Recent events involving financial institutions of ill repute and high ranking politicians were placing Malta’s reputation and economic future at risk, Malta Employers’ Association director general Joseph Farrugia told the International Labour Conference in Geneva on Tuesday.

Farrugia warned that Malta’s main growth sectors – gaming and financial services – were volatile and “heavily dependent” on the country’s international reputation and rigorous corporate governance.

Good governance, he said, was being undermined by MPs occupying executive positions in public entities and “thus creating a serious conflict of interest between their legislative and executive roles”.

During his speech at Palais des Nations, the MEA’s director general also referred to “the brutal assassination of Daphne Caruana Galizia, Malta’s foremost investigative journalist” on 16 October, saying it had left “an indelible mark on the country’s social fabric”.

Farrugia was addressing the 107th Session of the International Labour Conference being held until 8 June.

It is the International Labour Organisation’s (ILO) highest decision-making body that meets annually, bringing together the tripartite delegations from the organisation’s 187 member States and a number of observers from other international actors. The conference debates a series of topics related to the world of work, placed on its agenda by the governing body of the ILO.

He said the challenges being faced by Malta were partly a result of its economic success, although others were self-created.

One challenge highlighted by Farrugia was the rapid demographic change “mostly brought about through the influx of foreign workers”. Farrugia said this was resulting in an overheating of the property market, which, in turn was becoming a major cause of wage inflation “not backed by productivity”.

He said employers were calling for a long-term strategic approach to the radical social and economic transformation that Malta was facing, to enable a managed transition that would address the pressure that population expansion has on the social and physical infrastructure, on education and health services, and the natural environment.

Farrugia said Malta was a good example of how strong tripartite social dialogue structures have contributed to economic growth.

Since joining the EU, average GDP per capita had increased from less than 75% of the EU average to 95%. Malta has one of the lowest unemployment rates in the EU, Farrugia said.

There was a “healthy increase” in female participation rate – driven both by positive incentives and economic necessities. Yet, the increase in domestic labour supply could not keep up with the rate of job generation, Farrugia said.

The shortfall in labour supply in the private sector – partly caused by an increase in employment in the public sector – was being matched by an influx of foreign labour, both from inside and outside of the EU. In the private sector, 30% of employees were non-Maltese.

This momentum of real GDP growth in excess of 5% in 2017 has improved the state of the country’s finances, with a fall in public debt to 51% of GDP from a high of 70% in 2011.