Our frail econ­omy

Malta Independent - - NEWS -

As the gov­ern­ment pulls out all stops to pro­claim how good the econ­omy is, and this is then for­ti­fied by credit rat­ing agen­cies and the Euro­pean Com­mis­sion, it would be prof­itable to stop and re­flect be­yond the mere head­lines.

We do have sus­tained growth in our econ­omy and we do have the least un­em­ployed in many years. Our growth rate has sur­passed that of many other Euro­pean coun­tries.

But we are still among the poorer or not so poorer coun­tries in Europe and we are by no means among the rich coun­tries. Our GDP may have risen over the past years but it is still not com­pa­ra­ble to that of the richer coun­tries in the EU. Fur­ther de­tails may be ob­tained from the com­pared fig­ures es­pe­cially from in­ter­na­tional sources of in­for­ma­tion.

Our econ­omy may have been get­ting bet­ter, but the rate of growth will not get us to a level com­pa­ra­ble to that of bet­ter coun­tries in Europe. If we look back at the years since EU ac­ces­sion, we can see how we have im­proved but we can also see how long it will take us to move up in the scales.

We say it is still a frail econ­omy since there has not been any sus­tain­able im­prove­ment in the

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ba­sics and it is still strug­gling to im­prove.

Our eco­nomic growth, even the gov­ern­ment ad­mits this, is due mainly to the fact that we have al­lowed so many thou­sands of for­eign work­ers in and these have kept wage in­creases down.

One must also add the hefty EU funds which have helped no end to im­prove Malta, es­pe­cially as re­gards roads, etc. With­out these funds, Malta would be im­pres­sively poorer or would have to fork out the money by it­self, thus risk­ing its fi­nan­cial sit­u­a­tion.

The gov­ern­ment makes a big deal about the low num­bers of the un­em­ployed, and this is a good de­vel­op­ment, as is the ac­com­pa­ny­ing phe­nom­e­non of many women join­ing the labour force be­cause of child care cen­tres of­fered by the gov­ern­ment.

But, un­der­stand­ably, those who have joined the labour force are work­ing at the low­est level of em­ploy­ment. While this is a good de­vel­op­ment, we need far more than this to push growth and the econ­omy up­wards.

There are still a num­ber of ob­sta­cles on the way to real growth, still many ar­eas im­ped­ing real com­pet­i­tive­ness and pro­duc­tiv­ity. While we do have a num­ber of high-fliers, we also have many peo­ple op­er­at­ing a low tech­nol­ogy base.

We also have a num­ber of poor peo­ple. One may dis­cuss whether this is on the wane or on the in­crease, but it is an in­dis­putable fact that this percentage of our pop­u­la­tion is be­low what we could call the poverty line.

To con­clude, we may de­vote some space to the sit­u­a­tion of pen­sion­ers. The Prime Min­is­ter spoke on this sub­ject on Sun­day and de­clared that his gov­ern­ment will never ac­cept the sec­ond pil­lar form of pen­sions. Now this is quite sur­pris­ing, given that the sec­ond pil­lar is favoured the world over. Dr Mus­cat based his ob­jec­tion on the fact that to pay for this sec­ond pil­lar would re­quire the em­ployed, and the em­ploy­ers, an ad­di­tional out­lay each year.

Iron­i­cally, in the same speech, Dr Mus­cat dis­agreed with a per­son who ob­jected to pay­ing a €2,500 fine on a €200,000 house. With the same rea­son­ing, he should have agreed with pay­ing an ad­di­tional sum so as to get a higher pension later on in life.

And that is the right way for­ward, un­less we are to go on and await with anx­i­ety the Bud­get Speech of each year to see what the gov­ern­ment in its bounty has agreed to dole out to the pen­sion­ers.

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