In July there were 1,542 persons registering for work. This was the lowest number of jobless persons ever recorded in our nation’s history. The previous minimum had been that recorded in June 2019, when there were 1,616 persons on the unemployment register.
Unemployment had been on the decline ever since in 2014 Government started to implement its active labour market policies. A recent Central Bank of Malta study shows how these policies had an immediate impact on unemployment. Those who previously had languished on the register started to move unto full-time employment, reversing previous trends of rising long-term joblessness that had started in 2006.
By the time the 2008 international recession hit the Maltese economy, these labour market issues combined with the misguided austerity approach adopted by the Gonzi administration led to unemployment shooting through the roof. From 5,861 in June 2008, the number of those on the register rose to 7,900 by February 2010. Subsequently as the economy recovered, unemployment fell, but by March 2013 it still stood at 7,350. Thanks to a booming economy and the new labour market policies such as free childcare, tapering of social benefits and the introduction of the in-work benefit, by mid-2019 the number of persons on the register in Malta had fallen to 1,616.
The previous minimum had been that recorded in June 2019, when there were 1,616 persons on the unemployment register.
The onset of COVID-19 led to an initial shock that far exceeded that of 2008. In fact, unemployment initially rose by about 2,750 persons to reach 4,409 by the end of May 2020. While it took until April 2015 for Malta to return to the level of unemployment there was in June 2008, a recovery time of 72 months, this time round it took just 16 months for unemployment to return to its pre-pandemic level. The difference between austerity politics and progressive policies was to shorten by four-fifths the duration of the spike in unemployment.
Besides this, while there was an initial rise in unemployment, it always remained well below the historical average seen since independence, of about 6,000 persons. Contrast this with the 50,000-unemployment forecast made by some at the onset of the pandemic in Malta. Instead, we now have the lowest number of unemployed persons in history and firms complaining that they cannot find enough staff. This is testament to the excellent Economic Regeneration Plan that Government announced in June 2020 that marked a veritable turnaround in business confidence.
Prime Minister Robert Abela has managed to achieve an economic achievement that surely celebrates the centenary of the establishment of the Labour Party. To transform a shock that threatened to devastate Labour’s economic and social legacy into an opportunity to achieve the lowest number of unemployed in the nation’s history confirms Dr Abela’s reputation as a safe pair of hands.
Abela’s record in this crucial field now outshines that of all previous Prime Ministers. Under Borg Olivier, the lowest unemployment went was 3,250 in June 1970. Dom Mintoff managed to lower it to 2,930 persons in August 1979. Under Fenech Adami, Sant, and Gonzi unemployment never fell below this level. In fact, it was only in December 2016 that Mintoff’s record was beaten, with unemployment gradually reaching 1,616 in June 2019. After that month it started to creep upwards again, before the shock of the pandemic hit our economy.
Robert Abela’s record in this crucial field now outshines that of all previous Prime Ministers.
On average, under Labour administrations, the number of registered unemployed stood at 5,723. This is 10% less than the average unemployment under Nationalist led legislatures. Under Robert Abela, despite the pandemic, the number of registered unemployed has averaged 2,789, or less than half the historical average. Compare this with the average of 7,034 observed under Lawrence Gonzi.
For some, it may be easy to discount this achievement. They will argue that it comes at the cost of a much higher fiscal deficit. Yet, deficits have skyrocketed all over the euro area, and their unemployed total remains one million persons more than it was before the pandemic.
The decline in unemployment seen in Malta over recent months is not simply the result of Government throwing money at an issue. It is the result of a targeted and well-thought approach that had found many critics. For instance, in the design of the wage supplement Government did not copy other European countries providing a given percentage of previous wages to all. It provided a fixed sum, which translated into a stronger subsidy for low-income workers – the ones who firms usually fire first during a recession. Similarly, instead of lowering temporarily VAT rates as many stakeholders wanted, it came up with the voucher scheme.
Today EU countries that lowered VAT rates are raising rates again, with no discernible impact on consumption as consumers were not enticed to spend more. If anything, they are now worried about the higher prices that are resulting from the VAT rise. Instead in Malta consumer flocked to spend their vouchers, even spending double the amount Government gave them.
With this new economic record under his belt, Prime Minister Abela can now set his sights on progressing his long-term vision of transforming the foundations of Malta’s economy.