The effects of immigration

An article in a recent edition of The Economist attempted to assess the economic effects of an immigration boom that is evident in the richer countries of the world.

The article explains: ‘According to the IMF, the foreign-born labour force in America is 9% higher than at the start of 2019. In Britain, Canada and the euro zone it is around a fifth higher. America’s immigration surge means its economy will be 2% larger over the next decade than had been forecast. The influx of workers also explains the country’s strong economic growth.’

But – as we know quite well in Malta – The Economist goes on to say that the impact of immigration ‘goes well beyond the mathematical effect on GDP as it extends to inflation, living standards and government budgets’, with many policy makers arguing that ‘migration is helping contain price rises by relieving labour shortages’. The Economist argues that the evidence favouring this point of view is weak as facts point out to the opposite direction.

In fact, research suggests that in Australia each 100,000 increase in annual net overseas migration boosts rents by about 1%. Moreover, while the GDP of receiving countries has increased, the GDP per person has not – a reflection of the cheap jobs many of these immigrants take up.

There are quite some similarities with what is happening in Malta. A few days ago, the EU Commission statement on GDP growth in member states said that Malta’s economy is expected to show the strongest growth this year and next year. Malta’s growth is expected to be the strongest across the EU while wage growth remains one of the lowest. It also adds that Malta has ‘exceptionally strong immigration’.

Malta’s GDP growth is impressive. Its GDP growth per person is not. Malta is attracting both high-end employees and low-end workers. It is the low-end workers in the hospitality, the caring and the construction industries that hold the biggest sway.

Of course, Malta’s statistics are moreover warped by the massive subsidy sustaining our fuel prices across the board. I wonder how long this situation will persist.

Sometimes I wonder what the government’s official economic direction is.

More jobs can only translate into more foreigners coming to work in Malta, with the resulting consequences, including the need for more residences to house them. According to the Malta Developers Association (MDA), there was an unprecedented surge in the property market last February, marking it as the busiest February in recorded history of the property market. Promise of Sale agreements registered an impressive increase, rising from 1,318 in February 2023 to 1,420 in February 2024, reflecting an 8% growth. This upward trajectory is further underscored by a substantial 9% increase in revenue, soaring from €380,599,136 in the previous year to €416,571,905.

During March 2024, a total of 214,826 inbound tourists visited Malta for holiday purposes, and 14,834 ‘tourists’ came for business purposes. The largest share of inbound tourists was aged between 25 and 44 (35.3%), followed by the 45-64 age bracket (32.8%).  Most of these tourists stayed in holiday apartments.

Tourists visiting Malta in the first three months of 2024 amounted to 581,839, an increase of 31.3% over the same period in 2023. Total nights spent by inbound tourists went up by 17.7%, surpassing 3.4 million nights.

How can environmental NGOs push for less new buildings when the system of ‘buy to rent’ has become the best local investment for the citizen who has some capital that would otherwise decrease its purchasing power every day? This also contributes to the sense of well-being enjoyed by the middle classes, many of whom are the so-called ‘switchers’ whose support keeps Labour in power.

In Malta, the effect of migration on the property market and tourism and hence on the construction industry is tangible. Both sectors cannot survive without foreign cheap labour. Will this economic ‘growth’ ever slow down?

Complaining that this is destroying Malta – as some perceive the construction industry to be doing – will not stop the demand and hence the surge in new buildings.

The real practical question is: how long will Malta keep on importing workers from abroad?

PL shenanigans

The Labour Party suffered two legal defeats in the last few days.

On Wednesday, a magistrate found that voters’ addresses were shamefully manipulated to change their address to government apartments in Siggiewi even though these flats were not yet habitable.

The magistrate ruled that they were induced into making a false declaration by government who are thus potential accomplices in the criminal wrongdoing.

The magistrate was deciding the first of a number of cases instituted by the Nationalist Party against 99 people in what it had described as a case of 'gerrymandering'. Siġġiewi is a battleground locality in the forthcoming local council elections, and the change of address would have impacted the number of eligible voters in that locality.

It is, to say the least, demeaning for the Labour Party to resort to such stupid shenanigans. The stupid comments made by the Minister for Housing regarding the circumstances that led to these cases are hardly inspiring. He should have known better.

On the same day, the Employment Commission declared that Norman Vella’s dismissal from PBS soon after the 2013 election was ‘politically discriminating’ and condemned then Prime Minister Joseph Muscat and then Principal Permanent Secretary Mario Cutajar as having acted in an unacceptable way in a democratic society.

Vella was deployed to PBS in August 2012 but after the 2013 general elections he was redeployed to the Immigration Department, stationed at the Malta International Airport as border control officer.

The Commission, chaired by lawyer Frank Testa, declared that Vella’s redeployment stemmed from political discrimination and was thus unjustifiable in a truly democratic society.

It awarded Vella €15,000 in compensation, plus interest running from the date of the decision until effective payment.

One wonders whether there were others who suffered the same fate but did not pursue the issue as Norman Vella did. Sometimes people find themselves in circumstances that make them opt to suffer in silence rather than pick the courage to fight for their rights.