Employers slam Clyde Caruana’s cheap talk

The Malta Employers’ Association has rejected Finance Minister Clyde Caruana’s claim that businesses’ preference for cheap foreign labour over capital investment drove population growth, challenging the minister who helped shape and implement Malta’s labour recruitment policies.

Caruana headed the Employment and Training Corporation, later renamed Jobsplus, from April 2014 until October 2020.

As executive chairman, he oversaw the employment agency during the expansion of Malta’s foreign workforce and publicly defended recruitment from abroad.

His biography states that he authored policy documents central to the government’s labour force strategy and was a principal driver of their implementation.

In a 2019 interview with Times of Malta, Caruana acknowledged that limiting labour supply would increase wage pressure, with implications for business competitiveness.

He defended foreign recruitment as necessary to sustain economic growth and finance pensions and welfare, while acknowledging pressures on housing, education and the environment.

The interview reported that Jobsplus was processing work-permit applications within ten days.

Foreign workers numbered 55,000 at the end of 2018, up from 43,000 a year earlier, according to reported figures.

This week, Caruana said businesses had opted for cheaper labour rather than more expensive capital investment. He also rejected suggestions that public-sector recruitment had deprived private employers of workers.

The MEA disputed his account, saying the government’s population and construction-led growth strategy had been adopted without agreement or discussion with social partners.

It argued that technology often complemented workers rather than replacing them, particularly in tourism, transport and construction. Employers were recruiting abroad because essential positions could not be filled locally, it said.

The association also blamed public-sector recruitment, additional leave entitlements and traffic congestion for increasing staffing pressures and reducing productivity.

It cited annual growth of 1.4% in gross value added per worker, compared with employment growth of 3.9% and GDP per capita growth of 1.6%.

The MEA called for incentives supporting capital investment, technology and automation, saying high upfront costs and uncertainty discouraged smaller businesses from investing.

Caruana had already advocated a change of direction in a February 2021.

At the time, he defended the preceding seven years of economic policy as necessary for growth, while acknowledging that the next phase required a different approach.