The “Great Reset” will see the alignment of the economy with the most pressing social issues. How can Malta capitalise on this monumental change and make sure that its workforce will be equipped with the skills necessary to succeed in this brave new world?
The “Great Reset” is the name given to 50th annual meeting of the World Economic Forum (WEF), which was held in June 2020. Several high-profile individuals and political leaders discussed a global pressing issue: How can countries rebuild their economies and societies in a sustainable way following the COVID-19 pandemic?
The “Great Reset” discussions revolved around three main components:
(i) constructing conditions to promote the creation of a ‘stakeholder economy’;
(ii) making use of environmental, social and governance metrics to better promote green infrastructure projects; and
(iii) harnessing the innovations of the Fourth Industrial Revolution.
These components should help countries develop a forward-looking plan to revitalise their economies.
Economic forecasts show that the Maltese economy will reach pre-pandemic levels by the end of 2022. This rebuilding can only be sustainable if policy is geared towards addressing the above-identified components. Towards this end, three additional and complimentary factors are deemed to be crucial in the local context: the ability to attract foreign investment; the ability to expand the economy’s innovation capacity; and the agility with which we move towards a low-carbon economy.
The first factor is the country’s ability to attract foreign direct investment. In recent years, the island attracted investment across a wide range of economic activities, including financial services, digital gaming, high-end manufacturing, and aircraft maintenance. A determining factor for many of these investments is favourable taxation. However, the COVID-19 pandemic has shown that this might not be enough. Digital skills are now, more than ever, needed to attract businesses.
Complementary to investment in digital skills is a second factor: investment in innovation. Innovation is an enabler of international competitiveness and economic growth; it leads to enhanced efficiency and productivity, lower costs, better-quality goods and services, and increased market efficiency. Hence, policies and strategies that aim to boost innovation capacity are key. Investing in education, offering better tax incentives on research and development, supporting skilled migration and on-the-job training would help Malta generate growth through a knowledge-driven economy.
Finally, the third factor is Malta’s ability to transition towards a greener and more low-carbon economy. During the pandemic, certain government restrictions mandated working from home where possible. In these instances, we saw an increase in induced emissions due to excess energy consumed at home compared to at work. However, most of the corporate carbon footprint relates to employee commute. The ability to reduce commuting down to zero, without significantly effecting productivity outputs was a major benefit. Seeing how the unintended effects of government restrictions could help policymakers better understand what type of policies could support this shift to a low-carbon economy whilst simultaneously support economic growth. The investment in renewable sources of energy, promotion of green jobs, decarbonisation of mobility and green public infrastructure projects will not only help the regeneration of the Maltese economy from the negative effects of the COVID-19 pandemic, but it would also lay out a plan moving forward for sustainable economic growth.
This drive towards investment in digital skills and innovation and transition towards a greener economy is of the utmost importance for countries to flourish in the future. Even though Malta has had very good economic performance in recent years, it is now more important than ever to shift our mindset and rethink or implement certain strategies and policies. Together with the creation of a ‘stakeholder economy’, these factors should not only help Malta’s economy recover from the COVID-19 pandemic but be the building blocks for a more sustainable economy.