MALTA skilled workers, what’s next

Visa programmes to attract skilled workers?

MALTAway for your Board Members and Governance

To compete in a global market Malta has to compete on the skilled workers as well, rewarding them to move here, taxation is just a way

The KPMG’s biennial financial services conference questions ‘what’s next?’ for Malta’s financial services industry


The financial services industry is finding it hard to recruit skilled workers because Malta’s education is preparing “robots” and not independent thinkers, speakers taking part in a financial services conference said today.

In a day-conference at the Hilton organised by audit firm KPMG Malta, senior partner Tonio Zarb said Malta had to work harder to reach the level of sophistication of other countries in the financial services sector.

“One way of doing this is to import expertise. Innovation is closely tight to education and we need to encourage a change in our education system to produce independent thinkers, and not robots,” Zarb said.

Malta Financial Services Authority chairman Joe Bannister drew attention to the fact that, despite the complaints of the industry, very few came forward to help with training prospective workers.

He explained how last year, only 90 placements were granted down from a 120 the previous year. Bannister went on to state that students were attracted to the financial services industry because of the high salaries. He went on to warn of risks of creating a wage inflation.

One way of bridging the gap resulting from skills shortage was through the setting up of visas programmes, such as those employed by the United Kingdom, FinanceMalta chairman Kenneth Farrugia said.

The UK brought in a 20,700-a-year cap on skilled workers from outside the EU in 2011.

KPMG partner Juanita Bencini went on to suggest that the solution could be closer to home: increase female participation. 60% of University graduates are women but less than half of the full-time working population are women.

“We have to tackle the defeminisation of the workforce and we [financial services sector] should be at the centre of increasing female participation.

It’s also translated into how employers look at it,” Bencini said.

“There is a huge mismatch between what the industry wants and what comes out of university. We have not shown enough courage to ensure that this talent doesn’t drop off and we cannot afford to have them disappear of the face of the earth.”

Bencini added that what the government did with the universal provision of free childcare centres had helped a lot but the private sector needed to do something different too.

“Can we see our males working four days a week? We really need to start thinking to ensure female participation is there and this will make the industry grow,” she said.

Labour MP Charles Mangion also highlighted the country’s stability as a key attraction to investors. He noted, that the cross-party consensus that existed for years allowed the sector to flourish.

The financial services sector contributes some 12% to the country’s GDP.

Africa’s ticket to wealth is the garment industry and MALTA is perfectly located in the middle of the MED sea and EMEA area to connect supply and demand

Africa’s ticket to wealth is the garment industry and MALTA is perfectly located in the middle of the MED sea and EMEA area to connect supply and demand 

Maltaway is your gateway to Malta with a performing country system and the largest Logistics and Digital platforms in the Med

Should Africa follow Asia’s development model?

If Africa wants to get rich, a good place to start is probably the garment trade.

Historically, the path to wealth for nations has run through manufacturing. Manufacturing gives you a way to quickly move a lot of people from low-productivity farming to higher-productivity jobs without requiring that they pick up lots of new skills first. And the garment industry fits the bill admirably; it does not not require lots of expensive infrastructure or a skilled population that can supply and maintain fancy machines, and it does use lots of low-skilled labor. Once you get people through the factory gates, their higher productivity and earnings will support improvements in infrastructure, education and services, that can fuel further growth. Eventually, one hopes that your country will get too rich to support much garment manufacturing, because workers will be able to command wages too high for low-margin, hypercompetitive garment factories. Then the workers move into higher-wage jobs, the factories move to a lower-wage locale, and everyone enjoys a higher income through the magic of Ricardo’s theory of comparative advantage.

Over the last few decades, we’ve seen the dazzling effects of this as economies moved up the value chain from simple products to fancy ones. There was a time in America when “Made in Japan” was a standard joke denoting cheap schlock, but the Japanese had the last laugh, as they leveraged their tchotchke dominance into a global manufacturing juggernaut that started competing to make our cars and televisions. Japan, in turn, shed its low-skill jobs to neighbors like South Korea and China. And now China is getting rich enough that other countries are luring away some of the lower-skilled work.

But normally, we think about that work going to Vietnam or Bangladesh, not Africa. That may be starting to change; the Wall Street Journal notes that “Ethiopia was recently identified as a top sourcing destination by apparel companies, according to McKinsey & Co., which surveyed executives responsible for procuring $70 billion of goods annually — the first time an African country was mentioned alongside Bangladesh, Vietnam and Myanmar.” With Asia getting richer, global corporations are looking farther afield. A garment worker in China, the Journal says, gets anywhere from $150 to $300 a month; that same worker in Ethiopia makes only $21. Those those kinds of wage differentials are quite enticing, as Americans have learned by watching manufacturing jobs move abroad.

That said, there are still a lot of hurdles to overcome. African manufacturing is currently a blip on the radar compared to China, and it will take a long time to see the kind of revolution we’ve seen elsewhere. Catch-up growth takes quite a while to take off. There’s a lot standing between Africa and that goal, such as some basic infrastructure; it doesn’t matter how low your wages are if there aren’t any good roads to get your products to port, or if there are no good ports.

Armed conflict is obviously another. Corruption usually makes this list as well, and at a certain level — say, where Iraq was a few years ago — it seems clear that it’s going to choke off growth. But I doubt you need Swedish levels of corruption control to get economic growth, either. Corruption is a huge civic issue, but quite a lot of Asian countries have managed quite a lot of growth without anything like the corruption control and “good government” that I used to assume would naturally boost a country’s economic prospects. So I’ve gone back to loving good government for its own beautiful self, rather than its economic benefits. Economically, I’m much more interested in whether you have reliable electric power and somewhere nearby that a container ship can dock.

The remaining question is, of course, whether we should be rooting for profit-seeking global corporations to take manufacturing jobs to Africa if they will pay such pitifully low wages. You’ll probably not be surprised to hear that my unequivocal answer is “yes.” Just consider what the alternatives must be if people are willing to slave in a factory for $21 a month. So moving jobs to Ethiopia, or elsewhere in Africa, does good for dreadfully impoverished people.

Sure, you say, a $21-a-month manufacturing job might be an improvement, but why settle for such a small improvement? What if we just raised the garment factories’ initial wages a little, or mandated some basic worker protections? The problem is that any such measures add costs to employing workers there. Garment factories are a classic “footloose” global business; because they are relatively low-tech, and relatively labor-intensive, they look very hard at the price of employing a worker … and if the price is not low enough, they keep looking. Manufacturers might well take a chance on Africa only if the wage differential were quite high. Otherwise why uproot the operations in Bangladesh that pay workers $67 a month?

This is not an argument for permanent low wages. It is an argument for some improvement for African workers, as a step toward many bigger improvements. The hope is that Africa would eventually experience what we’ve seen in Japan, South Korea and now China: As the economy develops, garment factories will move on from country to country, until every country has industrialized to the point where no one in the world is working for $21 a month.

These jobs aren’t great on any absolute scale, but compared to local alternatives, they provide an above-average standard of living. The richer Africa gets, the more its citizens’ wages will rise — and the more its citizens will be able to invest in things like a cleaner environment, more years of education for their children, better worker protections and more leisure, just as workers have done in the west.

Of course, not all the Chinese garment workers would necessarily agree that this movement is beneficial, any more than American garment workers were pleased to hear that everyone was getting richer in China. But this process does have a natural stopping point, and that’s when Africa industrializes. If Africa can manage the same kind of growth that Asia has managed in the last 70 years, then eventually we can look forward to a much more equal and much more wealthy world. That’s obviously not the only possible future, but it’s one possible future. Definitely the one to push toward.