January 18 2004
FOI calls for drastic measures to bolster eroding competitiveness
this week about recent redundancies in industry and tourism, the Malta
Federation of Industry has issued an appeal to all stakeholders to urgently
tackle the country’s competitiveness problems without further
delay, if the situation is not to deteriorate more than it has and if
investment is to be saved and encouraged.
In a strongly worded statement, the FOI advises in no uncertain terms,
"The country needs to take drastic and immediate measures. There
must be serious commitment from Government and Trade Unions to find
a way out of the present difficult situation. This must start right
away because it is an urgent requirement on which depend future investment
"Industry is prepared to give its contribution to tripartite talks
and to reach a serious agreement as long as negotiations start without
pre-conditions from any side."
The FOI’s two-cents’ worth comes following recent redundancies
in the manufacturing and tourism industries – Malta’s two
most important economic segments in terms of employment generation and
foreign currency earnings.
Stating its concern over the state of affairs and expressing its sympathies
to the workers who have been made redundant and lost their earning potential,
the FOI cited the circumstances as symptomatic of the problems Malta
"It is an indicator that enterprises are suffering in the global
market place, losing market share and perhaps even the will to invest
in Malta. This is indeed serious."
The FOI recalls that it had been warning the government and unions that
what appears at the time of undertaking as a strong investment, is no
longer safe from external market pressures.
"Export-oriented industry in all sectors, except in the machinery
and transport sector, is suffering from reductions in their export figures;
and that includes tourism. Although each entrepreneur does his best
to retain and expand his operations, it is also true that performance
and profitability in manufacturing and tourism have been on a downward
trend for a number of years. The cause is not EU membership but our
increased exposure to market pressures, the level of efficiency measured
in terms of productivity increases, as well as the comparable lower
costs for industry in other countries."
In addition to these ailments, the FOI also warns that the state of
the country’s public finances and the accompanying upward push
in taxation is contributing to a diminishing disposable income in the
hands of workers and entrepreneurs alike.
"It is becoming increasingly difficult for firms to increase their
prices on the market whilst their profitability is being squeezed between
increasing costs and resistance by the market to accept higher prices
for goods and services.
"In the meantime, the Malta currency is becoming stronger and rendering
exports more expensive to sell, whilst productivity increases are being
surpassed by wage increases. In these circumstances no entrepreneur
can be blamed if he shifts his operations away from Malta."