Barely a month ago we were celebrating the achievement of the lowest unemployment in Malta’s history. In July the number of persons registering for work had fallen to 1,542. This beat the previous record of 1,616 that had been set in June 2019.
With the recovery in tourism gaining traction, it was to be expected that the labour market situation would continue to recover. And so, it did. August 2021 marked a new record unemployment low. Those looking for work were down to 1,442. This improved on the previous month’s record by another hundred.
This is a far cry from the 50,000-unemployment prediction that had characterised the onset of the pandemic.
When one looks at the lowest unemployment achieved in every year since Malta’s Independence, one finds five key months.
In June 1970 Ġorġ Borg Olivier presided over an unemployment level of 3,250. This record was bettered by Dom Mintoff in August 1979, when unemployment dropped to 2,930. For this record to be broken it took until 2016 under Joseph Muscat, when unemployment fell to its lowest in June 2019.
Throughout the long period between 1987 and 2013, the lowest unemployment fell was 4,220 in 1991. To give some context, this was roughly about the peak unemployment Malta experienced during the pandemic.
In August 2021, those registering for work stood at less than a fifth of the number of persons who were registering in March 2013. In Gozo, there are currently just 127 persons registering. Back in March 2013 there had been 743, or six times more than at present. These unemployment numbers constitute veritably a situation of full unemployment. That this is happening at a time when the country’s GDP level is still below 2019 levels indicates that not only Government policies safeguarded the pre-pandemic productive capacity of our industries but that at the same time, there has been an expansion in investment that has created demand for even more labour.
Whereas the rise in unemployment caused by the 2008 financial crisis took until 2015 to dissipate, the temporary rise due to the pandemic lasted less than a year and a half. A job market recovery that was five times faster. The dynamism created by the make-work-pay reforms enacted by Labour since 2013 not only made our job market more resilient, but they also made it much more efficient in the recovery process. Individuals no longer fall into a poverty trap when they become unemployed. Now they face a system that has in-built incentives for them to seek to be employed anew.
Mothers who lost their job, previously would have thought twice before accepting a job offer as they had to factor in childcare costs. Now this is no longer an issue. Being in employment means free childcare. Labour’s make-work-pay reforms are by far the biggest social innovation since the welfare state was set up. They are also one of the key engines of Malta’s economic model.