Addressing the reality of tomorrow's workplace

This is, in fact, a major downside to the government’s economic strategy: the downward pressure exerted by foreign workers on salaries across the board

On Wednesday, Finance Minister Clyde Caruana unveiled a document that sets out 12 challenges that a new employment policy will have to address: and it is no surprise that three of these are directly linked to foreign labour.

For the past seven years, the importation of foreign workers has in fact been a key component of the government’s economic strategy. Now, however, Minister Caruana says that the sheer number of foreign workers - and the demands they place on the country’s infrastructure, education, healthcare and housing – is an issue that requires attention.

But at the same time, he acknowledged that certain specific sectors, primarily construction and tourism, have become dependent on cheap foreign labour.

This is, in fact, a major downside to the government’s economic strategy: the downward pressure exerted by foreign workers on salaries across the board.

The reality in Malta is that a large foreign labour market has been created by the work demands of industry and a diversified service economy.  With over 67,000 foreign workers in Malta, various industries have come to depend on cheaper foreign labour in certain industries, or highly-skilled foreign management leaders whose value has outstripped that of Maltese graduates.

This has had ripple effects throughout the economy. On one end, salaries have been kept too low for Maltese workers to take up certain types of work, allowing industries to keep labour costs low; on the other end, certain types of industries, staffed by highly-paid foreign workers, have out-priced Maltese employers seeking skilled labour.

Indeed, Caruana said salaries had increased over the past years; but there were realities that saw some leaping forward much more than others. One key factor was the lack of skills in the Maltese workforce, which lagged behind the European average.

As the mastermind in 2014 of government’s employment policy that sought rapid economic expansion through targeted fiscal and social measures – including the introduction of free childcare, the tapering of social benefits and the importation of foreign labour - Caruana understands that foreign workers have powered Malta’s accelerated economic growth between 2013 and 2019. Indeed, they also financed a large part of Malta’s pension pot.

Now, as finance minister, Caruana wants the country to adopt a new employment policy in time for October’s budget.

But foreign workers are not the only challenge. Other situations the country has to address include the strengthening of measures to sustain the growth of female participation in the workforce; the lack of salary increases in specific employment areas; and the demands of certain sectors for high-skilled workers. Another will be ensuring that more disabled people join the workforce.

Caruana himself is even asking whether the dampened economy will need to introduce quotas for permits for foreign workers; or whether permits for foreigners should only be issued in certain sectors, or whether permits should be granted only to foreigners if employed with certain wages, or alternatively, whether these should be issued only to companies that employ a minimum number of Maltese and European workers.

All theoretical so far; but the new finance minister has certainly opened a window onto his way of thinking.

Certainly, there is a huge need to calibrate the labour market for Maltese employers: who seek better skilled Maltese workers, but at salaries they can sustain. There is no question that in the next years, more employers will require workers to have balanced expectations on salaries, if they are to withstand the effects of the pandemic on the economy.

At the same event in which Caruana laid out his vision, Bank Of Valletta executive Tania Camilleri this week gave an exceptional snapshot of how female employment has been bolstered: through tax credits for returning mothers, free nationwide childcare, school breakfast clubs and after-school services.

Moreover, the coming years will usher in radical changes in the world of work. Rapid changes in technology will displace manual labour jobs, and even middle-income service jobs; workplaces will be radically downsized by the increase in remote work; platform work, which as revealed recently by MaltaToday, will come under pressure for regularisation and unionisation; more low-skilled Maltese workers risk losing jobs to automation; the demand for better wages will increase, as will the demand for up-skilling of Maltese workers.

But without the private sector adopting flexibility for parents – including remote working and reduced hours – the new world of work cannot attract more people into gainful employment. Employers must learn to value quality of life for employees, and harness all that modern technology has to offer, if they are to bring out the best from their work-force.