“The figures for 2018 are very satisfactory. The economy is growing at a rapid pace and public debt relative to rising GDP continues to fall,” says Marisa Xuereb, Managing Director at Raesch Quarz (Malta). “Inflation seems to be contained, although there are clear signs of inflationary pressures particularly in the provision of services with high labour content. The projections for 2019 indicate that the economy is expected to keep the same momentum in the immediate term.”
One measure that Ms Xuereb believes is expected to help Maltese businesses is the implementation of more rigorous border controls and market surveillance that should mitigate unfair trading practices. However, the biggest worry for businesses at the moment is labour supply, “and there is not much in the Budget that addresses labour supply issues in the private sector, except for the additional day of annual leave which accentuates the shortages.”
“There is mention of measures to alleviate the skills gap, such as encouraging more students to study STEM subjects and improving the performance of post-secondary students through more robust apprenticeship schemes,” she states. “These measures have been on the table for several years, but they require major commitment from various stakeholders to implement and are not likely to have an immediate impact. Additionally, such measures need to be supported by a culture of quality, efficiency and innovation to be effective.”
Ms Xuereb adds that there was no mention of putting more national funds towards R&D initiatives in the Budget, “when our R&D expenditure is extremely low and we know too well that our industry needs to constantly reinvent itself to be able to absorb more STEM graduates and survive in a post-2020 scenario. We seem to expect to be able to fund our innovative capacity exclusively through EU programmes, but this is the same mistake we made in the past when we limited our expenditure on roads to projects that we could get funded through EU programmes. The establishment of Tech MT is a step in the right direction, which could provide the necessary impetus for a broad long-term growth strategy, provided that it is adequately funded.”
With the economy currently running on its own steam, Ms Xuereb says there’s also a great need for measures that balance out inequalities that threaten the country’s social fabric, and measures that ensure that particular segments of the economy do not become casualties of this rapid growth.
“The Budget acknowledges that low income earners who are not home owners are at risk of poverty as rental rates keep spiralling up. It also acknowledges that pensioners need to be helped more than those who are able to tap into the labour market. But other aspects of this rapid growth – such as the growing number of vehicles on the road – remain a white elephant,” she asserts. “The environment is given more mention than usual, but what matters is how much we are actually willing to invest in it. We will be spending €100 million a year on the upgrading of roads but just €1 million on green spaces in urban areas. We also need to consider the impact of this rapid growth on sectors such as industry and tourism, both of which are struggling to remain competitive.”
This interview is part of a four-part feature originally published in The Commercial Courier