The 2009 statistics on employment published by Eurostat send a clear message to the managers of our economy – unless we improve our employment rate, we risk seeing economic and social convergence with the more prosperous EU countries becoming unattainable.
Malta has the unenviable record of having the lowest employment rate in the EU. With 54.9 per cent of those aged between 15 and 64 in employment, we are almost 10 percentage points below the eurozone average. The statistic for female employment is even more worrying: Only 37.7 per cent of females are in employment, more than 20 percentage points less than the eurozone average.
If the economy is to grow, we need to attract more people to the workplace and make sure that they stay there for longer. Otherwise our GDP per capita – an indicator used to measure prosperity – will only grow very sluggishly. But what is keeping more people from joining the workforce?
One needs to interpret the figures on employment with some caution. In theory, with such low rates, one would expect to see clearer evidence of low standards of living. Some economic analysts argue that the official statistics are not capturing the workers that are gainfully occupied but not officially employed.
In simple terms, these would include those who work in the underground economy earning income but not paying taxes and not covered by national insurance. A determined effort is needed to gauge the extent of this phenomenon and measures devised to encourage such people to enter the official workforce.
Perhaps even more important is the introduction of new measures to attract more women to the workforce. Various studies show that the single most important factor that keeps women from seeking remunerated employment is the burden of motherhood – a woman with young children faces tough challenges to balance her family duties with those relating to her employment.
A combination of measures to ease this challenge could include better facilities for women to work from home and communicate electronically with their office. Job sharing is another possibility that so far has gained little support from Maltese employers. Yet another measure could be the greater use of tailored flexitime working to accommodate women who have special requirements because of their family circumstances.
Another area that needs to be tackled, if we are to get more people in the workforce, relates to the liberalisation of the labour market. For instance, in Malta anyone who wants to continue working beyond retirement age, whether one is in the private or public sector, should be allowed to do so without the need of the employer approving this. The effective retirement age of Maltese workers remains one of the lowest in Europe and this trend is not sustainable.
The excessive reliance on social benefits by those who are healthy and capable of working, the tight employment conditions on the maximum hours of work per week, and the fiscal disincentives to creating new jobs are some of the sacred cows that need to be challenged.
Encouraging more people to join the workforce will be challenging and will involve political unpopularity. In 2007 Jean Claude Juncker, Prime Minister of Luxembourg was quoted as saying: “We (politicians) all know what to do but we don’t know how to get re-elected once we have done it.”
If political boldness is what is needed to improve our records, then this is what many expect from our political leaders.