Still not seeing the light

There will be struggling businesses, and while those who have deep pockets may continue to operate, the vast majority will be hit hard

I stopped at a kiosk in Rabat just off Mdina to buy some ice-cream. On such a Friday the gardens in Rabat would be normally humming with children running and playing. There was none of this. Behind the kiosk counter, the muffled voice of the, probably, Asian server behind their face mask told me the price.

In what was once a setting where a Maltese speaker would have manned the tiny kiosk, I wondered how many low-end and minimum wage jobs were still being taken up by willing migrant workers. And whether Maltese workers with reduced hours and salaries under the strain of COVID-19 had started to feel the pinch, perhaps even forced to return to jobs they had until recently refused to take up. Even at a traditional titotla bar right up the road from where I was, the men serving the pastizzi were Asians, again symbolising the transition of certain types of labour that had been taken up by new residents and workers.

In the empty restaurants, owners took the decision to hang on to their staff, most of them also foreign. Waiters serve their customers with visors from a safe distance yet continue offering menus with the same exorbitant prices that we had back in February 2020. Nothing gratifying in eating out at a restaurant in these surreal conditions, especially when we are paying the same prices.

But seeing that most foreign workers here have been retained because their employers find in them competitive labour rates, flexible in working hours, and perhaps a better work ethic than others, is a reality that so far seems to have withstood the pandemic’s ravages. That is, until the tourism industry loses out on the loss of 2 million tourists annually who this year will not be visiting Malta, and possibly neither next year.

It is this cataclysmic impact that will create such a tsunami and send shockwaves everywhere. There will be unemployment and struggling businesses. Those who have deep pockets may continue to operate, but the vast majority will be hit hard. So the very fact that restaurants for example continue to present their clients with the same inflated prices pre-COVID, is a clear indication that many are still in denial. And beyond the catering world, the same should be said about the banking sector and fees they have been charging. Their moratoria on loans to businesses will not impinge on their profitability – if anything it will help the banks to redesign repayment programmes, retain interest rates after COVID-19 and increment repayment periods.

Other financially motivated groups have taken advantage of the supply and demand chain and repackaged their pricing structure. Such is the free market – ruthless, driven by self-interest, and in many ways intrinsically corrupt.

In the midst of all this we still see that one major hurdle in revitalising our airline and redirecting state aid where it is needed, are the pilots union led by Dominic Azzopardi, a former Labour party candidate and a property developer. He remains steadfastly against a compromise in the light of the complete eradication of tourist arrivals and continues to insist that Air Malta pilots should have an early retirement scheme of some €750,000. They also have a side letter signed by Konrad Mizzi that guarantees them a job with government if they lose their job!

Obviously Azzopardi does not represent the average pilot, who does not have a side business. If he does not understand the issue, the government will fold Air Malta as a company and start afresh. At this juncture, the need to have a national airline that can rekindle tourism without being priced out by more competitive airlines should be a priority.

It is this kind of example that underlines the lack of appreciation of how dire the situation will become for Malta and the whole world. In the private sector, big and small companies have been imposing salary cuts, reducing part-timers and trying to trim costs. Diligent shareholders have also withheld their demands for a share in last year’s profits. In the meantime those in government employ continue to receive full benefits even though some can never be as productive as when they were physically at work. 

On this, the pilots are right – they cannot be the only ones who experience cuts and sacrifices. Either we are in this together, or not. If things turn sour as they will, Robert Abela’s government will have to take measures which are unpopular but necessary.

Saving the livelihood of the most vulnerable and the vast middle class is a must. Failure to do this will translate into a world of haves and have-nots.

And one cannot forget the effects of the forthcoming Moneyval report. The focus will be on financial services and whether the reforms in governance will be used to either buttress this industry and safeguard jobs; or whether it will be used to disarm Malta of its competitive edge in a European economy where profits seemed to be sucked by the centre, by the powerhouses of major exporters.

I don’t think Malta is the only culprit when it comes to tax competition. The Netherlands is a haven for tax avoidance schemes. Surely enough, the Dutch government’s keen interest in Malta’s governance record is not matched by its own housekeeping when it comes to taxation. So even though we must always be critical of Malta’s international role in tax avoidance, we must understand whether competing industries want to dent an industry which ultimately is also a major employer of Maltese and foreign workers here. At some point, we must question the motivations of foreign players too.

Is Robert Abela taking this matter seriously enough? We certainly need stronger regulators – if anything, stronger regulation will take away critical eyes from the financial services industry. That means bolstering the resources of the FIAU, the MFSA, the economic crimes unit and the forthcoming financial crimes agency, the state prosecutor, and also the judiciary. We know the biggest problem we face on financial crime is the reluctance or inability to prosecute complex crimes: it is now a major stumbling block.

And the new commissioner of police has to get his act together and start prosecutions on economic crime. If our financial and gaming sector sare eradicated and transferred out to other EU countries it will be our economy on a ventilator, waiting to die. And die we will.

And when that happens, none of the eagle-eyed observers from the European Parliament, and the Council of Europe’s human rights defenders will be making a stand in our name. None of them are hitting out at the European surplus economies sucking up the currency from the rest of Europe now anyway.

This is a time to appreciate how serious the situation is. We need to come together and work harder – unfortunately for less money.