The following is the speech given by Chris Vassallo Cesareo, The Malta Chamber President, during the EY Malta Future Realised Conference 2023
We are living in times of persistent inflation. This is unfamiliar territory for businesses, consumers and policymakers because we have enjoyed many years of price stability. Price volatility is impacting supply chains in all sectors and in all geographic locations. It is a major concern for businesses everywhere, not least here in Malta where our policy response to inflation has focused on maintaining energy price stability while labour costs have run out of hand. The long-term implications of major hikes in labour costs without matching productivity gains on our competitiveness as an exporting economy, is likely to be a major topic of future attractiveness conferences.
Today, we face a very particular global reality. Markets are not adjusting fast enough in terms of supply. Prices are sticky downwards, and demand is not responding to interest rate hikes in a predictable manner. These weak responses to policy interventions are a post-Covid legacy. Consumer behaviour has been significantly altered by the Covid experience, as has people’s relationship with employment. It is not yet clear whether we are experiencing a delayed response to policy actions, or a complete rewrite of the rules of the game. Policymakers are therefore hesitant as, if it is a case of delayed reaction, there is a risk of overshooting. The prospect that markets will eventually react suddenly to an accumulation of factors and come tumbling down lurking in the background. The same dilemmas are faced by businesses everyday. There is greater global uncertainty about everything from pricing, to recruitment, to consumer behaviour, to taxation.
Geopolitical tensions are providing an increasingly more complex landscape. We are seeing the end of globalisation as we knew it. This brings with it more uncertainty, less confidence, and more spending on defence and security instead of investment in upgrading productive capabilities in countries that have a major impact on global trade.
Then there is climate change: new challenges of extreme weather that pose significant risks of disruption, loss of assets and even loss of lifes in unprepared territories. These events are impacting supply chains as well. Businesses have parallel derisking challenges. On the one hand there are the long-term decolonisation targets, while on the other there are the immediate supply chain risks that necessitate more prudent approaches to restricting procurement to cleaner sources.
Yet, businesses want to do more. New technologies are inspiring entrepreneurs to develop new ideas and venture into new markets. A major limiting factor is the availability of skilled human resources. So it is opportune to talk about the empowerment of people.
Critical for our future is the empowerment of young people through a better preparation for more productivity and inspiring life. This is achieved by providing quality hands-on education that is really for the future, that enables our young people to be life-long learners and enterprising at whatever they do.
The empowerment of the existing workforce is also becoming a pressing issue. This can be achieved through facilitation of life-long learning and the promotion of a better quality of life by prioritising the environment, healthcare, and a more promising future for their children.
We also need to seriously think about the empowerment of people who come to work here from other countries. We need to ensure that their capabilities match our requirements, that their expectations are congruent with our employment policies, and that they are treated fairly.
Ultimately, what will make things happen is the empowerment of businesses.
It is imperative that we ensure that all the key enablers are in place, and constantly being upgraded to meet rising standards over time. At the Malta Chamber of Commerce, Enterprise and Industry, this is what we do every day: through our constant communication with the business community, we identify the key enablers and specify the standards for need to aspire for as a country in tangible ways. Our 250 recommendations for Government ahead of the presentation of the National Budget for 2024 in a few days time constitute a comprehensive list of empowerment measures for businesses, the economy and society as a whole. Not surprisingly, they reflect many of the points of concern that come out of this year’s attractiveness survey.
The Malta Chamber’s recommendations are to address skills shortages with sharper policies for education reform, the recruitment of third country nationals and retention of both local and foreign talent; to invest heavily in our infrastructure for energy generation and distribution, transport, and waste management; to have a more efficient public service; and to tackle inflation with greater sensitivity to our competitiveness, by keeping a close eye on productivity and curbing locally-induced inflation.