WE WERE PROMISED PROSPERITY (BY IMPORTING POVERTY)

By Economist

There is a brutal truth Malta’s political class would rather avoid: you cannot build prosperity by endlessly redistributing wealth that somebody else has already created. Yet that increasingly appears to be the economic bargain offered to the Maltese people. Subsidies, benefits, allowances and handouts are paraded as progress while politicians compete to promise voters a larger slice of the pie. But governments cannot make a nation richer simply by moving money from one pocket to another. Real prosperity comes from a productive economy. Such an economy occurs when you have businesses that invest, workers whose skills become more valuable, wages that rise and families who can build secure lives through work.

And this brings us to the question Malta has spent years avoiding: why did successive governments choose mass immigration rather than allow wages to rise? Over the past two decades or so, Malta has imported huge numbers of foreign workers into restaurants, hotels, delivery, logistics, construction, care work and distribution. The argument was that the economy desperately needed workers. But an economy facing a genuine labour shortage has another mechanism available: higher wages. When workers are scarce, employers should have to compete for them. Pay should rise, conditions should improve and productivity should become more important. Instead, Malta dramatically expanded the supply of overseas labour, including workers prepared to accept wages that many Maltese workers could regard as unattractive.

That decision may have delivered short-term growth, but what did it do to the foundations of the Maltese middle class? If employers can solve labour shortages by bringing in more workers from abroad, the pressure to raise wages weakens. When wages remain low while living costs rise, the State is inevitably pushed towards compensation. More subsidies follow, from energy bills to healthcare. More benefits are demanded. More people become dependent on government intervention. Then politicians declare that the answer is even more redistribution.

It is a remarkable political circle: import labour to keep wages competitive, discover that ordinary workers struggle to get ahead, expand welfare under different programmes to compensate them, then insist the State must do even more. This is not an argument against migrants as individuals. Foreign workers came because Malta created demand for their labour. The responsibility lies with the economic model created by governments and businesses.

Malta joined the European Union hoping for opportunity, investment and rising living standards. So why was the answer to labour shortages not a sustained rise in wages, greater investment in skills, automation and productivity, and a determined push towards higher-value industries?

Now both major parties appear to be marching further left, competing over redistribution while the economic foundations receive less attention. A welfare state can protect prosperity; it cannot manufacture it.

Malta needs right wing economics: productivity, skills, investment, strategic industries and rising wages. Make work pay. Reduce dependence on low-cost labour. Build an economy capable of creating wealth rather than endlessly redistributing it.

Because the real question is simple: Why keep fighting over the pie when we should be making it bigger?