular cause of concern is the fact that there are several Government entities involved in the process. Having a one-stop shop facility will help reduce the time required and will certainly be a less frustrating experience for employers and applicants.

Another process which can be improved is that concerning applications for work permits made by employers to recruit non-EU nationals who are already working with another employer in Malta and to recruit people who want to return to work in Malta after an absence of a few years. The present system practically treats these applicants as first time applicants. Using parts of the documentation already held by the local Authorities and asking for updates and additional information will surely reduce the time required for the whole process to be completed.

I would like to make it clear that I am not suggesting in any way that Government should cut corners when granting work permits, but I am sure that certain significant improvements can be made without putting security at risk. Naturally there may be certain sectors for which the recruitment of third country nationals is not justified. Clearly in such cases the granting of work permits should continue to be tightly controlled to avoid abuse.

I consider the tackling of these issues to be of paramount importance since the current situation is becoming a threat to Malta’s competitiveness. 

According to the “Salaries and Benefits” report recently published by MISCO, average annual salaries in Malta rose by 4.9% continuing a trend which has been observed for several years. Can we afford to keep having such increases in annual salaries?

A quick review of the Global Competitiveness Index report for 2015 recently published by the World Economic Forum shows that “Inadequately Educated Work Force” is the most problematic factor for doing business in Malta. “Poor Work Ethic in National Labour Force” occupies the fourth spot. These two factors were also highlighted as problematic in previous years’ reports but they have gradually become a greater concern. In 2011, “Inadequately Educated Work Force” and “Poor Work Ethic in National Labour Force” occupied the eighth and twelfth spots respectively of the most problematic factors. 

In conclusion, whilst the initiatives announced in the 2017 Budget concerning labour supply should be commended and encouraged, I believe that Government, with the support of employers and social partners, needs to address the current labour market needs to safeguard Malta’s competitiveness.