At last, even the European Commission, in its Malta report for the spring of 2019, has begun to emphasize the fact that the Maltese economy is increasingly relying on the services sectors. The point though is that such a state of affairs was largely and consistently developing since Malta became a member of the EU.

Is this good, is it bad?

Problems can always arise when an economy becomes very dependent on one or two sources of wealth creation. The Malta government did understand how this could happen and has endeavoured to open up other areas of activity. However, all these “new” sectors remained tied to services. It’s been as if we have decided that we cannot make it outside the “services” compass.

In reality, European Union rules as they apply to a small and peripheral economy like ours necessarily push it towards a services profile if it is to stay afloat in the European single market. Given such a strategy in recent years, this island did not only manage to keep afloat economically – it has excelled … which is what creates “new” concerns…


Hotel economics

Forecasts for this year’s tourism indicate that the growth rate for hotel business could be less to much less than what it was in recent years. Various reasons have been advanced to explain why this is so: among which, the point that unregulated competition was allowed to happen coming from entities that offer private accomodation – the problems of road congestion caused by too much traffic plus a proliferation of public works – and an assessment that the Maltese tourism product is no longer genuine.

However an expert close to the tourism sector, opened up about another reason that, it seems to me, has rarely been mentioned. He said: You see, these past years, Maltese hotels have increased their rates considerably, and they were right to do so once the market allowed it. But since last year, they went on pushing prices when the market had gotten flabby. Had they moderated their claims, their economic situation would now have been much better.



Another issue was flagged in the European Commission report about Malta published this spring (along with similar reports for all EU member states). It needs to be given great attention.

The claim was made that all things considered, though relative to the outlay of other countries, Malta’s expenditures on education and training stand at level with theirs or outstrip them, we are not getting the benefits that should result from such a commitment. If this is correct, it would docket as losers a number of our young people as they aspire to lead a good life or when they go looking for a job.

The whole issue needs to be afforded serious attention, given that to sustain the economic growth of recent years, we have been needing to import foreign workers, at both the high income and the lower income range.

Perhaps it is high time for us – in Malta, and not in kowtow to the Commission – to consider whether what the latter is alleging stands up to a reasonable assessment. If that turns out to be the case, then we would need to launch an action plan meant to ensure that no child, and no young man or woman is left to experience the fate of being a loser in life.

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