When the political scene is dominated by new revelations by a consortium of investigative journalists as part of the Daphne Project and, also, by the highly-controversial amendments proposed by the government to the IVF law, new labour cost figures are hardly likely to raise any particular interest.
Yet, the figures, just published by the European Union’s statistics agency, Eurostat, merit far more than just a glance because they raise important issues. Two figures for Malta stand out: the hourly labour cost, given at €13.8, and the non-wage cost: 6.7 per cent of the total cost. At 6.7 per cent, the non-wage cost is the lowest in the EU. To put the figure in the right perspective, the share of non-wage cost in the whole economy was 24 per cent in the EU and 25.9 per cent in the euro area.
The Chamber of Commerce, Enterprise and Industry disagreed with the non-wage cost figure given for Malta, arguing that labour cost figures must include all factors contributing to non-wage expenses, such as mandatory statutory bonuses paid by employers, the contributions to the maternity leave trust fund, national insurance and “other costs that did not render productivity”.
Another strong point made by the Chamber is that Malta has the highest number of paid vacation days among all EU members. The island has 39 paid vacation days when taking into account both vacation leave and public holidays, when the average across the EU is 32.5 days.
Furthermore, the Chamber argues that, according to the labour force survey conducted by the National Statistics Office, the contributions paid on the average private sector salary amounted to 12.5 per cent, considerably higher than the 6.7 per cent of the total cost given by Eurostat.
However, even at 12.5 per cent, non-wage labour costs are still low compared with those in other EU countries. In fact, according to the Eurostat figures, they are the second lowest, after those in Luxembourg (11.9 per cent).
This newspaper has often sympathised with concerns expressed by employers over time on the need for Malta to remain competitive. These new figures provide a new twist to the employers’ arguments because they give a clearer, deeper insight into the country’s overall labour costs.
The other important figure for Malta, the hourly labour cost, is even more intriguing, especially at a time of booming economic conditions. Even though this increased by two per cent last year over 2016, at €13.8, the hourly rate is half the average in the EU. The average hourly labour costs in the whole economy, excluding agriculture and public administration, were estimated last year at €26.8 in the EU and €30.3 in the euro area.
Malta’s hourly labour rate is therefore still very low. Over and above the fact that the rate is not uniform among all the economic sectors, there is then the other known fact that the rate in some other sectors, especially construction, is considerably lower.
The figures raise critical issues. They suggest that key economic sectors are either depending on very low costs for their sustainability and survival, or, alternatively, it may well be argued that they are exploiting labour. Deeper analysis of the Eurostat figures is warranted to clarify the situation. Exploited employees are not likely to be loyal and committed workers.
This is a Times of Malta print editorial
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