Some politicians want us to believe that we have an economy based on the value of work.
Hard work is a pre-requisite to economic success, and if you work hard and save, you should be able to pay your bills and take care of your family. Put simply, you should not be poor. Sadly, this is often a cruel fallacy that is weakening our society.
Eurostat’s data confirmed that workers in Malta earn €14.20 per hour before taxes, less than half the EU-wide average. An earlier KPMG report found that wage increases over the last two years were entirely eaten up by rapid inflation, leaving workers worse off in purchasing power and rendering real wages stagnant since 2018.
The government fails to acknowledge the fallacies that are the rock base of its economic model and argues that it has removed financial burdens on workers by providing free childcare and public transport.
Sadly, this administration more than any other has committed itself to implementing the more unacceptable aspects of capitalism by making workers the main risk-bearers in the economy.
The use of subsidies to mitigate, in some ways, high inflation and low income of a significant sector of the labour force is neither fair nor sustainable in a society that believes in levelling up social conditions.
In recent years, we have seen exponential growth in the sharing economy, a broad term for companies and individuals who use technology to share, rent, or trade goods and services.
This method of organising labour works extremely well in controlling costs since the company does not have employees and only owes freelance low-paid workers money after they perform a profitable service.
The liberal labour market policies implemented in the last decade have also meant that employers, especially in the retail and tourism sectors, prefer to import low-paid third-country nationals rather than invest in human capital to improve productivity. The government wants the people to believe this is the best way to guarantee social services like free health, education, and pensions.
Lowering labour costs may benefit an individual business but has serious social downsides. More working people, not just third-country nationals, are working in precarious conditions and have low and unpredictable incomes. It is difficult for them to pay regular bills, such as rent and groceries, with irregular or low incomes. More people are working harder for less and less.
The government must shift focus from controlling labour costs, seeing more money going to business profits held by a few and less money going to the labour income, which is most people’s primary means of support.
The market fundamentalists in this administration would have us believe that the laws of the market are as clear and as straightforward as the law of gravity. Either our society does what the markets and businesses require, or they will have to pay longer-term economic decline and rationed public services.
Their answer is always the same: keep wages low, deregulate labour markets, lower taxes, liberalise trade, privatise public services and increase competition. They believe that increased production rather than improved productivity through investment in human capital and technology is the way forward.
This one-dimensional mindset is a significant reason for the growing inequality in our society. A wage-led economic revamp is essential to reduce inequality and social imbalances.
Providing better protection to all workers requires the enforcement of existing laws and new national labour standards to restrict the exploitation of vulnerable workers.