Surplus labour

The government is concerned about surplus labour. It has produced a document to specifically tackle the problem. The stated objective is that "effective and efficient performance in government entities will not be attained if restructuring is based on the premise that they will continue to hold on to surplus staff".

The government is to insist that suitable employment offered to surplus public sector employees should not be refused unless there are valid reasons.

Normally, a labour surplus occurs when the number of workers willing to provide labour at market wage rates is greater then the number required by firms. Implicitly, this refers to the unemployed pool. It is also possible for workers to be employed but their contribution in terms of marginal physical product is less than the institutional wage. In the past, such an occurrence used to be frequently found in the agricultural sector. In a number of developing economies it still prevails. Today, we can easily describe these workers as underemployed or else it is regarded as a measure to hide the true level of unemployment.

Here in Malta, we are referring to the term surplus labour to define those workers who are no longer needed in government entities. In other words, the same level of economic activity within the company is attained without the output of such workers. Apparently, this surplus labour has been identified not because of further investment or rationalisation of activities but because the government has decided not to incur any further debt burdens.

A pertinent question to ask is why has this problem been allowed to grow and reach such gigantic proportions. Why are government entities mostly in the red? Some people point their fingers to EU rules and regulations; others to mismanagement of the enterprises. But the underlying reason appears to be political vested interests.

It is a well known secret that governments of every political shade used to employ people in state companies. Their employment was neither dependent on particular skills provided nor on personnel needs.

In many of the cases, the number of employees in such government entities increased substantially because the minister responsible needed their votes and so employed constituents to ensure his return to Parliament and to retain his ministerial position.

This argument must not be limited to government companies. Given the definition of surplus labour as applied to Malta, superfluous labour exists also in government departments. It is futile to concentrate one's energies in one sector when the problem pervades all government activities. It makes more sense to identify all surplus labour so that economic planning is tackled in a more comprehensive way and economic regeneration may be ensured.

It simply does not make any sense. Malta depends mostly on its human resources and yet these are not properly handled to maximise benefits derived therefrom. The unspoken tactic used to be to let sleeping dogs lie and then impose further taxation to make both ends meet. If this persists, it will become increasingly more difficult for Malta to really take off in those areas where it has a comparative advantage. There are many areas in the public sector where human resources are either engaged in unproductive activities or else are seriously underemployed.

The present government is conscious of these problems that were left in limbo for years. It appears determined to tackle this issue of surplus labour and it intends to solve it in the shortest possible time. What is clearly beneficial is that it intends to monitor the progress made.

Retraining surplus workers for labour to adjust to new work demands and endeavour to be efficient in one's economic activities are certainly good measures to take. At least now we appear to have taken up the correct approach to economic development and growth.

But economic regeneration can only come about if responsible people are flexible to respond to prevalent needs, have ideas that really make economic sense and are able to procure new investment opportunities through the existing channels that are available but not yet deployed.

The pre-Budget document is only a small start. Results have to be achieved in much shorter time-spans than that envisaged in the document.