Not 10% of the workforce, but literally nearly 10% of the Gozitan population works with the government. A government minister can’t have an honest discussion about the economic model if it’s your own government that is distorting the economy and the labour market. A staggering 21% of the Maltese workforce works in public administration while the EU average is 17%.
The EU countries that have the highest number of people working for the public sector are Nordic countries and they can sustain a big public sector and even a strong army due to their very strong economies combined with high taxation – a very unique economic model that is mostly restricted to Nordic Europe. Malta has a completely different economy because its industries are still laden with businesses that are heavily dependent on cheap labor and the taxation regime is very liberal.
Malta’s advantageous tax regime should give enough room to ensure continued economic growth in the private sector if the government opts to reduce the pool of cheap labor by increasing the minimum wage. By increasing the minimum wage and reducing the pool of cheap labour, businesses depending on cheap labor will have to adapt by increasing the value of their products and their services. On the other hand, the government should free up much-needed labor in the private sector by reducing the public sector headcount and this would bring back some equilibrium in labour demand while pushing wages in the private sector upward.
I think there’s a lot of catching up that wages and salaries in Malta need to do.
Website Editor
Historian and Publisher
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