Wednesday, February 20

Standard of Living in Malta

Couple low wages with a high cost of living, add the Mediterranean sea and you get sunny Malta.

A three bedroom flat costs more than the average Joe earns in twelve years. How much does a small vehicle like the Mini One cost? About 10,000 euros more than it does in the UK. The average Joe does not afford these necessities, but he buys them nevertheless. "I can always take out a loan", he says. Finished paying your house loan and car loan, why not take out a loan for a boat or that holiday you have been promising yourself? The banks have a field day every day in this country. The queue to a loan processor must be longer than the queue to a cashier.

Is the average Joe complaining? Nowhere as much as he should be. Blame it on the relaxed Mediterranean lifestyle, I say. Hold on a minute, how can the average Joe relax if he is barely earning his keep by the sweat of his brow? There is more to life than sun and sea, you know. If the average Joe is not that bothered, wealthy politicians will be even less bothered. They win elections over ways to make us save 10 euros a week, like that is going to make a difference. Wages are still fundamentally the same as they were five years ago. The same cannot be said about the cost of housing. How do people on minimum wage survive? Do they eat? Seriously.

Regardless of how much revenue a local company makes, the wages are still more or less the same. Is this ethical? This brings me to the conclusion that Maltese employers think that if they pay their employees well, they will never afford a huge yacht complete with crane to gently lower a 15 foot speedboat into the sea. I am grossly generalizing but, last I heard, Malta was still the country with the biggest number of Ferraris per capita. That is food for thought. Scratch that, make it a five-course meal for thought.

Make no mistake, the problem is not the employers. No, Siree, it is the employees. If qualified people cease to accept low wages, employers will have to increase them. Similarly, if nobody buys houses and cars, the prices will have to go down. But we keep taking low-paying jobs, and we keep buying ridiculously overpriced housing and vehicles. I know we have kids to feed and shelter, but you cannot expect prices to drop if you keep buying, can you? Dear economics students, throw your textbooks out the window because theories of supply and demand, prices and quantities do not apply to Malta.

It is not so simple though. Why are qualified people willing to work for so little? Here is my take on the subject. University is free in Malta. This results in hundreds graduating every year, more than required locally. This, in turn, results in recent graduates accepting local jobs for wages so hilariously low they almost equal those of inexperienced non-graduates. Which, in turn, results in graduates with years of experience not being offered the wages they deserve. Would you hire one experienced, expensive graduate for the price of two or three young, inexperienced non-graduates? The answer has to be yes. Otherwise it will lead to a scenario where, pay-wise, degrees will be as close as makes no difference to worthless. In that statement, I am excluding jobs which actually require a degree like architecture, medical, and what not. This fact remains: the smarter we get as a whole, the less we are being paid individually.

I am sounding bleak I know, but making employees financially happy does not seem to be on the priority list of Maltese employers. Happy? Employees should be thankful they even have a job, right? Not so much. Hiring someone does not a benefactor make. Employees were not out in the street begging for food and clothing before they got hired. A job offer is not a gift. An employment contract is an agreement between employer and employee to help each other out. The sooner we realize this, the better for everyone. You see, hiring a person is easy, retaining that person is another story. Which is why Maltese employers are now complaining about foreign firms opening in Malta and poaching their employees. What nerve! How dare these foreigners offer good wages? The answer is simple: the feudal system has long been gone.

Local employers should take this as a wake up call, instead of laughing at how much these companies are willing to spend to keep employees happy. Some will point out that these foreign firms make more revenue than local ones, but I have already mentioned that wages given by Maltese companies do not vary according to revenue. More foreign companies are opening in Malta and even more will open with SmartCity. Guess where they will get their employees from. Eventually Maltese employers will be forced to face the music and realize what must be done to retain good employees. Eventually the average Joe will be able to afford necessities. Eventually.

Read also Relative Cost of Living and Chaaarge!


Anonymous said...

First of all. Welcome to the blogosphere.

Thank you for your kind comments.

I will try to link you up when I have to time to update IL-MINJIERA TAL-GURNALISTI HIELSA.

Keep it up.



Lilia said...

i am not sure i can agree with ur point tht hundreds upon hundreds are going to universuty b'coz it's free...proportionately the turn out it low...many drop out from high school.

Keith Chircop said...

Lilia, do you agree that more people are graduating than necessary in various fields?

Red said...

Very interesting post!!!

I think that there are two other important points to keep in mind. Sadly, as the propaganda against trade unions gathers increased strength, many employees do not bother to unite and join a trade union. At least, once a person joins a trade union, there is the chance of safeguarding certain rights via collective agreements. Many Maltese employers are currently incredibly enthusiastic as they throw their nets to capture as many young, alienated people as possible; individuals who often do not have an idea about the benefits of belonging to a union.

The other point that ought to be mentioned is that capitalism thrives on the fact that a certain percentage of the population is always unemployed. Many employers in Malta know that if someone resigns, they can always recruit an 18-year-old person, "train" them, and if things go badly, recruit some other desperate job-seeker.

Unfortunately, we are living under the capitalist rule. Every five years or so, the Maltese people are simply asked to elect the party that will continue managing the country using the same economic model, albeit with some small differences. The employers in the private sector in Malta have become so powerful that several politicians have apparently become nothing more than pawns in their games.

I do not know to what extent Dr Joseph Muscat will reverse the tide of capitalist power, but it would be nice to live in a country whereby the masses can enjoy better lives.


I've got nothing against a capitalist regime for various reasons, one of which being that it helps the country progress faster. Once the country reaches a comfortable financial situation it can start helping those in need (single mothers, widowers, etc).

The problems I'm talking about arise when a small not-so-successful company that pays its employees little money (understandably) grows but keeps paying its employees (who helped it prosper) little money, while the cost of living keeps rising and rising. These employers expect loyalty from their employees when they're giving them so very little. By loyalty I mean they expect the employee to be a sucker and take whatever Little Lord Fauntleroy dishes out. They think the feudal system is still on. The rich get richer, and the poor get poorer, and the rich are quite happy this way.

I know George Abela and Marie Louise Coleiro were true socialists, but I don't know how much of a socialist Joseph Muscat is. Alfred Sant didn't have a socialist bone in his body that's for sure, which is one of the reasons why he never got re-elected. We'll wait and see.

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