The Malta Independent on Sunday
Saying that the economy
has problems is indeed an understatement. The Italians probably have the right
saying to describe the state we are in. After long years of coming up with
temporary skin deep solutions to problems that were left to fester underneath,
it is now clear that “il nodo é arrivato al pettine”.
As if we needed any confirmation that we are fast losing our global
competitiveness, this week we had confirmation of what was clearly in the air
for some time but one doesn’t believe it until it happens. Our premier
manufacturing concern, ST Microelectronics that provides a living to 2,400 of
the most productive employees among us, is demanding remuneration cuts in the 20
per cent region in order to restore competitiveness compared to their
Singapore
NowSingapore Third World country. I can
understand that we are more expensive compared to
Morocco Malaysia Singapore
The economy is under great stress and there is no comfort that can be had from the influx of new investment. As countries upgrade their economy it is quite normal that some units become uncompetitive, dwindle or close. But normally these would be more than compensated by new openings created through new investment that delivers higher value added through knowledge and technology, making the increased cost of operations sustainable through gains in productivity.
With new investment nowhere in sight we have to do our utmost to preserve what we already have. And the realities of the global economy are putting us between a rock and a hard place. To restore our global competitiveness we have either to see our most productive workers accept lower take-home pay in double digit order, or we have to consider a downward re-adjustment to the value of the rate of exchange.
In layman’s language, we either take unpleasant macro-economic measures so that the stress of adjustment is shared across the board or we allow the burden to be carried entirely by our most productive workers. No easy choice, really! It has to be one of the lesser evils. But if we allow the burden to be carried entirely by those who work hardest and produce most, than we would really be sending the wrong signals as to which way economic re-structuring has to go.
The government’s reaction to this economic morass is one of helplessness. Rather than seek to promote measures which could immediately restore our international competitiveness and then work out painful but unavoidable re-structuring, the government’s reply comes in two strange and probably ineffective streaks.
The first strange reply is that the government is marshalling its main spokesmen and friendly media to acknowledge the problems and, without offering any specific solutions, blame them on Labour.
With what cheek or imagination can a government in office for 16 years that lands the country in this well-baked economic mess blame it on the opposition is really beyond comprehension. Arguing that Labour’s street protest will compound problems and, using ultra-flexible logic to conclude that therefore Labour are to blame for the economic hardship because they are taking to the streets rather than offering solutions, is an insult to our intelligence.
It is not only right but certainly to be expected that unions and the opposition show their disapproval of the government’s lethargic economic management by public peaceful demonstrations. At least hopefully this could serve to shake some life back into the government. Or does the government expect us to suffer in silence?
The other strange streak in the government’s reply to the deepening crisis, is that the main actors are more interested in getting away from the line of fire rather than showing they have what it takes to take the problem in hand and marshal a solution. Persistent and engineered leakages about the Prime Minister’s reported intention to quit shortly cannot but deliver the message that he has no fire left in his belly to captain the team tasked with reversing the dire consequences of easy, consistent, politically-expedient but economically expensive escapism.
The failure of the Minister of Finance and Economic Services to try and seek concessions from all sides to put together an urgent package to stem the economic haemorrhage, indicates more interest to see which ministry best meets his future aspirations rather than to focus energies to address his current prime and direct responsibilities.
The consequences of this economic neglect will mean hardship on the population at large. So the opposition, while fully entitled to organise protests and lay the blame entirely at the government’s door, must neither expect that street protest on their own could lead to any solution nor uphold that it is logical or in anybody’s interest to blame this economic sclerosis on EU membership.
Let there be no doubt. The blame for the sorry state we are in is entirely attributed to the government’s political opportunism over a long number of years in acquiring electoral popularity at the expense of our international competitiveness. Adding two weeks of holidays every year can make you popular but it does not help enhance productivity and attract investment. Giving generous terms and conditions to the least productive in the public service and creating a multitude of authorities and corporations at the fringes of the public service enjoying private sector pay at public sector levels of efficiency, obviously helps garner votes of favouritism but drives gaping holes in public finances which have to be filled with debt or taxation.
Blaming this economic mess on EU membership can only help to absolve or lighten the government’s fault in the public’s view and increase the perceived ambivalence of the opposition regarding this issue.
The truth is that the future is ours and it is up to us what we make of it. We have manufactured this mess on our own and no-one is going to solve it for us, not even the EU. Hopefully the EU could provide the discipline to ensure we abandon the escapism and focus on the real issues, no matter how distasteful they are.
Now
The economy is under great stress and there is no comfort that can be had from the influx of new investment. As countries upgrade their economy it is quite normal that some units become uncompetitive, dwindle or close. But normally these would be more than compensated by new openings created through new investment that delivers higher value added through knowledge and technology, making the increased cost of operations sustainable through gains in productivity.
With new investment nowhere in sight we have to do our utmost to preserve what we already have. And the realities of the global economy are putting us between a rock and a hard place. To restore our global competitiveness we have either to see our most productive workers accept lower take-home pay in double digit order, or we have to consider a downward re-adjustment to the value of the rate of exchange.
In layman’s language, we either take unpleasant macro-economic measures so that the stress of adjustment is shared across the board or we allow the burden to be carried entirely by our most productive workers. No easy choice, really! It has to be one of the lesser evils. But if we allow the burden to be carried entirely by those who work hardest and produce most, than we would really be sending the wrong signals as to which way economic re-structuring has to go.
The government’s reaction to this economic morass is one of helplessness. Rather than seek to promote measures which could immediately restore our international competitiveness and then work out painful but unavoidable re-structuring, the government’s reply comes in two strange and probably ineffective streaks.
The first strange reply is that the government is marshalling its main spokesmen and friendly media to acknowledge the problems and, without offering any specific solutions, blame them on Labour.
With what cheek or imagination can a government in office for 16 years that lands the country in this well-baked economic mess blame it on the opposition is really beyond comprehension. Arguing that Labour’s street protest will compound problems and, using ultra-flexible logic to conclude that therefore Labour are to blame for the economic hardship because they are taking to the streets rather than offering solutions, is an insult to our intelligence.
It is not only right but certainly to be expected that unions and the opposition show their disapproval of the government’s lethargic economic management by public peaceful demonstrations. At least hopefully this could serve to shake some life back into the government. Or does the government expect us to suffer in silence?
The other strange streak in the government’s reply to the deepening crisis, is that the main actors are more interested in getting away from the line of fire rather than showing they have what it takes to take the problem in hand and marshal a solution. Persistent and engineered leakages about the Prime Minister’s reported intention to quit shortly cannot but deliver the message that he has no fire left in his belly to captain the team tasked with reversing the dire consequences of easy, consistent, politically-expedient but economically expensive escapism.
The failure of the Minister of Finance and Economic Services to try and seek concessions from all sides to put together an urgent package to stem the economic haemorrhage, indicates more interest to see which ministry best meets his future aspirations rather than to focus energies to address his current prime and direct responsibilities.
The consequences of this economic neglect will mean hardship on the population at large. So the opposition, while fully entitled to organise protests and lay the blame entirely at the government’s door, must neither expect that street protest on their own could lead to any solution nor uphold that it is logical or in anybody’s interest to blame this economic sclerosis on EU membership.
Let there be no doubt. The blame for the sorry state we are in is entirely attributed to the government’s political opportunism over a long number of years in acquiring electoral popularity at the expense of our international competitiveness. Adding two weeks of holidays every year can make you popular but it does not help enhance productivity and attract investment. Giving generous terms and conditions to the least productive in the public service and creating a multitude of authorities and corporations at the fringes of the public service enjoying private sector pay at public sector levels of efficiency, obviously helps garner votes of favouritism but drives gaping holes in public finances which have to be filled with debt or taxation.
Blaming this economic mess on EU membership can only help to absolve or lighten the government’s fault in the public’s view and increase the perceived ambivalence of the opposition regarding this issue.
The truth is that the future is ours and it is up to us what we make of it. We have manufactured this mess on our own and no-one is going to solve it for us, not even the EU. Hopefully the EU could provide the discipline to ensure we abandon the escapism and focus on the real issues, no matter how distasteful they are.
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