Easing the Pain

29^th June 2007
The Malta Independent - Friday Wisdom

Economists can bring all the arguments in the world to explain that factory closures are a necessary link in the chain of restructuring. But for employees involved in the loss of jobs they have excelled at for who knows how many years, this would probably add to rather than ease their pain.

Yet individual pain and trauma apart, it is undeniable that our country can only progress if we shed the jobs we are no longer competitive in and create new ones with which we can compete and win in the global economy, permitting higher value added and better wages in order to keep moving up the ladder of development.

It may surprise many but even China, which has displaced so many manufacturing jobs in the western world and shifted them to the east, is already going through the same process as its currency starts to harden, reflecting the country’s development and efficiency gains, and making low scale jobs more competitive in Vietnam than in Beijing.

Our challenge is to identify and promote the economic sectors where we can effectively compete, and work at it with a singularity of purpose to create more jobs than those lost in the expired sectors, offering minimum frictional pain to those transitting from one job to another and opportunities to new entrants in the job market.

My worry is that without proper programmes to upgrade the skills of those who have lost their job to place them into a better job with the least delay, these people will find jobs in the consumption side of the economy. It is worrying that if we continue to exchange productive jobs in the export sector for jobs in the domestic consumption sector, the end result will be fewer exports and more imports, causing stress to the already heavy strain on our balance of payments.

The only way we can ease the pain of those involved in the job loss trauma is in the organisation of training schemes that could see them re-skilled to qualify for export-oriented jobs. While the Employment and Training Corporation is doing much to help in this regard, the pain of those involved is intensified by the discrimination prevalent in the job market.

Those involved in the productive export market, or in tourism – which is an invisible export – know that their job security is as reliable as the weather. Sharp movements in rates of exchange, political developments in far away countries, or mere technological innovation is all it takes for an employer to uproot himself and transfer to a lower cost location, if not abandoning an economic activity altogether.

In spite of all the good intentions of private employers, and some of them are indeed model employers, in the end they are in business to make money and if they can’t make money here, they will go where they can, and if they can’t make money anywhere they simply close down.

In spite of long years of honest and efficient work in the demanding private sector, reality ultimately knocks as it did last week to some seven hundred employees in two separate clothing manufacturing concerns.

Compare this now to employees in the public sector which, on the premise that accountability demands accurate and continuous measurement which is notably absent in the public sector, just cannot be anywhere near as efficient as employees in the private sector, where performance measurement and accountability is inherent. Try getting a public service on a summer afternoon and you will know.

How can we allow this social discrimination of giving maximum security to the least efficient and pretty much little or no security to the most efficient? Is this not an invitation for the discriminated against efficient to exploit our political system in the sensitive pre-election period to get favours to join the ranks of the cozy inefficient? This is just the opposite of what successful economic restructuring should really be all about.

Should we not have launched long ago schemes to retrain employees, including those in the public sector who are surplus to requirements, to smooth their transition to better paid private sector jobs and thus quicken the pace of restructuring? In such a scenario, factories in the low scale of development would close because they cannot find employees, not because they are paying them too much.

Easing the pain is also the objective of the launch of the Mater Dei Hospital. I feel insulted by the media glitz and bombardment attempting to brainwash how magnificent Mater Dei is, how much better the public health service will become and how grateful we ought to be to the government that has realised this project for the Maltese people.

I answer with two side remarks. God forbid if, after spending Lm250 million, we do not as a minimum get a magnificent place and a better service. We could have got that at half the price had the project been executed as projects should be executed, in good management and financial housekeeping tradition. The other remark is: can we please get a categorical assurance that at Mater Dei we will continue to enjoy a free universal health service, at least for the next legislature? This was already in doubt on the St Luke’s configuration. On the Mater Dei much higher operating cost base, trimming the universal free health service becomes a near certainty.

Revaluing Valletta

22^nd June 2007

The Malta Independent - Friday Wisdom

 

The new traffic restrictions applicable for accessing and parking within our City are literally a fresh breath of air permitting visitors to really enjoy the place as it should be enjoyed by walking its streets.

It is certainly a welcome step in the effort to polish up Valletta’s image and attractions but certainly there is a lot yet that needs to be done to come anywhere near to a satisfactory position.

Take the dismal bazaar at City Gate entrance that continues to prevail. No one seems concerned that the entrance should make the first imprint of quality that our capital city deserves. It begs explanation why more complicated issues like traffic and parking systems get addressed but simpler issues like the access to our main entrance continues to be neglected.

I am not referring to the endless argument whether City Gate should be replaced by something more appropriate for a fortified city. And I am not referring either to whether we should rebuild the Opera House as a replica of the previous one destroyed during the war or whether we should re-develop the site into something which bears the mark of the 21st century. These are too big arguments which need vision and enterprise which we do not seem to have.

I am talking of much smaller affairs, of things that should take little effort to execute with little or no budgetary investment. Mostly it is a question of imposing discipline.

Try walking as I do every working day over the bridge into City Gate and you will know what I mean. To make it over to City Gate over the bridge one has to negotiate one’s way through a maze of merchandise overflowing onto the street from the kiosks, through lined up white taxis, standby horse cabs, stalls incredibly set up right in the passage way of the side entrances of the Gate creating maximum obstruction, and at times even supply vans parked over the bridge as a standby source of supplies of merchandise to the stalls.

I have no idea of who is authorised to do what at that place. What is worse however is that the police and other law enforcing officers that ply the area many times a day have no idea either. Otherwise they seem to have no interest in enforcing any discipline and wardens are more interested in booking any unauthorised parking in the resident spaces rather than in bringing some sort of order to the entrance of our City.

I shudder to think what first impressions the place makes on the tourist groups that are guided into the City each and every morning, especially the groups who spend a just a few hours with us during their Mediterranean cruises.

Equally disturbing is the chaotic arrangement for the bus terminus just outside City Gate. The approach to the main gate of the City deserves a more tranquil and inviting environment permitting the visitor to marvel with the magnificence of our bastions rather than having to negotiate one’s life with a handful of bus and coach drivers as one crosses over from the Floriana side of the triton fountain to the bridge leading to City Gate.

With hand tools in the 16th century our forefathers dug out the ditches to fortify Valletta with masterful bastions. With modern excavation equipment it would in comparison be child’s play to excavate an underground terminus and shopping mall facilities in order to keep the surface ground clear of the chaotic transport razzmatazz and bazaar-like trade kiosks and stalls. Just imagine coming up from an escalator somewhere near or beside the triton fountain and looking at the Valletta main entrance manicured with gusto landscaping permitting pleasant and unobstructed access to City while admiring its inimitable architecture.

First impressions count. They give a brand mark which flavours the rest of the visitors experience inside the City walls. If one starts with a bad first impression the remaining marvels inside the City will have to struggle to leave their deserved mark on the visitor. On the contrary a favourable first impression helps the visitor to overlook our other defects and enhances his appreciation of the rest of the City’s experience.

Now that we seem to have tackled successfully the access, traffic and parking arrangements in Valletta, is it not time to further revalue its image by making small investments and enforcing discipline in order to enrich the experience of pedestrian access to our capital city?



   

There we Go Again

 
15^th June 2007

The Malta Independent - Friday Wisdom

This week we have been informed that our Shipyards have lost the road to financial recovery and that the organisation is still bleeding losses with little prospect of reaching financial sustainability by 2008 when the State will be prohibited through EU rules from continuing to subsidise the Shipyards operation.

This is only surprising to those optimists who assumed that a solution could be found by throwing money at the problem and by making superficial changes without going down to the core of the problem.

To realists like yours truly it comes as no surprise as I have always maintained that without a culture change right down to the roots, the Shipyards will never be turned around and that a culture change cannot be brought about gradually when the old bad culture is so deeply ingrained. Culture change needs shock treatment which our political doctors never found the courage to apply.

Failure to execute a culture shock leading to effective recovery is costing the country very dearly. Not only are we subsidising the Shipyards with many millions each year that could be much more productively invested for the benefit of the general economy, but probably more costly are the opportunities being lost.

Great opportunities are being missed with shipping industry booming due to increased international trade brought about by integrating China and other Asian economies in the global economy. Ship repairing generally is now profitable with ship owners willing to pay top dollars for a job properly and expeditiously executed.

Why then are our Shipyards not participating in this international boom in the shipping industry? Why are we letting opportunities pass us by and continue to expect eternal state handouts at the expense of taxpayers?

Management has admitted that efficiency levels are still very low. Even though the union representing employees has adopted a very co-operative attitude in trying to achieve improved efficiency levels, yet reality is that these are hard to realise at the individual department and worker level.

Frankly, I think it is an attitude problem. For as long as the Shipyards remain in public ownership, management will find it impossible to extract the efficiency gains necessary for commercial viability. For as long as workers assume that in the end their wage and job security does not depend on their efficiency levels, the necessary step efficiency gains will just continue to be as elusive as trying to catch the wind.

Only shock treatment can deliver the bacon, and probably so much time has been lost that not even shock treatment can work now. And shock treatment must necessarily include in the equation that the government must not remain the direct or indirect employer of the work force. Employees must start believing that the security of their job and the prospect for better conditions is directly proportional to the efficiency levels gained in their individual and collective efforts.

This could be achieved in different ways. The government could offer the Shipyards operation, not the property title, to private investors who are willing to invest and install management systems to turn the company’s commercial fortunes around. This is what is happening in Italy with Alitalia which is being privatised after endless efforts by the Italian government to restore commercial success miserably failed for much the same reasons that our Shipyards have failed.

Government could promote the formation of the workers into a co-operative that would rent the immovable from government and run the operation on a commercial basis for their own benefit or risk.

Or government could retain ownership of the Shipyards property and the commercial departments but organise the workforce into clusters of co-operatives that will then compete among themselves to bid for work won by the Shipyards.

It was 22 years ago in distant 1985 that newly appointed Prime Minister Dr Karmenu Mifsud Bonnici asked me to spend some time studying why the then Malta Drydocks had last made a profit in 1981 and was bleeding losses which were consistent but small by today’s standard.

It has been 22 years since I gave the advice that the Drydocks, now Shipyards, needed shock therapy and that without such shock therapy the public cheque book will have to start writing fat amounts each year to keep the operation afloat.

One would be shocked to learn how many millions have since then been poured down the drain without actually turning the operation around. Whole communist countries have since changed their totally command economies into vibrant market economies growing at enviable rates and winning in the globalisation game.

But in Malta we continue to toy around with a relatively small problem which if subjected through proper shock treatment would have been sorted out in two years with great advantage to the workers themselves and to the country in general.

Then there are some who wonder why Maltese people hate paying taxes and are quite prepared to spend one lira to save one lira taxes.

Six Days Forty Years Ago

8^th June 2007

The Malta Independent - Friday Wisdom

 

Forty years ago this week I was a young lad of fifteen sitting for my O levels. Why should I remember this event so specifically, you may ask? It is not exactly earth shattering.

I remember it because it coincided with an actual earth-shattering event. Forty years ago this week the six day war erupted and turned into an event that changed the course of the Middle East and by implication of the world.

In the short space of six days between 5 and 10 June of 1967. Israel crushed an alliance of Arab armies which were preparing to obliterate Israel out of existence. Egypt, Syria and Jordan were preparing to invade Israel from all sides believing that America, with its hands already full in Vietnam, would not come to Israel’s rescue.

Spearheaded by President Nasser of Egypt, who was considered the moral leader of a secular Arab world following his victories against Britain and France in the Suez crisis of 1956, and armed and supported by USSR equipment and military backing, the odds were clearly staked against the vulnerable state of Israel. Following its 1962 humiliation in the Cuba stand-off with the US, the USSR was keen to return the compliment in the Middle East knowing that America was too pre-occupied with the Vietnam nightmare in the making.Israel made a pre-emptive strike and in six days managed to destroy most of the opponents’ military equipment on the ground and extended its territory by invading the Sinai desert on the Egyptian front, the Golan Heights on the north Syrian border and the West Bank on the Jordanian border apart from annexing Gaza. All this in six days which left the world stunned with admiration at the military capability of Moshe Dayan and co.

Forty years later it is possible to judge that whilst the military strike of 1967 was justified and almost inevitable in the interest of self-defense, too much time has been wasted in preserving the post war status quo without addressing the real underlying root of the problem in the Middle East.

Forty years of missed opportunities to exchange land-for-peace have left calamitous consequences for both sides.

From being admired and even romanticized nation of pioneers and kibbutzniks, Israel is now branded as a pariah state for the way it treats Palestinians under occupation and for continuing to build settlements in the occupied West Bank against UN resolutions. It also covered itself in contradictions by becoming a nuclear power while expecting all countries around it to avoid developing any tastes and ambitions for nuclear capability.

For Arab states the 1967 humiliation blew away the ambition of a pan-Arab secular association of modern states leaving a vacuum which is filled either fundamental Islamists or by fragile kingdoms or regimes trying to keep a difficult balancing act in meeting the Islamic demands of its population whilst maintaining co-operative relationship with the West on whom they depend to grow their resource based economies.

The high price of oil, the growth of Islamic fundamentalism, even the adoption of terror and terrorist measures as a policy instrument to change the status quo in the Middle East can all be traced back to the events of these six days in 1967.

There is no mystery about the solution to this conflict. Full Arab recognition of Israel in exchange for the land seized in 1967 is the only solution which brings back all parties within the confines of UN resolutions and consequently of legality. The formula has not really been tried as even in the high watermark of the Oslo peace process the number of Jewish settlers in the West Bank continued to increase and East Jerusalem has been enclosed by blocs of settlements.

Whilst Israel was eager to make a land-for-peace settlement with Egypt by relinquishing the conquered Sinai desert, and in theory is quite willing to do the same with Syria over the Golan heights if it ever finds an honest negotiating partner on the Syrian side, Israel shows little or no flexibility on a land-for-peace deal involving the West Bank to promote the formation of a peaceful Palestinian State and is totally inflexible about relinquishing east Jerusalem.

Time moves on and forty years is a long time for all sides to be forced to realize that peaceful co-existence is in everybody’ long term interest even if short term painful concession have to be made. The parties will never come to such arrangement on their own. They need a strong US as an honest broker to push them in a compromising mode. However this is impossible from a Bush administration that misguidedly believed that the road to peace in the Middle East passes through the conquest of Baghdad.

It needs a new administration in the White House and strong support from the EU foreign policy, but it has to be done. This is not some regional dispute that can be left to fester. Further neglect will alienate Arabs and Muslims and compromise the security of the West, foremost amongst them the Israelis. Iran’s quest for nuclear capability can only be properly judged in this forty year context.

Cabinet Making French Style

  

 

1st June 2007

The Malta Independent - Friday Wisdom

We all hope that newly elected French President Nicholas Sarkozy took back with him happy memories of the short break he had among us in the interval between his election victory and his official appointment.

It would help our tourism branding efforts to no end if he did, in the same way that AC Milan’s win of the UEFA Champions League and their frequent references to their season’s change of fortunes following their Malta training camp over the Christmas recess, is still helping to raise our image as a destination worth visiting. May be it is a coincidence, but I was impressed last weekend with the evident prevalence of up-market Italian visitors in the St Julian’s area.

I have a bigger hope, probably pious, that we could learn something else out of the Sarkozy visit. Something we can implement to our great advantage. It was proclaimed that President Sarkozy needed a short relaxing break (in Malta) during which he needed to take important decisions regarding the formation of his cabinet.

Soon after nominating Francois Fillon, a former social affairs minister, as his Prime Minister, President Sarkozy nominated his cabinet of ministers. The cabinet nomination was a cultural revolution, a shock to the traditionally narrow French way of doing politics. It sent a strong message that Sarkozy is different and that he means to deliver with efficiency while economising on resources.

The size of the cabinet was cut from 30 to 15. By crude simplification every minister in the new cabinet will have to work and carry responsibility twice as much as a minister in the former cabinet.

The composition of the cabinet was equally revolutionary. The centre right president announced a slim dream-team, breaking down barriers of gender, ethnicity and party politics. He nominated Bernard Kouchner, a socialist human rights campaigner best known for founding the aid organisation “Medicines Sans Frontiers” (Doctors without Frontiers), as foreign minister. Kouchner’s acceptance of the post raised the ire of the French Socialist Party who threatened to expel him. Three other leftists were named as junior ministers.

As Defence Minister Sarkozy named Herve Morin, a prominent member from the centrist camp of president-contender Francois Bayrou. Morin’s acceptance also weakened Bayrou’s party for the forthcoming parliamentary election.

The new French Cabinet has an unprecedented number of women including France’s first powerful woman of North African descent, notably Rachida Dati, 41, as Justice Minister.

The French-born Dati grew up in a low-income housing project, one of 12 children of an Algerian father and a Moroccan mother. Dati worked as a magistrate, advised Sarkozy when he was interior minister and served as his campaign spokeswoman. She becomes the first leader of North African descent to run a key ministry in a society whose large population of immigrants, mostly Muslims, has been largely excluded from the halls of power.

Somehow however the Malta air which refreshes the minds and strengthens the muscles of visiting foreign dignitaries seems totally ineffective on the local political class. Could it be that our air only imparts its benefits if taken in small doses?

In the Sunday morning sermons at their respective political parties, it would be refreshing if the Prime Minister and the Opposition Leader, rather than criticize each other in the most partisan of manners, will one day illuminate us whether they intend to take a leaf out of Sarkozy’s book.

Cutting the cabinet by half would reduce our cabinet from 18 to nine and if France can work with 15 ministers probably we can go further and reduce our cabinet to not more than seven ministers. It would send a highly visible message that the government means to get full mileage out of the taxpayers’ money.

They could also bring some fresh air into Maltese politics by promising to make their cabinet choices on the basis of merit and not pure party affiliation. They can pledge to offer members from other parties to join the cabinet if they are considered as best suited for the job.

And may be they can make a more practical symbolic gesture and keep our weekends politics free. Instead of their weekly monologue they can experiment with mid-week media interviews with phone-ins for public participation. To begin with we deserve to have next Sunday politics free so that as one nation we can be proud of the canonisation of the first Maltese Saint.

Come back Monsieur Sarkozy.