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.