Growth, Jobs and Social Cohesion are the three central elements underpinning the Pre-Budget Document 2010, which was launched, by Minister of Finance, the Economy and Investment, Tonio Fenech. This followed weeks of consultation, including meetings with the MCESD, businesses and the general public.

Minister Fenech explained that Budget 2010 will be drawn up in a particularly difficult international and local context, where the economic crisis has directly impacted all European economies.

In this context, Minister Fenech explained that central to Government’s proposals is the need to continue strengthening Malta’s competitiveness. He outlined a number of areas through which this can be achieved. This includes addressing market imperfections, improving labour market conditions, strengthening our productivity, increasing investment in education and training and increasing investment in a number of areas, such as essential infrastructures, R&I, clean technologies, next generation of broadband services and energy security and efficiency.

Tonio Fenech explained that the Pre-Budget Document provides a very detailed analysis of the economy, that allows the identification of those areas that need to be strengthened to ensure the achievement of our objectives. Tonio Fenech explained that ultimately the economy is a tool to provide a better standard of living and insisted that safeguarding and creating new jobs is key to Government’s policy and decisions.

Full details on the Pre-Budget Document for Gozo are as follows:

Introduction

Gozo’s particular characteristics are well known: distinctive and relatively unspoiled natural environment; close and strong social fabric, with its tranquil way of living; and a flexible and hardworking workforce. Nonetheless, the island faces a number of realities and challenges mainly originating from its double insularity. Being an island within an island, the operators in Gozo suffer from a number of comparative disadvantages, even when compared to their counterparts on the Main Island.

Latest data published by the National Office of Statistics estimates that in 2007, GDP produced in Gozo amounted to Euro 315 million, which is equal to around 6 per cent of the national total for 2007. In per capita terms, Gozo’s GDP at market prices was Euro 10,074 in 2007 compared to Euro 13,511 for Malta. Inherent disadvantages and drawbacks impinge negatively on the economic development of Gozo. This is reflected in a lower average rate of economic expansion compared to that registered in the island of Malta. Furthermore, average income per person in Gozo, measured in per capita GDP is significantly lower, standing at around 75 per cent to that in Malta.

Government’s vision for Gozo has been recognized in a number of policy documents which highlight Government’s commitment to transforming Gozo and the Gozitan society into a sustainable reality not only environmentally, both also economically and socially. It is with this in mind that Government is proposing a number of initiatives which are directed towards the achievement of such long-term goals, however which also take into account the current prevailing needs of the Gozitan economy and which aim to inject the necessary stimulus to help sectors which are currently undergoing periods of difficulty.

Ensuring the generation of sustainable employment is high on Government’s agenda. Whilst recognizing that the development of Gozo could be sustained by encouraging the development of sectors which are considered as important to the development of the island Malta, it is important to recognize the distinctive characteristics of Gozo and thus to ensure that policies for Gozo are not just a replication of a ‘one size fits all’ approach but are focused and created with Gozo’s specific needs at the centre of policy making.

The continuation of employment generation within a number of high value-added sectors which have recorded positive developments over the years will be of prime importance for Government for the forthcoming year. In particular, the focus would be on tourism and industry-related policies which within the Eco-Gozo framework should ensure the sustainable development of the economy of Gozo. Furthermore, the necessary environment and support to attract new start-ups or stimulate new ideas particularly within the private sector would be provided.

The next section will seek to analyse the main developments in the labour market over the last few years. Particular attention is devoted to the sectors which have been considered as the prime movers of employment in the Gozo economy. The analysis will also focus on sectors which have recorded declines over the recent years or which are in need of restructuring and ‘fine tuning’ to ensure that the highest level of efficiency in resource use is achieved.

An Analysis of the Labour Market: Past Trends and Current Developments

The labour market in Gozo is viewed as a limiting factor for establishing new businesses and expanding existing ones. Given the small population of the island and a recorded unemployment rate that is only slightly higher than that of Malta, the pool of potential new recruits is very limited.

The labour market provides further evidence of the challenges that Gozo is facing. The ratio of employed persons to the working age population in Gozo stood at just 51.2 per cent in Gozo. This figure is almost 10 percentage points lower than that found in Malta for the same year and this in spite of the fact that the labour force in Gozo registered an increase of 566 employees between 2000 and 2007. The disparity in the participation rate between the two Islands cannot be fully attributed to just one factor; nonetheless, it still provides clear evidence that the employment opportunities in Gozo are more limited.

Employment in Gozo is concentrated in two sectors: the Wholesale and Retailing sector and the other Services. These two represent almost 65 per cent of all employment in Gozo with the latter sector, in which government employment is listed, employing one-third of the total employment. The structure of the self-employed in Gozo remained relatively unchanged between 2000 and 2004, with the highest share of self-employed being in the Wholesale and Retail sector. Sectoral trends also show increases in Hotels & restaurants and Real estate activities with a slight rise in the Community, social & personal services.

Meanwhile, the share of Transport and communication fell noticeably (from 10 per cent to 6.2 per cent) during the last few years. It is the Government’s objective to close the gap in employment and participation rates that currently exists between Gozo and Malta. In order to achieve this, the employment rate has to be increased to 60 per cent from the current rate of 51.2 per cent. This translates into a net creation of around 2,000 jobs in Gozo. This figure is based on the assumption that the participation rate in Malta remains constant, which in reality is unlikely as the current rate of employment in Malta is rather low compared to other EU member States with efforts being made to increase the participation rate in Malta.

The targeted increase in employment is not expected to take place across the board, as employment opportunities in some sectors are likely to be rather limited due to productivity challenges and market saturation. Examples are employment in government departments and in the construction industry. The creation of new employment opportunities should be aimed in relatively high value added activities and in those sectors in which the Island of Gozo has a comparative advantage.

Analysis of the Competitive Advantages and Weaknesses: a SWOT Analysis

There is a general consensus that Gozo does offer a number of highly valued attractions, including a safe environment, a distinctive Mediterranean lifestyle coupled with a hospitable community and, a flexible workforce. Add to these, the attractiveness of the landscape, fine restaurants and hotels and, a relatively rich history and culture, and it is not difficult to see that opportunities do exist.

Nonetheless, despite the various positive aspects that characterise Gozo, these have to be considered in relationship with the challenging features that limits the socio-economic development of the Island. Indeed, the inherent characteristics of double insularity give rise to a considerable number of issues that can infer negatively on possible opportunities. A SWOT analysis follows:

Strength

Gozo’s physical detachment from Malta and its smallness makes it rather unique with distinctive characteristics that can be marketed to attract visitors to the Island. Additionally, specific characteristics both in terms of human resources and the environment do present a strong base on which targeted measures can be taken in order to create high value-added employment.

The following points can be noted:

Relatively unspoiled environment:

Gozo has to date avoided much of the construction related overdevelopment that has occurred in Malta. This gives Gozo a competitive edge over Malta in terms of tranquility and ambience. Additionally, the Island of Gozo offers an attractive topography with a natural landscape and scenic views that can be enjoyed in a non-densely populated area.

Preservation of traditional traits, with a strong and sometimes traditional social fabric which offers a safe and serene living environment.

Large stretches of coastline are still ‘unspoiled’ with clean surrounding water. Additionally, Gozo offers well-known diving sites which are considered among the best in the Mediterranean.

Rural development which has a strong direct linkage with the environment still has a strong presence among the local communities, thus ensuring the preservation of the positive externalities from agricultural activities.

Apart from the natural environment, Gozo boosts a rich cultural and historical heritage. The Cittadella and Ggantija temples are among the most notable and well-known heritage sites on the Maltese Islands. Other minor heritage assets are spread across several locations, such as fortifications and military buildings around the coast.

Gozo benefits from an active and enterprising community. This is evident in the various local clubs in almost all villages which are highly active throughout the years. Such examples are the nowadays established Opera and musical performances organized by the two main band clubs in Victoria.

A further point of strength present on the Island of Gozo is a small but highly active non-Maltese community, mostly made up of senior citizens, which are pivotal in the organization and running of NGO’s such as Wirt Artna.

There is a flexible workforce with a distinctive entrepreneurial spirit.

Several facilities and resources are already in place. One can mention here, the well equipped University of Malta campus premises, the sports complex in Rabat and also a number of fine restaurants and hotels.

Opportunities

The distinctive nature of the Island of Gozo with its particular characteristics, offers a number of opportunities that can be exploited to stimulate economic activities and create new employment opportunities.

The main opportunities can be listed as follows:

The fact that the Island of Gozo is physically separated from Malta offers the potential for distinctive branding in tourism.

The surplus in labour supply in Gozo can offer potential for back-office work and IT services.

Potential for eco-tourism.

Potential for Investment in renewable energy that can create employment.

Life-long learning and an active ageing population can partly mitigate the adverse effects emerging from the possibility of brain-drain process.

High potential in niche markets such as health tourism and sport tourism due to the tranquility of the island and its pleasant surroundings.

A highly enterprising labour force which quickly adopts to changing market conditions.

Weaknesses

Despite, the various positive attributes that emerges from the rather isolated nature of Gozo, there are a number of difficulties and challenges. Most of the weaknesses evidenced are direct results of the double insularity of the island which tend to accentuate structural problems.

Major weaknesses are listed below:

Constraints on the movement of people, goods and services due to the double insularity of the Island, as well as financial expenses and time delays mainly in the form of overheads and transport cost.

Access to the island is primarily provided by a ferry service between the ports of Cirkewwa in Malta and Mgarr in Gozo, and although highly reliable, this service is still to a certain extent dependant on uncontrolled conditions, resulting in a degree of uncertainty to an already costly and time consuming form of transportation.

The current public transport system fails to address the needs of the local residents and foreign visitors. Thus transport within Gozo is highly dependent on private use of cars. This causes a certain level of congestion in certain main areas especially in Victoria, causing air pollution and other related problems. 5.3.3.4 The small size of the island renders space very sensitive and as a result limits opportunities for both business and industrial activity,

Given the relatively small size of most business and the dependence on seasonal variation (in particular within the tourism sector) it is very difficult to take advantage of the benefits that economies of scale could render to a business. Furthermore firms tend to operate on a higher cost base. 5.3.3.6 Issues with space are also evident in the extremely fragmented farm land which limits the optimal use for agricultural use.

Employment in Gozo is still characterized by a high ratio of employment in Government services. Furthermore, such employment is mainly made up of clerical and lower-end grades with limited opportunities for career progression.

An emerging issue is the lack of sufficient child-care centres on the Island. This will become more pressing in the near future given the number of parents having to travel to Malta for work, compounded with the fact that people will remain active for a longer period of time.

Lack of matching employability skills to match current labour market demands.

Capacity constraints in tertiary education. Given the population size and the need for resources to support tertiary education it is difficult to provide courses at the University of Malta (Gozo campus) in line with courses offered at the Malta campus.

It is often the case that authentic Gozo craft products have to face unfair competition from cheaper imported products being sold as local ones. This is a consequence of the fact that presently no certification for quality rural/artisan products exits.

Inadequate spaces for ‘cottage’ activities, resulting in small family run manufacturing activities taking place in residential areas. (this can though be of an advantage to the local community )

Limited availability of regional statistics. This makes adequate and timely indicators challenging to obtain, thus impeding appropriate policy responds.

Threats

Like most other small Islands, Gozo has very few resources, apart from its human resources. Furthermore, Gozo has a rather specialized and concentrated output structure, highly dependent on tourism, including retailing, and governmental services. These factors combine to create a number of threats to the Island future opportunities.

These include:

A real risk of environmental degradation due to the continuously over-exploitation of the rare resources including the coastal areas.

Risk of excess urbanization where the mark between the villages are being blurred.

High seasonality in tourism arrivals put excessive pressure on both the physical infrastructure of the island as well as risking damaging the same distinctiveness (quietness and tranquility) that attracts the tourist in the first place.

Lack of adequate facilities around established beaches, especially parking facilities.

Lack of accessibility for the elderly, disabled and child bearing families in public areas.

There is a general lack of co-ordination of coastal management which risk damaging the marine and coastal eco-system.

Fragmentation in rural activities in connection with farm holding and land ownership, increasing the risk of making agricultural activities non-profitable. This will have adverse implications on the rural setting especially the loss of traditional activities and maintenance of dwellings.

Coordination challenges with regards to the organization of the various local activities, possibly resulting in inadequate marketing and package of the tourist product.

An ageing population which will present significant challenges in the near future, especially as there is a general lack of ‘retirement houses’ on the Island.

The high dependency ratio (the ratio of those under 16 years of age and those over 61 years to the working-age population) of the Gozitan population compared to the one registered on the main island. This higher dependency ratio can be attributed to a lack of opportunities on the island thus making it less costly for young persons to take residence on the main island in search of better opportunities and rewards. This issue generally also surface as a brain drain situation, which in turn hinders key development in certain areas.

Recommendations

The inherent characteristics of Gozo imply that recommendations need to be considered and proposed in the context of the current economic and social situation prevailing in the island. Whilst some specific interventions should be focused towards addressing temporary challenges, others should focus strongly on correcting identified structural weaknesses. The proposed recommendations seek to minimize on the identified threats, aiming to achieve long term sustainability in environmental, economic and social areas. The recommendations focus and build on the distinctive strengths of the island of Gozo, whilst seeking to maximize on the gains highlighted as opportunities.

The recommendations fall within three broad categories:

a) Better use of the current available resources with an emphasis on the administrative and institutional set up of the island of Gozo.

b) New and better focused initiatives to help current businesses and to encourage the start up of new business projects.

c) Business promotion strategies based on Gozo’s distinctive cultural and natural environment. It is imperative that for measures to be successful they have to take place within an appropriate framework where horizontal issues such as transport and the natural environment are in place. A number of demographic challenges are also considered given the importance of such developments within society. Moreover, it is equally important that there is a synergy of measures where contrasting actions are avoided. Whilst recognizing the importance of the various sectors which make up the economy of Gozo, it was considered appropriate to focus on two particular core areas which constitute the back bone of activity on the island, in particular tourism and industry.

Horizontal Measures

Issues Related to the Environment

It is Government’s target, through its Eco-Gozo strategy, to make of Gozo a model of sustainable development. Considering the relatively unspoiled environment and natural beauty of the island, measures in this area will help to create the necessary framework which will contribute to the economic development of Gozo, its tourist product and generate a number of ‘new’ jobs in this area.

The tranquility and attractive topography of the island, the large stretches of ‘unspoiled’ coastline and the presence of rural activities in most villages are a strength to build on. An increase in the level of environmental awareness and responsibility among stakeholders through initiatives at different levels of society, particularly within schools, by local councils and business initiatives in favour of the environment will be encouraged.

Government is committed to further promote the use of alternative and renewable sources of energy, particularly focusing on ensuring that schemes offered are taken up by the public, a case in point being the promotion of solar energy and use of windmills. Improvements in the environment will be of benefit to all and working towards the attainment of Eco-Gozo is a priority of the Government.

Issues related to Double Insularity and Transport

Gozo needs an effective and efficient transport system. An improvement in both links to and from and within the island will help to reduce the problems faced by the Gozitan population and provide a better service for both tourist visitors and the general public. A modern transport system is an important ancillary service which ensures that Gozo’s full potential is exploited to the maximum.

The implementation of the public transport reform in Gozo is targeted towards this aim, and together with the completion of the Cirkewwa terminal should ensure that transport needs from the main island to Gozo and within Gozo are better met. With particular reference to the needs of the visitors to Gozo, both for day trips and for longer stays, the provision of adequate and innovative tourist transport services from the port of Mgarr will be encouraged. This includes the availability of a sight-seeing bus (similar to that operated in Malta) and also the possibility of other innovative modes of transport.

Administrative and Institutional Reform

The socio-economic development of Gozo is sensitive to economic outcomes, particularly employment in a context of a tightly-knit community that is complemented by an extensive social protection network. Under these conditions, improving the allocation of resources and the functioning of institutions would help foster the necessary conditions to realise the desired objectives. Policies for Gozo would be better designed and implemented if underpinned by Gozitan involvement. A better level of co-ordination within the various entities and institutions which seek to focus on the current needs of Gozo is a prime objective of Government’s vision for Gozo.

In view of the size of the public sector relative to the Gozitan economy, the allocation of resources, especially human resources is of a significant nature for economic outcomes in Gozo. It is government’s conviction that the public administration, not just in Gozo, but also in Malta, must be fully tuned to the realities of the emerging globalised environment, where the private sector is constantly under competitive threat from a host of emerging economies. Government stands committed to ascertain that the supporting role of the private sector to the economic development process unfolds smoothly. Against this backdrop, continued emphasis on a constant critical review of the effectiveness and efficiency with which the public sector in Gozo delivers its supporting role to the local economy will be ascertained.

This critical review is not restricted to current work practices and arrangements, but should also explore more innovative structures for the delivery of public services. In addition, one should consider further the application of the Public-Private Partnership model. Such organisational arrangements have been deemed to be particularly attractive in view of their introduction of incentives, coupled with changes in work practices, offered to workers involved in such arrangements. The potential contributions of these models could, amongst others, be considered in the critical area of the overall cleaning and maintenance of streets, beaches, cultural and historic sites around the island.

Government is also committed to explore ways to strengthen the institutional structures in Gozo with the specific objective of improving both the designing and implementation of the desired policies for the island. This process should take cognisance of the needs and aspirations of Gozitans. Government strongly believes that the policy making and implementation processes are enhanced by putting Gozitans closer to the decisionmaking process.

To this effect, government is closely evaluating the establishment of a Gozo Regional Development Advisory Council that would be composed of representatives from government, social partners and a wide array of organisations of civil society. The principal function would mostly be concerned with advising the authorities on matters of importance to Gozitans. The brief of such council could cover advise on critical policy areas deemed necessary for the advancement of the economic and social development of Gozo and could include higher education, financial services, tourism, investment promotion, employment, EU funding, transport, culture and heritage.

In order for such council to function adequately, it needs to be publicly funded in order to commission research (from within and outside Government) aimed at developing policy proposals. To this end one needs to consider strengthening the collection and availability of statistics on Gozo with an eye on increase timeliness and the production of indicators (such as structural indicators) that facilitate the assessment of progress registered by the Gozitan economy and society more generally.

Tourism Related Measures

Tourism related activities offer opportunities to increase both value added and employment in niche activities. Gozo possesses some very attractive assets that if fully exploited can enhance its potential. Assets include both natural ones such as the landscape as well as cultural ones. Measures need to be taken in order to address issues related to marketing and packaging of the tourism product. Indeed, an adequate balance has to be reached between activities which seek to target an increasing number of visitors to the island and the safeguarding of the characteristics of the island (tranquility and quietness) which are themselves an attraction to tourist visitors.

Proposals will focus on both tourism generated by Maltese visitors which is of crucial importance especially during the shoulder months and that of foreigner tourists. Such measures are primarily directed to address the problem of high seasonal variation in tourist numbers which visit the island of Gozo, leading to pressures on the infrastructure of the island and significant fluctuations in employment within the industry.

Maltese Tourists

The re-introduction of a scheme to incentivise travel to Gozo for weekend periods in the shoulder months of the year would help to smoothen seasonal variations in tourist numbers. In particular one can mention the reintroduction of the scheme whereby the costs of travel (car etc) are covered by businesses in Gozo, once a specified amount is spent. Such a scheme could be also linked to the attendance of cultural/heritage activities organized by local organizations or the local council.

The promotion of local village activities, focused on what makes such villages different from the counterpart villages in Malta, will encourage Maltese travel to Gozo. A case in point is for example a festival which is themed around the production of a particular agricultural product or delicacy produced in Gozo (e.g. a gozo cheese festival, a lemoncello festival, a festival of sun dried tomatoes and others). One should ensure that such activities are organized within or be part of a whole set of other activities which would help to create an ‘eventful’ weekend for Maltese families and other visitors. The organization of such activities, of relatively low scale will help to generate activity in Gozo, of significant but not burdensome quantity in terms of resource use when compared to large scale activities organized by central government.

Foreign Tourists

Gozo can offer a truly different experience to its visitors and the characteristics of the island distinguish it from other touristic locations. A number of specific areas related to tourism have been identified as possible areas for further improvement, building on current strengths and exploiting opportunities which exist. One notes that improvements to the overall touristic product will not only serve to cater for the needs of the foreign market but is of an added benefit to the Maltese tourist to Gozo.

Culture Tourism

Government is committed to provide the necessary support and promotion to the organization of cultural activities, the restoration of cultural assets and the management and running of a number of heritage sites. Visits to such sites should really be an experience for tourists and facilities at such sites should be upgraded in line with recommendations issued by the competent authorities.

Local councils could be given additional support to get into cooperation agreements with other foreign local councils, possibly also tapping EU funds to organize activities and events. One could also consider the extension of opening times for cultural sites during the peak touristic season. Given the number of interesting cultural venues which are owned by private individuals, a scheme of incentives for the restoration and rehabilitation of such sites for public viewing would be of an added attraction.

Religious Tourism

The interest in religious activities, the abundance of churches and the high number of activities organized by religious entities in Gozo are an attraction for foreign visitors. It is being proposed that through proper marketing campaigns a number of unique spiritual venues in Gozo could be developed to cater for religious niche tourism.

Health Tourism

The tranquility and serene environment offered by most villages in Gozo are a perfect setting for the promotion of health related tourism. Gozo offers the ideal setting for facilities which attract patients to spend their after operation recovery period by staying in Gozo, or staying in Gozo for re-habilitation programs. One can also explore the possibility of offering cosmetic surgery facilities in Gozo. One acknowledges the need for adequate facilities to support such programs and thus measures should be investigated to promote this new niche tourism market. Furthermore, Gozo’s characteristics are also particularly attractive to retiring non-Maltese citizens, thus efforts should be made to continue encouraging them to retire in Gozo.

Sports Tourism

Two other areas that merit specific attention are sports tourism and diving activities. While the diving industry is well established on the Island, the concept of sport tourism is still not well developed.

Further assistance could be provided to the diving industry to improve its overseas marketing campaign and to help it in consolidating its current markets. The provision of new diving sites, located on different sides of the island would make diving possible in most weather conditions and thus improve the overall product. With the right measures in place and the typical Mediterranean climate, sport tourism could become a new niche tourist market. Training camps and other outside activities can be attracted to the Island. Better use could also be made of existent sport facilities whilst the building of new sport facilities could serve to attract new forms of sport tourism to Gozo.

Rural Attractions and Agri-Tourism

Tourism activities are intrinsically related to the environment. The environment affects the type of tourist that visits the island and in turn the tourist influences how the environment is looked upon. Of particular interest in this area is the role played by the local agricultural community, and its significant contribution to safeguard the environment. The proposed measures in this area are in line with Government’s strategic commitment for ‘Eco-Gozo’.

The mixture of rural and coastal scenery in Gozo, provides an ideal setting for the establishment and further promotion of walking paths. The provision of better ancillary services related to this type of activity is needed. Other specific ideas under consideration include the setting up of ‘natural parks’ in specific areas such as Dwejra, Mgarr ix-Xini, and other areas of the coastline, the re-use of exhausted quarries and explore the possibility of setting up a park on the lines of ‘Limestone Heritage’ in Siggiewi.

The possibility of developing activities related to agri-tourism are to be explored. Given the size of the island and the relatively few available spots for a fully fledged form of agri-tourism it is being suggested here that a number of farms/agri-related businesses (in particular one can mention the production of olive oil, wine, cheese, honey, and other produce of the local agri industry) coordinate to promote their produce and offer their facilities for viewing by tourists. The production and marketing of local products, which are indigenous to particular villages can be further encouraged and supported by both financial and other help.

The particular characteristics of villages, their core buildings and attractions could be improved through schemes which would help to re-generate and preserve village core areas, such as schemes to arrange old wooden balconies, schemes to restore old religious niches and public recreational areas. By working in close collaboration with the local councils, Government would ensure that the best use is made of funds available to preserve and restore that which makes villages in Gozo unique.

Education Tourism

The already available facilities at the University of Malta campus and at other venues could be better utilized to encourage a number of initiatives related to education tourism, such as the setting up of English language schools, both for teenagers and for mature individuals. The provision of specialized courses in agricultural studies and craft work together with other areas of interest in conjunction with local business could also be pursued.

Industry

Employment in Gozo in the manufacturing industry has declined significantly since the turn of the millennium, in line with the trend experienced in Malta. However, there is scope for exploring other emerging industries which are less prone to the constraints presented by transport cost, wage costs and physical space. Malta Enterprise has a significant role to play in promoting and ensuring that the particular needs of small and medium sized enterprises in Gozo are adequately met.

Industry Space and Crafts

Generally, given the size of the island, space considerations lead to limits in opportunity for both businesses and industrial activity. There is a certain level of difficulty in finding suitable land for business and for industry use. This applies for both small sized manufacturing firms and also to family-run locally oriented businesses such as carpentry, metal-work and similar crafts. Thus, due consideration should be given to identify areas and space that can be used for business and industrial purpose.

Furthermore, the concentration of business and industrial activities away from the village core areas would be in line with ensuring that the potential of villages in terms of quietness, tranquility and environment is maximized. The concentration of small businesses in a specific location, away from the village core areas, would also lead to spill-overs amongst firms and possibly further employment generation possibilities. To this effect the provision of adequate space for small size family businesses would need to be identified.

The promotion of Gozitan crafts would be enhanced through the setting up of a co-operative which would aim to promote development of Gozitan hand made products, including in particular lace-making, carpet weaving, filigree work and curved stone. The promotion of such products is in line with Government’s commitment to promote local products and also in line with measures targeted towards improvement of Gozo’s tourism product.

Gaming

One particular industry that has been thriving in Malta in recent years but which is notable in its absence in Gozo is the gaming industry. This particular industry is not hindered by either transport cost or space and thus offers a good opportunity to attract employment in Gozo. It is thus crucial to identify the needs of this industry in terms of human resources and physical facilities and also consider the possibility of promoting and offering incentives for the gaming industry to set up business in Gozo.

ICT and Back-Office Work

Accentuated seasonality is presently exhibited in almost all activities on the Island. This seasonality translates into higher registered unemployment in winter compared to summer and the shoulder months. Whilst acknowledging the supply of a highly enterprising labour force, which quickly adapts to changing market conditions, a number of measures are being proposed to help in reducing seasonality in employment conditions. The development of a skilled workforce, through adequate training programs, focusing on ICT related jobs would help to reduce the number of jobs which depend on seasonal factors. Providing the necessary help to encourage young people with entrepreneurial ability and ICT skills to set up their own small business in ICTbased services is being proposed. Other incentives could be given to promote the development of financial services and call centers establishing base in Gozo. Incentives to allocate back-office work in Gozo are also being proposed.

Demographic Challenges

Given the current conditions in the labour market and the particularly high and increasing number of parents working in Malta, it is becoming increasingly necessary that adequate child-care centers are built and manned to deal with this new demand. The running and manning of such facilities could be carried out in partnership with the private sector through the use of a Public Private Partnership agreement.

On the other hand, given the ageing of the population, there is also an increasing need for retirement homes in Gozo. Such an initiative could also be carried out in conjunction with the private sector through the use of a Public Private Partnership agreement.

Concluding Remarks

The Island of Gozo suffers persistently from market failures as well as a lack of economies of scale due to its small size. Furthermore, there are other restrictions emerging from double insularity. Distinctive policies from that of the main island need to be designed in order to correct such market failures and to create the right environment to encourage the right mix of initiatives especially in the form of Private-Public initiatives. Such measures should be carried out in the context of sustainability, which calls for a long-term view of development, taking into consideration environmental, economic and social impacts.

The Pre-Budget Document can be downloaded in full from http://www.budget2010.com.mt

Feedback can be provided via email (budget2010@gov.mt), by participating on the forum on the same website, or by phone on 25998888.

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