The Economic Survey for 2016, which the government published with the budget, has been a reality check on what is happening to the wages of average people, the real economy in people’s pockets, because economic totals inflated by the increase in population have to be related to real individuals and families for a proper debate on where this country needs to be going.
A study on pages 100-108 of the Economic Survey shows the developments in average wage rates based on collective agreements lodged with the government itself. It takes two points in time, August 2015 and August 2016, and checks out the difference in wage rates between the two, adding on the €1.75 increase the government gave last year. The study is based on a representative sample of collective agreements and a very large sample at that: 200 collective agreements covering 30,000 employees.
This study makes very salutary reading for those who want the economy to be about people. A large swathe of private sector workers have seen their wages stagnate or fall in real terms because increases in their wages in the year to last August did not keep up with the official rate of inflation.
This is the official inflation rate, not the rate found by Caritas in its study on the much higher inflation rate faced by lower income groups. Furthermore, the study is based on unionised employees covered by collective agreements, not the nonunionised employees who benefit only by the minimum increase set by the government. And this study is about the latest 12 months, while we have Eurostat data showing average wages in Malta falling in real terms over the previous two years.
What real workers are experiencing, according to the government’s own study of a large and representative sample of collective agreements, should give us pause for thought. We need to reflect on the increasing separation – after not even four years of a ‘new’ government – between an élite that has grown very much used to the trappings of its utter abuse of power and what is happening at shop floor level in real wages.
What has happened in the last three years is that no new economic sectors have been created that produce, export or sell services to foreigners and can thus pay the kind of wages to which a modern European nation aspires.
The government is resting on the laurels of others: the new sectors it inherited and which are now the main contributors to our economic growth; gaming, aviation and financial services most particularly. But the economy is much like a bicycle: you won’t get far without your fair share of pedalling, however much momentum you enjoy at any particular point in time.
After almost four years in power, this government has not even started talking about – let alone planning – the new sectors we need to attract to Malta to provide good jobs for the students we have right now in secondary schools and who will be working in just a few years’ time. What quality and sustainably long-term industries are we attracting to Malta if we don’t want to condemn our young people to a lifetime of low-paid work?
It’s true that the government has been selling off the energy and health infrastructure it inherited, earning one-off revenues. It is also true that the government has been reversing a 25-year trend and has increased the public sector workforce by 3,000, which again inflates employment and total wage figures. And it is true that the government is reverting to property as a pump-priming measure. But these are not longterm and sustainable measures that create new, private, productive, sustainable economic sectors to provide the quality leap our economy constantly needs.
In our two pre-budget documents and in the discussionpaper for our new economic vision ‘An Economy for the People’, we talk about the quality economy we need to keep building if we want to provide a better standard of living to all: Malta as a global investment district and a regional logistics hub, professional clusters, science and technology for the research and innovation we need, fintech (financial technology), quality niches in our manufacturing sector, the social enterprise sector, branding our economy as ‘Trusted Malta’, among many proposals.
In the next few months, my Party will be explaining our vision for an economy that works for everyone, rather than for an élite that has suddenly been found out. It is only by focusing on real Maltese and real, higher, sustainable incomes that we can all succeed together.
What has happened in the last three years is that no new economic sectors have been created which produce, export, sell services to foreigners and can thus pay the kind of wages a modern European nation aspires to It’s only by focusing on real Maltese and real, higher, sustainable incomes that we can succeed together