Most businesses claim that one of their most valuable assets that do not feature on their balance sheets is human resources. Scrutiny to establish how truthful this assertion is will quickly reveal that many businesses treat human resources as a commodity that should be sourced at the lowest price as and when required.
The construction industry is already notorious for this approach to employment, whether this is by the book or off the books. So far, it has steamed ahead despite the effects of the pandemic.
However, the last several months have revealed the vulnerability of at least two other sectors of the economy that are equally labour intensive. Earlier this year, the public health system saw an exodus of critically important healthcare workers who left Malta because they found better opportunities in other EU countries, especially the UK.
And now that tourism has slowly started to pick up, restaurant and hotel owners are clamouring for more taxpayers’ support because their low-paid workers have left the country and found better employment opportunities. They argue that, unless public support is given, their business could fail.
The policy of treating workers as a commodity comes with undeniable risks. Importing nurses and other healthcare workers from low-cost countries like India and the Philippines can help resolve short-term staffing levels in the public health system. But it will never be a good strategy for a sustainable healthcare system that the public rightly expects.
The Minister for Tourism and the chairman of the Malta Tourism Authority frequently sing the praises of their adopted strategy of upgrading our tourism model. The reality is that this industry still depends on low-skilled, low-paid, mainly foreign workers who have to cope and survive with precarious work conditions. Admittedly, this is not just a local problem.
The laissez-faire policies adopted by many developed countries mean that a large underclass of low-skilled workers has to put up with the endemic conditions in the famously volatile tourism industry: low wages, tense workplaces, grinding hours, little vacation time and unpredictable scheduling. Many low-paid workers even accept to work in the submerged economy to maximise their take-home pay. It is no surprise that Malta has one of the biggest submerged economies in the EU.
Restaurant operators are now complaining about ‘poaching’ by competitors who understand the economic dynamics of the labour market. They clamour for a reduction in VAT, which would mean that taxpayers would be asked to bail out enterprises that would be considered insolvent if it were not for taxpayer support.
One can hardly deny that the injection of millions of euros into the economy in the last several months has saved many jobs and helped the country to avoid a deep depression. But it must also be acknowledged that the strategy of economic growth based on massive importation of low-cost labour, a tourism industry that is mainly interested in high turnover and low return and a skills deficiency due to an underperforming educational system is not conducive to a sustainable and fair economy.
Government and business leaders need to look at enhancing investment in human capital to build a fairer society instead of seeking quick returns at minimum financial cost. Tourism, the building industry and the public health sector have underinvested in human capital for the last few decades.
We need to adopt long-term strategies to improve people’s skills, boost the basic income of workers and have more sustainable business models for critical labour-intensive industries like tourism and public health.
It is time to stop treating workers as a commodity.