Times of Malta 17 July 2017
Malta’s economy is characterised by uneven employment realities. On the one hand, Malta is top European performer on a macro-level, with the third lowest unemployment rate in the EU and with a consistently growing economy.
On the other hand there are quite a lot of working-age persons who do not form part of the labour market. According to Eurostat around 31 per cent of Malta’s working-age population is economically inactive, which is on the European high side and above the average rate of 27 per cent. Around 7,000 young persons are not registering for employment nor attending educational facilities.
This could be happening for a variety of cultural, social and economic reasons. Qualitative and quantitive social-scientific evidence is imperative to assist policymakers to understand the situations, motivations and reasons for this.
Then there are many workers who are experiencing hard times. This does not only include those who receive the minimum wage, which is subject to increases in the coming years. It also includes others who are finding it increasingly difficult to make ends meet and who experience bad work conditions.
In this regard, it is interesting to note that around 35,000 foreign workers are employed in Malta, and these account for much of the increase in workers in the country. Some are employed in high-paying legitimate jobs, for example in Malta’s financial and gaming sectors. Others perform a wide range of regular jobs in various sectors and at various levels. But it is quite clear that others are employed for purely exploitative reasons, resulting in a depression of wages in their respective sectors.
Something else to note is that Jobs Plus recently reported that it caught 3,500 workers working illegally, and that 1,105 persons were removed from the unemployment register as they were abusing the system. It would be interesting to commission studies to verify why persons may be working illegally. For example, do the Maltese authorities have data on persons working in quasi slavery conditions?
Which takes us to the underground economy. In 2013 economist Friedrich Schneider carried out a study of 31 European and five other OECD countries which showed that Malta’s underground economy accounted for 25 per cent of the GDP, which is higher than the EU average of 18 per cent.
Applied to the world of work, the underground economy may create risks for workers in terms of health and safety, lack of security, bad work conditions and lack of stability.
But there may be other reasons related to the underground economy. Some persons might voluntarily choose to go underground to evade taxes, some may wish to avoid bureaucratic hurdles related to occasional jobs, community-oriented initiatives and other matters. Going underground might also incentivise a degree of creativity in start-ups before they take the plunge and officially register themselves.
The government should ensure that workers who are experiencing bad working conditions, whether through regular or irregular employment, are protected.
How can this be done? In some cases, workers can benefit through the formalisation of their economic activities through incentives. These may include lower taxes and bureaucratic simplification.
The government can also increase educational and outreach initiatives that encourage voluntary commitment, self-regulation and trust in formal registration of work.
Some reforms have already taken place in Malta. For example, workers in private companies providing jobs for public services are receiving the same wage, otherwise the companies would not be eligible to tender their offers. Public sector tenders also include various obligations, for example on limits of subcontracting works, minimum hourly rates to workers and so forth.
But government should also ensure that exploited workers who want to report their experiences trust authorities and do not fear repercussions for speaking up. More work inspectors should be employed, and random inspections should increase.
Malta’s uneven labour market clearly informs us that equality is not only about liberal legislation such as equal marriage and LGBITQ rights. Equality is also about ensuring that workers in the labour market get equal pay for equal work, equal opportunities and equal worth in terms of the policy process.
