[WATCH] Downward pressure on salaries caused by foreign workers needs attention, says finance minister

Finance Minister Clyde Caruana kicks off a consultation process to have a new employment policy by October that will address 12 key challenges, including stagnating salaries, underemployment, lack of skills and pressures caused by foreign workers

Finance Minister Clyde Caruana
Finance Minister Clyde Caruana

Foreign workers and the downward pressure they put on salaries is one of the challenges a new employment policy has to address, the government has acknowledged.

The importation of foreign workers was a key component of the government’s economic strategy of the past seven years.

A document unveiled on Wednesday by Finance Minister Clyde Caruana sets out 12 challenges that a new employment policy will have to address and three of these are directly linked to foreign labour.

The sheer number of foreign workers and the demands they place on the country’s infrastructure, education, healthcare and housing is one other challenge that requires attention. However, the policy will also have to address the demand for foreign workers by some industries.

Acknowledging the challenges was important, including those caused by a large foreign labour market, the Finance Minister said. But he noted that the issue was also one of competitveness and diversification of the economy.

"There are more than 67,000 foreign workers and our economy has now diversified, which is why we need these numbers to sustain the growth of recent years but we also have to acknowledge that this has created challenges," Caruana said.

Is it time for quotas on foreign workers?

He asked stakeholders to consider whether the time was ripe 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 empoyed with certain wages, or whether these should be issued only to companies that employ a minimum number of Maltese and European workers.

"I am putting forward these ideas to provoke a discussion in the coming months because doing nothing is not an option," he said.

Caruana said salaries increased over the past years but there were realities that saw some leaping forward much more than others.

Another key challenge he highlighted was the lack of skills in the Maltese workforce which lagged behind the European average.

Caruana was 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.

Malta experienced above average economic growth between 2013 and 2019, saw unemployment drop and government finances returning a surplus.

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

The process that kicked off on Thursday with a business breakfast for stakeholders is expected to address the challenges of a post-COVID-19 world and the consequences of Malta’s rapid economic expansion.

"If there is a will we will find a way forward and we have to address new challenges caused by the rapid economic expansion of the past years," Caruana said.

Indicators of change between 2013 and 2019

• Persons in employment grew from 178,241 in 2013 to 258,064 six years later

• Persons over 61 in employment increased from 9,452 in 2013 to 14,438 in 2019

• Children attending childcare services increased from 1,745 in 2013 to 6,413 in 2019

Among the challenges the country will have to address is 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 challenge is to ensure that more disabled people join the workforce. Figures released with the document show that the number of disabled people in employment more than doubled to 3,894 between 2013 and 2019.

Farsons executive Antoinette Caruana said policies adopted over the past few years helped boost the employment of disabled people but called for more training for managers on inclusion and a one-stop shop to act as a reference point for employers on such issues.

Tania Camilleri, head of Bank of Valletta's training centre, gave an overview of government measures that helped bolster female employment, including the introduction of tax credits for returning mothers, free nationwide childcare services, school breakfast clubs and afterschool services. However, she said the bank also had a series of policies that enabled flexibility for parents, including remote working and reduced hours.

Betsson Group executive Corinne Valletta said attracting skilled foreign labour to Malta was an important element for her company but said it was important that the country's international reputation is maintained at the highest level. 

Key challenges identified by government:

  • Strengthen and sustain growth of the female participation rate and persons with disabilities in the labour market
  • Underemployment and other impacts of COVID-19
  • Up-skilling and re-skilling the Maltese workforce
  • Maltese low-skilled workers and opportunities and threats facing this sector
  • Lack of salary increases in specific employment areas, leading to deteriorating stands of living for workers
  • Third country nationals and downward pressure they put on salaries
  • Volume of TCN workers and the comparable increase in infrastructural, education, healthcare and housing needs
  • The demand of specific industries, primarily construction and tourism, for TCN workers
  • The demand of certain industries, such as finance, gaming and engineering for high-skilled workers
  • Automation and other technological advancements and what this will bring to specific sectors
  • Address the issue of pay inequalities
  • Removing incentives for the black economy and strengthening the rights of workers and employers in the formal one

More in National