A survey of the Malta Chamber of Commerce highlighted that 77 per cent of businesses reported having trouble finding workers, of varying skills, with operations being negatively affected as a result.

Sixty-one per cent stated that hiring challenges are limiting their company’s ability to operate at full capacity. This newspaper reported that Malta’s businesses are currently grappling with a staffing crisis as a result of a large number of foreigners leaving the island because of the pandemic.

A number of questions arise when trying to understand the implications of this data. Part of the answer is provided by the survey data itself. When respondents were asked why they believed foreign employees were leaving the country, 64 per cent said that their staff were looking for higher salaries. Having kept employees on their books for the last 15 months, in spite of much reduced revenues, many employers can ill-afford such wage increases.

On the other hand, this does not mean that most employers wish to continue to rely on non-Maltese workers as a source of cheap labour. Some have, and these are the usual known sectors. However, in manufacturing and certain services sectors, the reliance on foreign labour was due to the simple lack of availability of Maltese workers.

Additionally one needs to remember that non-Maltese workers have been charged exorbitant (and even extortionate) rents for substandard properties, which has made it very difficult for them to make it to the end of the month. So, yes property speculators have managed to kill the goose that laid their golden egg. The impact is not just on them but also on those sectors that create the real wealth in this country.

Gaining competitive advantage on the basis of low prices and low wages is a race to the bottom and not a race to the top

As I wrote, this expectation for higher salaries provides only a part of the answer. We also need to keep in mind the level of public sector employment. In certain areas the public sector needed and still needs to take on more staff, such as in the health sector and the care for the elderly sector.

Then there are other areas, where the public sector has crowded out the private sector and absorbed a large number of Maltese workers. This has a two-pronged effect. First, it increased significantly the wage bill of the public sector (possibly unnecessarily). Second, it increased costs for the private sector who would have needed to pay higher salaries to hang on to their employees.

As we prepare for the 2021 budget, each entity in the public sector needs to make a serious professional assessment as to whether it really requires all the employees it currently has on its books to deliver on its expected outcomes. Put in another way, has productivity increased or decreased with the increase in employment in the public sector?

A third part of the answer may lie with the private sector itself. Have we used well this lull in activity caused by the pandemic to have a thorough and objective view of our operations to remove any inefficiencies? Has the wage subsidy provided by government given us a sense of false security such that we were not keen to make our operations more efficient?

Are we simply assuming that we will go back to the way we were or have we tried to evolve? Are private sector employers hoarding jobs?

There is a fourth element to consider, which is whether the staff shortages are due to a lack of applications or due to a lack of skills on the part of the applicants. My direct experience in advising employers in their recruitment efforts indicates that the answer is a bit of both. This takes us back to the issue as to whether our youth have the appropriate skills to take up employment.

I strongly believe that the staff shortages that employers are experiencing may be a blessing in disguise because it should be challenging us to think strategically about the direction which the Maltese economy should take. I support the view that Malta’s future prosperity depends on our ability to move up the value chain. Gaining competitive advantage on the basis of low prices and low wages is a race to the bottom and not a race to the top.