Uneven job realities

Times of Malta 17 July 2017

Malta’s economy is characterised by uneven employment realities. On the one hand, Malta is top European performer on a macro-level, with the third lowest unemployment rate in the EU and with a consistently growing economy.

On the other hand there are quite a lot of working-age persons who do not form part of the labour market. According to Eurostat around 31 per cent of Malta’s working-age population is economically inactive, which is on the European high side and above the average rate of 27 per cent.  Around 7,000 young persons are not registering for employment nor attending educational facilities.

This could be happening for a variety of cultural, social and economic reasons. Qualitative and quantitive social-scientific evidence is imperative to assist policymakers to understand the situations, motivations and reasons for this.

Then there are many workers who are experiencing hard times.  This does not only include those who receive the minimum wage, which is subject to increases in the coming years. It also includes others who are finding it increasingly difficult to make ends meet and who experience bad work conditions.

In this regard, it is interesting to note that around 35,000 foreign workers are employed in Malta, and these account for much of the increase in workers in the country. Some are employed in high-paying legitimate jobs, for example in Malta’s financial and gaming sectors. Others perform a wide range of regular jobs in various sectors and at various levels. But it is quite clear that others are employed for purely exploitative reasons, resulting in a depression of wages in their respective sectors.

Something else to note is that Jobs Plus recently reported that it caught 3,500 workers working illegally, and that 1,105 persons were removed from the unemployment register as they were abusing the system. It would be interesting to commission studies to verify why persons may be working illegally. For example, do the Maltese authorities have data on persons working in quasi slavery conditions?

Which takes us to the underground economy. In 2013 economist Friedrich Schneider carried out a study of 31 European and five other OECD countries which showed that Malta’s underground economy accounted for 25 per cent of the GDP, which is higher than the EU average of 18 per cent.

Applied to the world of work, the underground economy may create risks for workers in terms of health and safety, lack of security, bad work conditions and lack of stability.

But there may be other reasons related to the underground economy. Some persons might voluntarily choose to go underground to evade taxes, some may wish to avoid bureaucratic hurdles related to occasional jobs, community-oriented initiatives and other matters. Going underground might also incentivise a degree of creativity in start-ups before they take the plunge and officially register themselves.

The government should ensure that workers who are experiencing bad working conditions, whether through regular or irregular employment, are protected.

How can this be done? In some cases, workers can benefit through the formalisation of their economic activities through incentives. These may include lower taxes and bureaucratic simplification.

The government can also increase educational and outreach initiatives that encourage voluntary commitment, self-regulation and trust in formal registration of work.

Some reforms have already taken place in Malta. For example, workers in private companies providing jobs for public services are receiving the same wage, otherwise the companies would not be eligible to tender their offers. Public sector tenders also include various obligations, for example on limits of subcontracting works, minimum hourly rates to workers and so forth.

But government should also ensure that exploited workers who want to report their experiences trust authorities and do not fear repercussions for speaking up. More work inspectors should be employed, and random inspections should increase.

Malta’s uneven labour market clearly informs us that equality is not only about liberal legislation such as equal marriage and LGBITQ rights. Equality is also about ensuring that workers in the labour market get equal pay for equal work, equal opportunities and equal worth in terms of the policy process.

Localise not centralise

Times of Malta 10 July 2017

Are local councils equipped to meet the needs of their respective localities? Do they have enough funds and authority to govern? I believe these are key questions which need thorough debate, especially when local councils are so close to citizens’ everyday needs.

Government funding of local councils has increased in the past years. Indeed, in 2017, Malta’s 68 local councils received a total of €35.5 million from government, an increase of €3.5 million from 2015. High earners include St Paul’s Bay (€1,684,906), Birkirkara (€1,283,056), Mosta (€1,185,524) and Sliema (€1,110,593).

The government will also engage in a road-building programme in the next seven years. It recently announced that it would take over this responsibility from local councils, which are finding it increasingly difficult to cope with hefty demands in this sector.

One expects that in the near future government elaborates on its intentions and consults accordingly. For example, will the road building programme covered by the government include pavements? Will the  government’s plans affect local council funding? Will local councils be responsible just for patching of roads, or would councils still be expected to budget for full-road asphalting? And who will decide on which roads will be prioritised?

Going back to the original question of this article, let us keep in mind that local councils have very limited options for the generation of other revenue. Sure, local councils may apply for EU funds and for discretionary government schemes. They may also generate some revenue through permit fees, adverts and the like.

But it is more than evident that something has to be done to ensure that local councils may adequately cover their growing demands and needs. These include not only infrastructure and waste management, but also educational, cultural and social initiatives which are very important for social cohesion, integration and community building.

Ideally, Malta’s local agenda should emphasise decentralisation to ensure that no government, entity or sector has excessive power. This should be accompanied by subsidiarity, where decisions are taken at the lowest level possible, meaning that decisions which can easily be taken by local councils needn’t be taken by ministers or authorities.

In addition, more state-owned land should be devolved to local councils. This may include public car parks, public buildings and heritage sites. Local councils can then manage such areas in the best interest of the locality, possibly generating funds in the process. Such funds can then be used to help finance local programmes and initiatives.

Unfortunately, Malta’s government is progressively moving towards the other direction. Apart from discretionary schemes referred to earlier in this article, we are witnessing increased centralisation of power.

One key example of this is enforcement. Local councils are frequently at the receiving end of complaints related to illegal street vendors, abusive parking, careless construction practices, noise pollution, illegal littering and so forth. Given that wardens are now under central government control, there is not much that local councils can do to ensure that enforcement takes place. The same applies with regard to other enforcing agencies such as the police, the Building Regulations Office and the Planning Authority.

Centralisation of power gives excessive strength to ministers, who in turn are omnipresent at macro and micro levels in Maltese society. Thus, a local council may require enforcement against abusive practices which affect residents’ quality of life, but this may be prohibited from taking place due to partisan political reasons and patronage.

The centralisation of powers makes citizens and local councils increasingly dependent on ministers, and this can erode the dynamics of local governance. It can also result in increased apathy and lack of initiative.

On the other hand, decentralisation, subsidiarity and devolution can incentivise both local councils and citizens to be more creative and innovative in the governance of localities. It would also help diversify power. In a politically-charged society like Malta, this could enrich democracy, giving more value and legitimacy to local council elections and other similar appointments.