One issue I have written consistently about is the need to change our economic model. Those who have an interest in maintaining the status quo counter the claim by saying we cannot just stop what we are doing as it would disrupt our economy. Others say that our economy is so much dependent on foreign labour (and I add cheap foreign labour) that we cannot all of a sudden halt the influx of foreign workers.

Those who believe that we need a change in our economic model also believe we need to transition from the old to the new in an orderly manner. One cannot all of a sudden put the brakes on an economic model as the economy would not function. So we first need to go through a process of transformation, like we have done a number of times in the past.

In each decade since 1964, our economy has gone through at least one transformation process and every time we have emerged stronger than before. From an economy that was very much dependent on the presence of the British military, today we have an economy with vibrant and diversified manufacturing and services sectors.

Moving on to the second point: the dependence on cheap foreign labour. Let us be transparent about it. This cheap foreign labour has benefitted the few but it has hindered our economy from moving up the value chain. What has this cheap foreign labour contributed to the skills base in our economy? What has it contributed to gross value added? And what have been the social costs of the increase in population?

In each decade since 1964, our economy has gone through at least one transformation process and every time we have emerged stronger than before

In effect, there are a number of non-Maltese workers who we really need, such as those in the caring and nursing professions. We cannot put everyone in the same  basket and say we simply need to get rid of all non-Maltese workers. Nor can we equate non-Maltese workers in the caring and nursing professions with non-Maltese workers doing elementary jobs.

A more pertinent question we need to ask about our economic model is whether as a country we still need an economic policy that incentivises employment. Traditionally, successive governments have offered assistance to those businesses which increase their headcount. Do we still need businesses to increase their headcount? Or do we want them to be more productive and efficient so that they can afford to increase wages and rely less on cheap labour?

Having an economic model that continues to create the type of jobs we have today is not needed. We need to create jobs that will replace others that will become obsolete and/or uneconomical. However, the net increase in jobs needs to be minimal. Otherwise we will continue to need importing labour.

We need an economic model which is based on entrepreneurship, innovation, productivity, but not cheap labour. In answer to the question I posed in the title of this week’s contribution, we need to adopt a strategy which will create more employment which will push the Maltese economy up the value chain.