Stagnating wages and the minister’s wake-up call

Minister Clyde Caruana’s statement about stagnating local wages due to the massive influx of foreign workforce qualifies as an act of contrition. Indeed, in the Christian worldview, that is a fundamental first step to right your wrongs. Real contrition however requires the sinner to go a step further, and refrain from sin in the future, at least in intent.

I cannot see that candid intention in Caruana. For while he acknowledges that the government’s employment policy was short-sighted by betting everything on rampant importation of foreign workers, he fails to chart the road ahead for a truly sustainable employment policy which not only avoids past mistakes, but lays the ground for the mammoth challenges for Maltese workers in the next decade.

Caruana’s reading of the situation in his statements this week is not off-mark by much in quality as much as it is on timing. The Nationalist Party, the main worker unions like UHM Voice of the Workers, and myself as European election candidate, have been saying since a few years now that the unregulated wholesale importation of foreign workers was leading to a downward pressure of salaries and work conditions for thousands of Maltese workers.

So, while the minister launches a public consultation whose main question is how to address the problem of stagnating salaries, he must realise that his own handling is at the root of the problem.

The take-home pay and work conditions of the Maltese worker should indeed be the primary concern for government. When you talk to workers in manufacturing or associated industries, you realise that they were certainly not the focus of government’s attention. People on the shop floor will tell you how their bargaining position has weakened significantly over the past years given that employers had easy access to replacement workers even for semi-skilled and skilled jobs. Few had any courage or success to demand pay increases or better conditions in a market where you are easily dispensable. The little advancement in salary and conditions to report are to be attributed to the wisdom of certain employers who privilege the trust relationship over time with the employees.

To my mind however, the stagnating salaries, are but a part of the bigger problem with the job market right now. To illustrate that problem I would like to share a small anecdote. A few months back I was visiting a well-known i-gaming company. In a meeting with the head of human resources I was told that the company was in the process of finalising paperwork to offer contracts to 12 programmers to join the company ranks. When I asked about the nationality of these programmers, I was told that nine out of twelve were coming from non-EU, third countries and three were coming from Eastern Europe. None of them was Maltese.

A programming job in a gaming company is a good position offering attractive salaries and most importantly, interesting job advancement prospects. My question to the HR manager was hence obvious: why not recruit Maltese programmers? The answer was simple: that would be great if we could find any.

How could it be that Malta created the golden goose of the gaming industry but then failed to reap the golden egg of the quality jobs it creates? I asked the HR manager what it takes to produce home-bred programmers. He told me that the company tried a number of initiatives to offer expertise to educational establishments in Malta. According to him, these were however not supported with the right structures to produce any viable fruit. This discussion was not an isolated incident. Similar stories can be heard from a good number of other private undertakings big enough and bold enough to try to contribute to the educational system to produce the employees they need. Our educational system is very good on many fronts. It is manned by dedicated teaching staff and management, but it is not evolving quickly enough to produce the right kind of skills for the job market.

Clearly, there has to be a time-lag. We cannot expect University or MCAST to produce programmers, robotics technicians, renewable energy engineers and other workers for these cutting-edge areas immediately as the need arises. But how much of a lag is acceptable? For how long shall we accept that we need to import foreign skills because we don’t have the local skills before we move to create such local skills? In case of gaming, we have been hearing the same stories for years now.

I am sorry to say that while the minister’s statements indicate the will to address the problems he himself created over the last years, I do not see the vision for an employment policy to anticipate future needs and the upcoming disruptions to the job market. For the future will indeed bring important disruptions for which we need to prepare as from yesterday. A recent study estimated that in Europe alone, we could be seeing up to 50 million workers go unskilled and possibly unemployed as a result of robotics. A Forbes study indicates that round 47% of jobs in manufacturing could be at risk of extinction, replaced by advances in artificial intelligence and robotics.

You may think that we are protected by this in Malta. We are not. Most of the Maltese companies are already in the process of investing in AI and robotics to improve their output. The beer you drink tonight and the milk you added to your tea this morning required handling by much less workers today than they did two years ago, as kegs which needed five or six people to move around now need one operator for a few robotic hands.

Our industries need to be part of the digital and robotic revolution. We expect them to invest in this area and improve their operations. We also need to bolster their ambitions through EU funding, which will see a dedicated €6 billion fund for the digital transition which Malta must tap with greater efficiency. But while the private sector moves ahead on needing less muscle power, public authority must ready all our workers to face a job market where muscle power has less value and less opportunity.

The above challenges are not limited to the manufacturing sector. The services industry is not cocooned from the need to upskill. The internet giant Amazon last year announced a $700 million dollar investment in its own staff to upskill also on the services front. Malta’s biggest employers in tourism, retail and other parts of the services industry will also re-dimension needs for numbers and skills as new applications open up new needs while making some of the older jobs and skills obsolete.

In conclusion, while we definitely need a wider discussion for a national employment policy, we also need a detailed and factual analysis of the evolving needs to inform that discussion. Anything else will be as safe as Mister Caruana’s earlier hunch to invest in Muscatonomics lumping us with stagnating salaries and several job types reserved to the more skilled foreigners.