Kaizenlog

 

 

 

 

 

 

No. 1848

 

 

THE CHALLENGES OF LABOUR SHORTAGE

 

 

“The dynamic economy that Maltese entrepreneurs are competing in requires a well-trained yet flexible workforce.  On the other hand whilst today’s workers seem keen on embracing the new employment regime they want to have a substantial amount of security and the consistent protection of workers’ social rights.  Flexicurity is an integrated approach which is intended to enhance flexibility and security in the labour market contemporarily. Within the Lisbon Strategy, it is a means to successfully manage change and progress employment and welfare reform to meet the challenges of globalisation, technological innovation and an ageing population. 

 

It is in this light that Malta’s Employers must view the issue of Labour Shortages not merely through the narrow view of skills shortages.  Whilst lack of flexibility might be fatal for companies in the global market lack of security might be keeping essential human resources away from the local labour market”.  This was stated by Minister Louis Galea at the opening of the Malta Employers’ Association conference entitled ‘Dealing with Labour Shortages’ which is focusing on strategies to make better use of a limited human resource.

 

In his opening remarks, Minister Louis Galea referred to published figures which would set the stage for any discussion on labour shortage in Malta in the wider context of the region in which we operate.  Minister Galea referred to the activity rate of men and women in Malta and said that in Malta men had a participation rate of almost 80% which was higher than the EU average of 77.5%.  In the case of women however Malta lagged considerably behind the EU average with just 40% as opposed to the EU’s 63%.  He said that this showed clearly that the main area for growth was female participation. 

 

Dr. Galea said that Malta had a considerable growth in labour supply at 2.6% more than double that of the EU average which stood at 1.1%.  Malta also had an unemployment rate which was lower than the EU average.  At the end of 2006 the unemployment rate stood at 7.3% in Malta and 8.2% in the EU.  This year these figures should continue to improve.  Dr. Galea also pointed out that Maltese workers are remaining on the register for shorter periods of time and that at 2.9% the percentage of Long term unemployed was lower than the EU average which stood at 3.6%.  Minister Galea also referred to statistics on part-time and fixed term employment and said that the statistics dispel common perceptions.  Whilst the rate of part-time workers stands at 8.6% in Malta, the EU average is 14.4%.  In Malta there are 2% of workers on fixed-term contracts whilst the EU average stands at 10.7%.  Malta also has a high rate of productivity growth which was 2% at the end of 2006 whilst the EU average was 1.5%.  Dr. Galea also pointed out that the working time in Malta is equivalent to the EU average of 40.5 average weekly hours.

 

Minister Galea said that Government is committed to continuing to develop a flexicure labour market, through four main initiatives, namely, making work pay; making employment legislation as flexible as possible whilst providing reliable protection to workers; through active labour market policies that help the unemployed enter the labour market; and through lifelong learning. 

 

Louis Galea said that in recent budgets Government has given a clear indication of this policy commitment.  He said that for instance, the review of tax bands is intended to make work pay, and the lower paid workers in Malta continue to enjoy among the lowest tax burdens in Europe.   “We have also introduced the pro-rating of NI payments, and extension of non-wage benefits to part-timers.  The Fixed Term regulations were also intended to reflect a proper balance between flexibility and security.  The establishment of a Part-time Register at ETC will contribute to improved matching of labour market supply and demand. 

 

This matching is also supported by an intensive flow of services provided by ETC – from the development of a Personal Action Plan for each jobseeker through to the client’s referral to a work scheme or a job.  From next year, ETC will be utilising ESF funds for both wage subsidy and training grant purposes which will further increase the volume and quality of the labour supply.  In respect of lifelong learning, there are wide opportunities at all levels of learning, at the various courses available through University, MCAST, ETC, the Department of Further Studies and Adult Education and a host of private training providers.”

 

Dr. Galea said that shortage of labour is not only a local phenomenon but is a trend in all developed countries with similar demographic changes.  Malta like other developed countries needs to constantly attract and retain more and better jobs.  At the same time it must ensure that its human resources are well-trained and educated to make the most of these employment opportunities. 

 

“However, shortage is not just a question of more jobs being available to meet the demand for people with the proper qualifications to fill them. It is also a result of the increasing unattractiveness of certain jobs for certain jobs as a result of increased expectations of the Maltese population who is now better trained and more qualified” said Dr. Galea who emphasised that meeting skills gaps requires a multipronged approach which differs by sector.

 

Dr. Galea explained that at the low-skill level, conditions of work militating against labour supply include pay, split shifts, irregular hours, unpaid on-call, lack of transport, cost of childcare and other issues.  At the higher skill level it is more complex, with employers not having the time or the ability to afford the learning curves necessary in a dynamic and competitive environment.  Louis Galea said that a lot is being invested to ensure that Maltese workers are well-prepared for the world of work.  Maltese workers abroad are commended for their work and all foreign investors cite Malta for its highly skilled work-force. 

 

Minister Galea said that the rate of economic growth affects the severity of the labour shortage with employers hiring less experienced workers, resorting to longer overtime hours or greater capital investment to reduce the impact of labour shortages in the short-term since the alternative would be the loss of business opportunities.  This could however be a result of short-sightedness. We, including Government, as employers, should always be one step ahead, predicting shifts in demand and hence their needs in terms of labour and other factors. 

 

Employers must always be on the lookout for persons with the right mix of education, skills, experience and qualities, they must think ahead to hire and train individuals before the need arises and cannot afford to limit themselves to the bare minimum expecting workers to lie idle until they need them. 

 

The management function is essential in all this and firms cannot retain old organisational mentalities.  “Our society must inculcate, foster and reward a mentality which encourages in the individual a continuing willingness to learn – crucial in rapidly changing work environment. Workers should assume a more active role in job searching and ongoing skills development whilst employers must sustain and encourage them. The ever-changing labour market has increased the demand for more flexible and innovative workers. To remain marketable in the labour market, workers need to ensure that their skill set is updated on a regular basis.  Employers on the other hand are often afraid to invest in education and training because of fear of loss to competition, however this is one of the tools to cultivate employee loyalty which is so highly-priced by employers.”

 

“If we accept that a job for life is a thing of the past, so is the concept of retention of an employee for life – increasing worker mobility is a positive trend as it increases the ability of the individual worker to adapt to varying situations.  In all this the conditions of work are more than just important they are vital.  Often the unavailability of labour reflects a lack of willingness to perform work which is perceived as not meeting expectations for the remuneration given”

 

Minister Galea said that the Government was investing heavily in education and training with a record spend in education for 2008.  He said that there has never been so many young students and adults taking up post secondary, tertiary and post-graduate training.  Female participation in education is also very high and this needs to be reflected in the labour market.   Government has implemented measures to improve participation rate, particularly female and has also brought about considerable change in employment legislation particularly with regard to part-time work, fixed-term employment, introduction of family friendly measures, and with regard to child care facilities.

 

The postponement of retirement age in the Pension Reform and budget measures regarding work beyond retirement age could also provide new opportunities for employers to maintain valid individuals within their organisation.  On the other hand we also note that employers are seeking to make more use of the immigration system as a key source of skilled labour.  Minister Galea pointed out that over 7000 foreign nationals have a work permit and a considerable number of these are filling in for skills shortages.

 

Minister Galea said that ETC attempts to offer partial solutions to skills gaps:

 

(a)  through a range of basic, trade and non-trade courses that instruct over 5000 trainees a year;

(b) through the apprenticeship system which aims to ensure that trainees obtain relevant work experience by the end of their apprenticeship;

(c) in areas of particular labour market shortage, ETC operates traineeships, i.e. up to one year of on- and off-the-job training in a given occupation;

(d)  apart from our national vacancy matching system, ETC also seeks for suitable candidates in Europe through the EURES network when employers request our assistance, as well as ad hoc contacts with our acquaintances in peer agencies. 

 

When all these actions do not have a positive outcome, ETC receives applications for work permits.  For EU nationals, these are automatic in the sense that they are not subject to labour market consideration.  For third country nationals, we consider whether the job is a bona fide one, whether there are Maltese who could be referred to the post, whether the foreign candidate is qualified and experienced and can provide verifiable documentation.  These work permits are renewable on an annual basis but except in exceptional highly skilled occupations, not renewable a third time.

 

Recently, a Forum for the Management of Legal Migration was set up, between ETC, MJHA, DCEA and the Immigration Police with a view to optimising application processes and to consider and prepare for the relevant proposed EU directives on highly skilled migrants.  The EU has also proposed a framework directive for a streamlined work and residence permit system, and intends over the coming months to propose common conditions for the entry and residence of various categories.  In addition to the highly skilled, and to the recent students’ directive, similar common conditions are envisaged for seasonal workers, intracorporate transferees and possibly other similar groups. 

 

In his concluding remarks Minister Galea invited all employers to reach out and create a better communication channel with educational institutions. He said that employer know that apprenticeships are of considerable value and that they are mutually beneficial to both employers and students however their uptake by employers is slow and limited.  These should be strengthened and used to a greater extent to ease the transition from education to the labour market.  “Initiatives to address labour shortages work best when they are led by both, employers and employees.  As a government we will continue to be proactive and to act as a catalyst and facilitator and in this we are fully committed” concluded Dr. Galea.

 

 

DOI – 28.11.2007

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