Almost all the European states have been beset by the influx of foreign workers in their domestic labour market. Statistics show that the Maltese economy has also fallen prey to this phenomenon.
Figures given to a parliamentary question, as reported in the Times of Malta (June 27, 2018), revealed that the number of foreign workers in Malta is 43,071, of whom 30,564 are EU nationals while 12,407 are third-country nationals. The gainfully occupied population for the April-June 2018 quarter, as reported in the NSO News Release of September 13, 2018, was 203,633. This means that about one-fifth of people active in the Maltese labour market are foreigners.
There seems to be a number of Maltese who are concerned about this influx as they contend that it causes job displacement – in the sense that non-nationals are recruited to jobs previously held by local workers. According to this belief, these foreign workers are substituting, rather than complementing, the locals in the labour market.
A corollary to this view prevails that the vulnerable position of some of these foreigners in the labour market has been the cause of an overall decline in the legally prescribed standards related to the practices at the workplace. Wage setting can also be affected as these non-nationals, by being forced to accept low pay – sometimes alleged to be below the statutory minimum standards – tend to create a lower floor of payment, which in one way or another adversely affects the wages of those employed in low-paid jobs.
Of course, these widely held views are highly contentious as they tend to be sustained by anecdotal rather than hard evidence. What makes the issue of job replacement and downward pressure on wages complex and highly contentious is the subtle process in the economic sector that brought about two extreme poles of the work situation.
A policy that combines a commitment to labour market openness and effective standard setting is probably the most appropriate policy to address the issue of labour migration
On one scale there is a relatively higher demand for well-paid and lucrative jobs, in contrast with the other scale, which is characterised by low-paid and precarious jobs. The recruitment of workers in these two disparate types of work have created a dual labour market comprising two highly differentiated and extreme forms of employment conditions and practices. Non-national workers are to be found in both types of work, although the presence of EU nationals in the first scale far outnumbers that of the third-country nationals.
In spite of their disparity as regards conditions of work and payment there seems to be a common thread running along these two categories of foreign workers. This is the transient nature of their stay in Malta.
According to a study conducted by the Central Bank of Malta, the average length of stay of foreign workers is 3.5 years, relatively unchanged since 2012. Only 30 per cent remained engaged in the Maltese labour market more than six years after their first employment. This itinerant form of worker has become a characteristic feature of the globalised economy.
The openness of the labour market with the right balance or mix of standardisation and flexibility chime well with the transient and itinerant nature of these workers. Labour has somehow shown the same tendency of capital of giving in easily to external pressures and in the process become more mobile. This mobility gives an added value to their skills and knowledge as it enables these workers to fine-tune their skills and knowledge and adapt better to the exigencies of the digitalised economy of this post-industrial society.
The intrepidity of these workers is in line with the top priority of a government which is continuously striving to increase competitiveness by supporting knowledge-based business development.
Improving the supply of highly-skilled labour is a central aspect of economic policy. However, the domestic market by itself may not be able to supply the right type of human capital. Recruiting workers from elsewhere may be the only option to avoid skill shortages in important sectors such as information and communication technology or business services.
Probably Malta is not the only European country with a mismatch between the supply and demand for labour. Investment in knowledge-based business, which tends to have high added value, has become a high priority among policymakers aiming at sustaining the competitiveness of the economy of their country. The search for labour that matches this new demand is likely to persist for many years to come.
The ambivalences and concerns prevailing among the public at large about the foreign workers entering their domestic labour market have to be viewed within the context of this transience and itinerancy of work.
Most national governments of the EU member states have adopted a cautious approach as they believe that any distant move from the principle of labour market openness would be politically precarious as it would tamper with the core values of the EU. A policy that combines a commitment to labour market openness and effective standard setting is probably the most appropriate policy to address the issue of labour migration.
Saviour Rizzo is a former director of the Centre for Labour Studies at the University of Malta.
This is a Times of Malta print opinion piece
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