The next active labour market policy
Malta’s employment market has undergone a major transformation in the last decade with new sectors flourishing like the platform economy, remote working coming of age, the influx of thousands of migrant workers and a steady rise in the participation rate of women.
The existing employment policy dates back to 2014. Seven years ago, the priority was to make work pay as there were too many inactive people. In this respect, the policy which saw the light of day thanks to the forward vision of UHM Voice of the Workers, has reached very impressive milestones. Those in employment have soared from 178,241 in 2013 up to 258,064 in 2019 – an increase of 45 per cent. Meanwhile female participation rate rose across all age cohorts especially between 25 and 54 years in which case the increase was from 48% to 74%. The introduction of free childcare was a game changer in this regard. Making work pay also means that thousands which had been inactive were lured back in employment thanks to the gradual tapering of social benefits. It is no coincidence that the inactivity rate dropped from 40% to 25% with the decline being especially pronounced among women.
However, seven years down the line policy makers need to take stock of the situation. The reasons are two-fold: first the objectives set in 2014 have been reached and secondly due to the fact that this success has brought about new challenges.
Arguably, the biggest issue at present has to do with the work-life balance. There are worrying indicators that the increase in participation rate has had a negative impact especially on families with children. While spending power might have increased, family members have less quality time together as both parents have to juggle between work and house chores. This is resulting in families ending up having little rest and doing the supermarket shopping on Sunday rather than sit back and relax before the start of a new week. One of the proposals being put forward by UHM in this respect is to launch a pilot project to gauge the feasibility of working less than 40 hours per week without negatively impacting productivity. In this respect research and trials carried out abroad are very encouraging. Though such measure might not necessarily work in all types of jobs, it would be unfair not to consider it in areas where it is feasible.
Research published recently by CNN has shown that in certain cases 40-hour work weeks are “pointless and even harmful”. Researchers in Iceland are calling trials of a shorter workweeks an “overwhelming success,” after productivity improved and workers reported feeling less burned out.
In two large trials between 2015 and 2019, public sector employees were asked to reduce their work time by about five hours a week, without reducing their pay. After shortening the workweek to about 35 or 36 hours, instead of 40, researchers found that productivity and services stayed the same or improved across the majority of workplaces. Around 86% of Iceland’s entire working population is now working shorter hours or have gained the right to shorten their working hours.
In the near future, the finance ministry will be unveiling the new employment policy catering for the country’s needs of the next decade. Though the reduction of the 40-hour week brings about various challenges, sticking our head in the sand would be a mistake. The alternative would be to brace ourselves for the status quo which means that our quality of life continues to take a nosedive. Moreover, if change is to be successful, it is a must to engage with all stakeholders not least workers and unions in order to have constructive feedback and consultation. This should be the way forward if government wants everybody to be on board.