It’s the economy, stupid

Published in The Malta Independent on Sunday 6 April 2014

‘It’s the economy, stupid’. This famous political slogan was derived from the slogan ‘The economy, stupid’ coined by Bill Clinton’s campaign team in 1992. The simple rational behind this rather abrasive statement is that everything depends on the economy. Get the economy right and everything else falls into place. Few governments have lost an election when the economy was performing well.


An economy that is performing well generates wealth, creates jobs, builds consumer confidence and boosts sales. This understanding is not a text book definition of economics. It is what people understand by a good economy. Governments, including our own, tend to define the economy through comparative statistics that benchmark one economy with another. The statistical economy has not worked for the previous Nationalist government and will not work for this government.

The previous government was proud, and it had every right to be, for having weathered one of the worst economic storms in living history. But the people cared little about what was happening outside their shores and were more concerned by the fact that the country had lost the feel good factor it had for so many years under successive Nationalist administrations.

The man in the street is the best economic barometer. The electorate couldn’t be bothered with what the statistics people in Malta or in Brussels are saying about the economy. What they care about is the money in their pockets and the income that is coming their way. So when Minister Scicluna talks about impressive economic growth, people do not really understand what he is on about.

The nearly 8,000 people looking for a job certainly are missing his pitch. So are the shop keepers who are seeing a drop in their monthly sales. The factory workers are seeing a drop in their income and therefore they too cannot understand how the economy is performing well. The more government keeps on harping on how well the economy is performing, the less credible it is going to sound.

The fact of the matter is that unemployment is on the rise. It is increasing across the board. Perhaps the most worrying aspect of it all is that we are seeing an increase in youth unemployment. We are starting to see an increase in graduate unemployment. Some months back, Malta had the best record in graduate employment compared to its European counterparts. Our university could not generate enough students to meet the demands of the economy. This equation is now starting to change.
Our economy is not generating enough jobs for our graduates. The problem is not restricted to graduates. Month after month, we are seeing more people under the age of 30 looking for work. One might feel comforted by the fact that we do not have it as bad as Spain or Greece where youth unemployment is far higher. To my mind we cannot draw any consolation from other countries’ woes. Nor is it comforting for the people who are registering for work to think about the situation beyond our shores.

The Prime Minister is on record as saying that he is satisfied that our country is still managing to generate new job opportunities and that our unemployment is still one of the lowest in Europe. He is failing to mention however that the influx of new jobs is not sufficient to meet the demand generated by jobs that are being lost, such as the jobs lost at Arrow Pharma.

There are not enough jobs for all the new entrants to the job market, be they school leavers, graduates, women re-entering the job market or retired persons who opt to continue working.  And there is one other fundamental consideration that is absent in the government’s economic vision and strategy: Which new sectors of job creation will replace the Arrow Pharma type of jobs that are being lost to Bulgaria and similarly cheaper EU countries? If the manufacturing lines in pharmaceuticals of ten years ago are losing their competitiveness, which jobs are going to replace them?

Unemployment has not yet exceeded 8,000 simply because this government has engaged hundreds of people on the public wage bill. We now have consultants for practically everything under the sun. We even have a consultant to find rehearsal spaces for rock bands. And a Maltese consultant to supervise public works employees in Gozo! All of these consultants are being paid handsomely for their efforts. That much we know.

What we do not know is what the country is getting in return. We are definitely not seeing much happening on the economic front. And before the Minister lets loose another tirade of how well the economy is performing, here is a bit of free advice. Go down to an ETC office and have a word with the people in the queue. Let them tell you “It’s the economy, stupid”.