The Malta Independent
I gain the impression that the parliamentary process for ratification of the EU membership treaty will just be another diversion from focussing on what the country really needs.
The government continues to present EU membership as some sort of miraculous cure to all our ills. The opposition, while accepting the will of the majority, is clearly on the look out to see if there is a legal case to test whether parts of the treaty offend the Constitution in those entrenched clauses requiring two-thirds parliamentary majority and in respect of which the referendum and the election result are ineffectual.
While these could be a matter of particular interest, none of it helps to address the real problems at source and any belief that these will be addressed by the mere adhesion to EU membership is quickly evaporating.
Whether we like it or not, with EU membership or without it, we have to compete and win in a globalised world if we are to maintain and enhance the standard of living and meet the growing aspirations of society. We have to do so whilst economic tools used in the past are either not available or have become quite ineffective.
Interest rate policy is no longer ours to influence the economy with, as we used to do in days of stiff exchange control regime. The Central Bank keeps cutting interest rates in sympathy with the decisions of` foreign central banks representing the currencies in the Lm rate of exchange basket. Fiscal policy needs tightening to come in line with Maastricht criteria for EMU membership even though real results do not match the stated intentions. This can only make future tightening that much more painful. Rate of exchange policy has not been an effective policy tool for the last 10 years and will become less so as we approach the fusion of the Lm into the Euro.
So solutions have to be addressed at source through economic re-structuring and no longer through intermediate policy tools. In particular we need to address the issue of how to make the country competitive again leading to attraction of` direct investment at a level much higher than we have seen in recent years.
This is what the country really needs. The EU decision can only help by bringing the stability of knowing what the rules of the game are. An improvement over the previous insecurity of not having the benefits of uncertain membership without enjoying the benefits of non-membership whilst we were officially on the road to membership.
The problem is that we do not have a road-map ( to use a suddenly popular phrase adopted in the Middle East peace plan) of how can we get there. We should at least make a national plan identifying the areas for which we have the natural characteristics to compete effectively.
In 1999 I published a book where I identified five areas which merit our focussing investment and development efforts. All these sectors cannot be dependant on competitive cost base but on the value we can add to the process. We just cannot compete on low wages and competitive costs with other candidate countries that are geographically better linked to the EU mainland, are starting from a much lower cost base and have economies of scale that, given our size, we can never have.
These sectors can only be developed if we accept that our only real competitive edge or point of distinction is our size and the intrinsic abilities of our human resources. So development must compulsorily involve huge investment in training and re-training of labour resources, increased efficiency in the use of such resources especially, but not only,` in the public sector, greater flexibility in our labour laws and adoption of the concept of life-long employability rather than life-long employment.
And none of this will come about by the simple adoption of early retirement schemes especially if the public sector indulges in the scandalous` habit of` paying huge sums for early retirement of its best able-bodies and than getting the same people through the back-door simply increasing` costs rather than efficiency.
I gain the impression that the parliamentary process for ratification of the EU membership treaty will just be another diversion from focussing on what the country really needs.
The government continues to present EU membership as some sort of miraculous cure to all our ills. The opposition, while accepting the will of the majority, is clearly on the look out to see if there is a legal case to test whether parts of the treaty offend the Constitution in those entrenched clauses requiring two-thirds parliamentary majority and in respect of which the referendum and the election result are ineffectual.
While these could be a matter of particular interest, none of it helps to address the real problems at source and any belief that these will be addressed by the mere adhesion to EU membership is quickly evaporating.
Whether we like it or not, with EU membership or without it, we have to compete and win in a globalised world if we are to maintain and enhance the standard of living and meet the growing aspirations of society. We have to do so whilst economic tools used in the past are either not available or have become quite ineffective.
Interest rate policy is no longer ours to influence the economy with, as we used to do in days of stiff exchange control regime. The Central Bank keeps cutting interest rates in sympathy with the decisions of` foreign central banks representing the currencies in the Lm rate of exchange basket. Fiscal policy needs tightening to come in line with Maastricht criteria for EMU membership even though real results do not match the stated intentions. This can only make future tightening that much more painful. Rate of exchange policy has not been an effective policy tool for the last 10 years and will become less so as we approach the fusion of the Lm into the Euro.
So solutions have to be addressed at source through economic re-structuring and no longer through intermediate policy tools. In particular we need to address the issue of how to make the country competitive again leading to attraction of` direct investment at a level much higher than we have seen in recent years.
This is what the country really needs. The EU decision can only help by bringing the stability of knowing what the rules of the game are. An improvement over the previous insecurity of not having the benefits of uncertain membership without enjoying the benefits of non-membership whilst we were officially on the road to membership.
The problem is that we do not have a road-map ( to use a suddenly popular phrase adopted in the Middle East peace plan) of how can we get there. We should at least make a national plan identifying the areas for which we have the natural characteristics to compete effectively.
In 1999 I published a book where I identified five areas which merit our focussing investment and development efforts. All these sectors cannot be dependant on competitive cost base but on the value we can add to the process. We just cannot compete on low wages and competitive costs with other candidate countries that are geographically better linked to the EU mainland, are starting from a much lower cost base and have economies of scale that, given our size, we can never have.
These sectors can only be developed if we accept that our only real competitive edge or point of distinction is our size and the intrinsic abilities of our human resources. So development must compulsorily involve huge investment in training and re-training of labour resources, increased efficiency in the use of such resources especially, but not only,` in the public sector, greater flexibility in our labour laws and adoption of the concept of life-long employability rather than life-long employment.
And none of this will come about by the simple adoption of early retirement schemes especially if the public sector indulges in the scandalous` habit of` paying huge sums for early retirement of its best able-bodies and than getting the same people through the back-door simply increasing` costs rather than efficiency.
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