I am not sure how to start this week’s contribution as I can start it off in so many ways.

I was thrilled to bits (and I am being exceedingly serious) with the interview by Mark Laurence Zammit (he is my namesake for two-thirds of his name as he once pointed out to me) with the Minister of Finance, Clyde Caruana.

Caruana was replying to an interview with the president of the Malta Developers Association, who claimed that the construction sector contributes significantly to Malta’s economy.

Anyone who knows me knows too well that I am not here to sing Caruana’s praises; even he knows it. However, his interview about the Maltese economy was so very refreshing. He rubbished the claim of the president of the Malta Developers Association and stated quite clearly how he would like to see the Maltese economy developing. It was not an economic vision, but the interview had enough substance to show what the vision is.

The interview was then followed up by an editorial in this newspaper, also taking to task the MDA president and further substantiated by a fact-check by the Times of Malta journalist Neville Borg.

I had claimed on July 15, 2022, and again on September 3, 2022, that the contribution of the construction sector to our economy is minimal and that the profit from that activity is being made by a few people. In fact, one cannot take the construction sector on its own as one needs to include the real estate sector as that is where the profits are being made − again at the cost of repeating myself − by the few. Michael Stivala had taken me to task for my claim.

I await with trepidation his response to the minister of finance.

However, the substance of the interview with Caruana goes beyond the headline of the Times of Malta article: ‘Economy must rest on everything except construction’.

Caruana stated that we need to expand those sectors that really contribute to our country’s economic growth. In other words, we must move up the value chain, that is we need more value added per employee.

This has been the mantra of successive ministers of finance and/or the economy since Independence in 1964, with no exception. It has been the mantra of all those chairpersons and CEOs who have led and lead the Malta Development Corporation and its successor, Malta Enterprise, again with no exception. And we have always managed. Think of those economic activities that were not present in this country 30 or 60 years ago. Think of the way the manufacturing sector has developed along the way, and these are just two examples.

We may debate whether one should give priority to this sector or that sector, but the principle remains the same – increase the value added per employee

We may debate whether one should give priority to this sector or that sector, but the principle remains the same – increase the value added per employee. That would indeed be a very healthy debate. I, for one, believe we have many opportunities in manufacturing, ICT, international education and financial services.

I have sought to compute the value added per employee by economic sector from data published by the National Statistics Office. I have made use of data on the gross value of each sector in volume terms (extracted from GDP data) and the distribution of employed persons by economic activity in the main occupation (extracted from the Labour Force Survey). I am aware that this is a very rudimentary approach, but it is still indicative.

Gross value added by employees in 2022 in the construction sector was €28,675. This was the second-worst-performing sector. Understandably, the worst-performing sector was public administration, but this sector should not be seen as a driver of the economy.

On the other hand, the real drivers have been the information and communication sector; the insurance and financial activities sector; and the professional, scientific, technical, administrative and support activities sector. Their respective gross value added per employee during 2022 was €98,317, €64,231 and €65,836, respectively.

The gross value added per employee in manufacturing and other industry is €35,278, while that of other services (which includes I-gaming) is €58,598. Agriculture and fisheries have a value added per employee of €68,532.

We come to the crux. The real estate activities sector has a value added per employee of €190,109 and employs 3,672 persons (including self-employed). This goes on to show that the very few are making a killing through their speculative activities thanks to all the other sectors which are the real drivers of the economy.

Yes, let us have a healthy debate on which sectors we wish to give priority to, but let us once and for all kill the myth that the future economic growth of our country depends on construction. To use Caruana’s words: “We must now become more quality oriented.”