The Public Servant: A ‘New Economic Model’ For Malta? Less Talk, More Action

Our country is unusually united in the collective mantra of establishing a “new economic model” to end our dependence on the cocktail of cheap foreign labour, low corporate tax for foreign-owned companies, mass tourism, construction, and gambling.

What has made this call for a new economic model more of a red herring, however, is the way this line has been repeatedly coopted by both sides of the political spectrum and the business community without substantial plans or action to bring it to life.

Finance Minister Clyde Caruana, one of the architects of our current economic model buckling under its own weight, warns of potential population growth to 800,000 by 2040 if we do not “reinvent” said economic model (stopping there). Imagine he actually had the power to do this!

The Opposition urges a shift from quantity to quality, proposing that the solution lies in the metaverse and digital games, among eight other economic sectors. These ideas somewhat overlook workforce realities, what to do about construction and mass tourism, and the 100,000- or-so foreign workers living in Malta.

Some industry figures talk a good game on ESG and sustainability but revert to their priority expectations of no-limits growth and consecutive record-breaking economic figures whenever these are released. Business leaders with a genuine interest in the common good, meanwhile, express disillusionment with the degeneration of existing advisory bodies, such as the MCESD, into ineffective talking shops.

The cause of this inertia is quite simple. Nobody has yet had the courage to take the first step towards disrupting the status quo, out of fear of losing out on votes, patronage, and profit.

We must ask ourselves: Are we willing to take short-term pain to secure a better future? The task of creating a new economic model is bigger than any individual, party, or election. It requires a bipartisan effort that gives Malta a modern, sustainable, and coherent strategy.

It must survive changes in government, harness the unique qualities of our people, geography, and history, and be responsive to changes in the international business environment.

We therefore need an inclusive process that brings together representatives of the Government, Opposition, public entities, social partners, academics, and the country’s youth, on a National Economic Council appointed to gather evidence-based solutions and draw up a strategic long-term plan with actionable measures for Government to implement.

This Council would replace failing advisory bodies, establishing a deliberate and innovative policy planning structure with its first set of deliverables leading to the implementation of a new economic model for Malta.

While I certainly do not have all the answers, the Council should address questions like:

• How can we develop a strategy for building on existing success stories, opening up untapped high value- added sectors, and improving underperforming ones? How can we harness our geostrategic dynamics in sectors such as energy, blue economy, aviation, maritime services, and logistics?

•  Which sectors require urgent regulatory reform? Obvious contenders here are construction and planning, employment agencies, and tourism.

• How can we make education a central pillar of our economic model to support the creation of new industries and ensure that our people not only have the hard and soft skills required to succeed in them, but also better awareness of how their career choices can bring a positive social and environmental impact?

• What are Malta’s environmental and infrastructural carrying capacities?

• Can we reduce the reliance on cheap foreign labour in certain sectors, such as retail, tourism, and hospitality, by raising the national minimum wage and providing incentives to Maltese workers to return to them? How can we help businesses restructure their systems and operations into a more sustainable model that is less reliant on cheap foreign labour but that will yield similar long-term growth?

• Is it time to level the playing field for local businesses by reducing the gap in Corporate Tax to that effectively paid by foreign-owned companies?

• How can we improve working and living conditions for third-country nationals performing menial and unskilled jobs that Maltese have outgrown to tackle ghettoisation, enhance their sense of belonging, and boost employee retention and productivity? How can we eliminate exploitation by recruitment agencies and human traffickers?

• Can we draw on the experience of other countries such as New Zealand in implementing an alternative measure to Gross Domestic Product as the primary index for economic policy planning, evaluation, and benchmarking?

Turning to bipartisanship to address crises of national urgency is what leadership is about. In the midst of the Great Depression, US President Franklin D. Roosevelt established the Committee on Economic Security. Within a year, the Committee’s comprehensive recommendations formed the basis for the landmark Social Security Act 1935, which created the social security system and unemployment insurance.

It’s time our elected officials and business leaders showed the same unity and magnanimity in charting a new path for Malta.

The Public Servant is a new Lovin Malta series aiming to make Malta better. Having verified their credentials, Lovin Malta has agreed to keep this individual’s identity concealed.