Corporate DispatchPro
Issue No.3 | 25th May 2020
Corporate DispatchPro The Journal of CI Group
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Issue No.3 | 25th May 2020
Corporate DispatchPro The Journal of CI Group
EDITORIAL TEAM Andrew Azzopardi Isabelle Micallef Bonello Jesmond Saliba
Contents The paradigm after the crisis
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Creating a shared value ethos – towards 2030
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From profits to resilience
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It’s a long jump back onto the travel bandwagon
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Communication now is a Form of Leadership
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Malta’s key enabler: A digital & green transition
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The Tripoli mirage
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Catering on a knife-edge
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Malta Insights
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CommuniqEU | Environment & Biodiversity
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Production Assistant Laura Grima Shirley Zammit
CommuniqEU | Financial Services
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CommuniqEU | Neighbourhood Relations
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CommuniqEU | Foreign Affairs
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Design TEAM Matthew Borg Nicholas Azzopardi
Handshake will be relic of a more trusting time
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Homing in on homelessness in Malta
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Local Perspective | Global Outlook
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Contributors Ann Marie Cutajar James Vella Clark John Foley Keith Zahra Matthew Bugeja Nathanael Muscat Sharon Lam Tonio Galea
Sources
Published By
Additional Sources
Design Produced
2 Cover Photo by CALIN STAN on Unsplash
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Corporate DispatchPro Editorial
The paradigm after the crisis A crisis is rarely welcome, but the coronavirus emergency may be just what the doctor ordered at this juncture in history. That the pandemic pushed the world into an ‘unprecedented period’ has been repeated enough times already and, indeed, never before has a disruptive force spread so rapidly and so broadly. However, this could only happen because we forged conditions that were themselves without precedent: deep-seated international ties powered by a break from analogue electronic technologies. Before the pandemic, governments, businesses, and societies were speeding towards a fourth industrial revolution that some will argue is already here. The digitalisation of life thanks to advancements in areas such as artificial intelligence, biotechnology, materials science, or quantum computing put humanity on the cusp of a completely new era. The Covid-19 outbreak is perhaps the decisive nudge that will bring about this impending paradigm shift. The disease has altered every aspect of life – healthcare to leisure, governance to activism – and many of the changes have been made for good. The emergency measures introduced in practically every country, have provided the opportunity to re-evaluate human contact and the void created by social distancing has quickly been filled by digital solutions there were waiting in the wings. Trade and the economy, sport, services, education, strategy and leadership, even warfare will have to adapt to an increasingly contactless environment. The worth of personal touch can only be 5
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Corporate DispatchPro expected to grow, but human interaction across all fields will likely transition into the digisphere without looking back. Communities will find their ways through the new age, as they always have, but business, the media, authorities, and other major stakeholders have a pivotal role in building new norms, standards, and values in the emerging social system. Global cooperation will be redefined; international trade will open new paths; social and ecological justice will demand different approaches; jobs will address fresh challenges. Once we cross the Covid-19 bridge we shall discover the full extent of the change that has been going on over the recent decades. For the first time in history, the definitive shift will have had a clear demarcation line.
Jesmond Saliba
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Corporate DispatchPro CiConsulta
Creating a shared value ethos – towards 2030 The Independence of Malta from the British Government had triggered a socio-economic development in a small-island state with very limited natural resources. The hard-working ethic of its citizens, as well as the investment-pro strategy of the various public administrations led to a thriving economy, which although faced periods of recession, has culminated in Malta being one of the top economic performers in the EU. The socio-economic programmes driven by the public and private sector in the last years that resulted in our country being one of the leading economies in Europe will surely need to be revisited in the wake of the Covid reality that dragged the country to an economic slowdown. The economic recovery of our country will largely depend on the pace of recovery of other countries particularly those which our tourism sector is dependent upon. However, our reconstruction will also be highly dependent on the concerted effort of public administration, NGOs and the private sector who through a collective effort can ensure a comprehensive social cohesion framework allowing all strata of society to benefit from the economic recovery of the country. Covid did not have the same impact on all families. Those dependent on daily paid income and those working in sectors that had to abruptly seize their operations and sack their employees, or reduce their pay, witnessed a drastic drop in their income. Home-schooling and teleworking introduced new challenges as working parents struggle to keep their agility in completing their corporate tasks while looking after their children and completing 9
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the increased housework workload and in some cases looking after the elderly. A common theme in the recent socio-economic discourse is that life after Covid-19 will not be the same. Indeed, the economic recovery from the pandemic will be accelerated through the adoption of smarter policies and programmes that identify the transformative power of shared value through the merge of profit and non-profit deliverables. While government’s role is to encourage and award efforts towards addressing societal and environmental ailments, the business community needs to work towards long-term goals of securing a profit that includes a social purpose. Adopting a shared value mentality in the corporate world demands a shift from a short-term 10
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Corporate DispatchPro objective to a longer-term vision through which various elements of the value chain are moulded to reduce and potentially eliminate any negative environmental or social impact. The rebound of the European Economy after this pandemic depends on the agility of creating a social innovation culture where the business community, civic society and public administrations work together to shape public policy, implement programmes and develop products and services that address the social needs while providing a profit. Prior to the pandemic, Malta’s journey to the future was already a challenging transition as the advent of artificial intelligence coupled with the ambitious targets to zero-carbon emissions have a direct impact on our socio-economic fabric. Malta 2030 will continue to ensure the happiness of its citizens and residents who increasingly hail from different cultures. The nearly full-employment scenario that led to the attraction of foreign workers in the various economic activities from gaming to low-skilled jobs, has fuelled the economy through an increase in the demand for real-estate, entertainment and catering services. Yet, the next decade presents the challenge of ensuring the same quality of life and levels of employment, while addressing societal challenges of the ageing population and poverty. Although slightly less than the EU average, having one-fifth of the population at risk of poverty is a particularly worrying phenomenon especially when the country has had an economic boom which clearly has not translated in a better quality of life to the vulnerable strata of society. The reality of a post-Covid society will accentuate the need to address these challenges particularly if the economic slowdown persists to long weeks resulting in a substantial increase in unemployment.
“The rebound of the European Economy after this pandemic depends on the agility of creating a social innovation culture� 11
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Corporate DispatchPro Malta will continue to work towards a resilient and productive economy, provide top-notch education to our children and invest in the best health and social care systems. Yet, Malta’s workforce needs to embrace lifelong learning as increasingly machines will take over rote tasks and workers need to apply more cognitive, creative and problem-solving skills. The impact of AI on the workforce is expected to result in an unprecedented need for re-skilling in the labour market, yet if Malta can provide the new skills it will preserve its economic growth and increase in prosperity. Although the last decade has witnessed an increase of female participation in the labour market Malta stills needs to address the gender pay gap while continuing its efforts to boost female presence in C-level positions and politics at local and national level. The aspiration is for Malta 2030 to be a safe and economically stable country where the young generation can grow, thrive and work on their dreams and aspirations. Malta will continue to implement and respect civil and equal rights, increase normality for people with disabilities, ensure equal maternal and paternal rights, equal wages based on role and not gender identity. The months following the recovery from Covid will be crucial for Malta. The decisions taken in the next few months will mould Malta’s journey towards the next decade.
Your team at CiConsulta Shirley Zammit, Isabelle Micallef Bonello, James Vella Clark, Nathanael Muscat, Tonio Galea, Laura Grima, Keith Zahra, Nicholas Azzopardi, Matthew Borg, Denise Grech, Matthew Bugeja, Jesmond Saliba
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Corporate DispatchPro Matthew Bugeja
From profits to resilience We live in a time in which our very way of life has changed both drastically and abruptly. The global economy was growing at an acceptable rate, although economists and institutions warned that the number of downside risks were both visible and growing. No one, outside of the scientific community, could have foreseen the impact of such an event on our day to day lives.
Imagine being on an underground train which is quite full of people. The train is speeding along, and all of a sudden, it hits the brakes. People, young and old, of all colours and creeds, find themselves flying across the train car, with injuries varying depending on how and where the person landed when the train stopped. The train in this case is the global economy. The passengers are the countries, companies, employers and employees. Everyone has been hurt simultaneously, but to varying degrees. In the capitalist model, companies are driven by profit, which they use to pay employees, issue dividends to shareholders, and to reinvest into the company to achieve higher growth. The model is a good one (though with its own set of imperfections, which are well-known, and we will not delve into here), but has proven time and time again to be far from resilient from shocks emanating from both within the economy, and outside of it. This is not a call to scrap capitalism completely and replace it with something else. It is a system which has, for the most part, allocated people, goods and capital quite effectively for a few centuries now. But in times of crisis, the drive to make maximum profits means that companies inevitably invest in products and services that will yield the greatest return for the lowest possible cost. Industries grew according to their profitability, and most Western countries have interfered very little in shaping and moulding key economic sectors as the years went by. As a result of COVID19 and the unprecedented government interventions in national economies, CNN estimated 15
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that towards the end of March, that figure reached some $7 trillion globally between governments and central banks. And it is early days yet. How can this change going forward? Companies will inevitably evolve and transform their business models in order to cater for the new normal, until, hopefully, there is a viable vaccine. But that may seem to be two years off. Some will survive. Others may not. Ending lockdowns will not necessarily stimulate consumer demand sufficiently enough to encourage them to visit shops, restaurants, and hotels. Businesses will inevitably have to find ways to cater for basic human needs in a safe way. In order to move forward, we may need to look back at older economic models. This may include taking another look at stimulating a sector of the economy that governments the world over have taken for granted for at least a century - agriculture and fisheries. This sector has comprised the lowest share of national gdp for most countries for a number of years. But they are incredibly resilient to shocks for the simple reason that people will always need the nutrition they provide. Some countries would have an easier time of it than others, as some countries, such as Malta, lack the natural resources or space to cater for the size of their populations. However, as time wears on, and it becomes evident that the amount of resilient and essential industries are relatively fewer, investment may well find its way into these underappreciated sectors by both private and public funding. The state of the global economy at this time would suggest that it is undergoing a rapid transformation. Unemployment has grown at an unprecedented rate in many countries. The United States alone has had 33.7 million people file for unemployment in the period between March 15th to April 30th, which is a 14.7% unemployment rate. The Great Depression of 1929 led to an unemployment rate of 24.9%. If US unemployment continues to grow at the current exponential rate it has been, it may well reach that point by the first week of June, which would be a bleak milestone for President Trump’s reelection ambitions in November. 16
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Corporate DispatchPro
In order to move forward, entrepreneurs and public policy makers will need to go back to basics, in every sense of the word. Within the context of the means and technology available to us in the 21st century, but with social distancing now in place, what do people still need? Some answers are obvious. Food, water, electricity, entertainment. Then you have to add one more element to the equation: there will be more people with less money for some time to come. So how do you provide a product or service that they will both need and appreciate, and still turn a profit? One answer may be by tackling those key human needs, and keeping prices as affordable as you can for everyone involved by providing a low cost product for a wide customer base to increase your potential profitability. Agriculture and fisheries, for example, will have less of a problem during the pandemic than high-end clothing shops, for instance. Resilience and adaptability will be key. There are many questions as to how we will survive the pandemic economically. Sometimes, the answers to the future can be solved by looking to the past for how we used to do things before. That may be an avenue worth exploring for the private and public sector alike. 17
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Corporate DispatchPro Sharon Lam | Reuters Breakingviews
It’s a long jump back onto the travel bandwagon It has never been truer that the journey is the destination. Travelling has proven resilient after previous crises, which suggests that once a Covid-19 vaccine, treatment or other solution is found, antsy globetrotters will pack their Samsonites in nearly full force again. Notable changes are likely to be in health checks and corporate flyers.
The pandemic’s effects will undoubtedly linger. Count Warren Buffett, whose investment horizon is longer than most, among those worried that some changes to travel habits will endure. The billionaire’s Berkshire Hathaway conglomerate dumped its big stakes in four U.S. airlines amid the crisis. There’s reason for concern. It took nearly two years for North American flight demand to return following the 9/11 attacks, according to Morgan Stanley research. Overnight stays abroad this year are expected to fall by 20% to 30% from 2019, according to the World Tourism Organization, which would amount to a loss of up to $450 billion in receipts. After the global financial crisis in 2009, the comparable decline was a mere 4%. Travellers probably will stay closer to home at first. Domestic driving vacations, for example, make more sense in many places while flights are grounded, and national borders closed. Before bigger vacations get planned, popular destination spots will have to reopen. With most of Walt Disney’s theme parks and other major attractions unavailable, there’s less incentive to embark on a journey anytime soon. Eventually, though, airlines, hoteliers and online booking sites should be able to start luring confined consumers back with tantalising discounts. 19
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Costs will ultimately be on the rise, however. Airlines can expect lasting changes to their expense structures. Just as a single bomb threat forced passengers to remove their shoes before boarding, the virus is likely to usher in a mask-wearing era. Temperature checks, deeper cleaning of planes and new boarding protocols all will be more time-consuming and chew up money. Many middle seats also will be empty for a while, as Southwest Airlines boss Gary Kelly noted for his $16 billion discount carrier, forcing further financial recalibration. Roughly 77% of seats need to be filled for airlines to break even on an operating basis, according to the International Air Transportation Association trade group.
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Some destinations also may fare better than others. Countries with better-developed healthcare systems, such as Switzerland and New Zealand, will be more appealing, providing even greater incentive to channel government stimulus funds into improving them
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Corporate DispatchPro now. At least some tourists are already thinking about their next itinerary. Embattled cruise operator Carnival , for one, said nearly half its passengers had opted for future credit instead of refunds on cancelled trips. The company is planning to restart some voyages in August. There is other mildly encouraging evidence for the industry even though Expedia and others have withdrawn financial forecasts and Delta Air Lines boss Ed Bastian expects a recovery to take two to three years. Domestic bookings for China’s largest online travel agency, Trip.com, are on a rapid rise. Travellers in their teens and twenties are powering the $15 billion company’s first stage of a rebound in May, signalling that less risk-averse generations will help lead a post-pandemic age of tourism. Certain carriers, such as Ireland’s Ryanair, with more flexible cost structures also may be better able to navigate the crisis. More consolidation could be necessary and allowed. Mobility will be more difficult, however. Countries wary of future contagion may tighten their borders and widen the scope of what constitutes non-essential travel. Leisure trips are also apt to become onerous. Health immunisation documents could become as vital as passports. Global air traffic, meanwhile, is expected to slow to a compound annual growth rate of 4.6% through 2028, from an estimated 5.1% before the crisis, according to UBS. Business travel looks especially vulnerable. Such spending had been projected to reach $1.7 trillion worldwide by 2022, according to industry estimates. Serious concerns are evidenced, however, by two investors recently backing out of a proposed deal to buy a stake in a corporate airfare and hotel booking enterprise half-owned by American Express at a $5 billion valuation. By the time the pandemic blows over, companies also will be more accustomed to remote working, and happy to keep costs down by using videoconferencing to meet with clients over first-class tickets and conference boondoggles. Even a modest 5% long-term hit to this segment of the market would upend many business strategies. For the beaten-up travel complex, this area will leave the most lasting scars. 21
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Corporate DispatchPro James Vella Clark
Communication now is a form of leadership In my last contribution I had made the assertion that the brands who keep communicating will be the ones who will come out stronger when we finally manage to ride the bulk of the disruption caused by this ongoing pandemic.
But communicating for the sake of communicating becomes just noise. And at a time when people need clarity and vision, noise is the least thing they need. On the other hand, everyone is more alert, and more people are watching. So now could be a good time to strengthen and sustain your brand’s story. The first step would be to redefine your audience. Go through a checklist of who your stakeholders are at this point in time, communicate with them and analyse where they stand in relation to your product/service offer to define the extent of your relevance to them. Make yourself felt, first and foremost with them. Most businesses have had to re-evaluate most of their plans and projections. I am engaged with clients who have had to redefine their business activity altogether. One brand in particular, has done an amazing job in shifting what was a secondary business activity and making it its main operation. It has taught me the importance for businesses to always be prepared to adapt as need be. This, in my opinion, says a lot about such companies because the ones who adapt best to market conditions are the ones who are certainly most capable to adapt to your expectations as a customer. 23
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ETHICAL V I TA M I N S
with an organic heart A v a i l a b l e at B r o w n ’ s
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Corporate DispatchPro Another aspect that businesses should be communicating more is their ‘humanity’. They can do so by doing away with the corporate spiel that no longer works and by simply being more human, by showing empathy first and foremost with their people, by sharing in their concerns and offering hope, support and mentoring. At a time when leadership seems to be lacking on so many different fronts, I would advise brands to speak regularly to all their team members who are working remotely, addressing employees through periodic messages and reaching out to clients to inspire confidence and control. Qualities of leadership and strength are what will convey a durable image that will make brands stand out above the rest. Communication needs to also happen regularly and even if your business has been affected, keep your communication channels open and flowing. As the situation remains very fluid and public directives issued by Government keep changing, you will need to show that your business is on the ball, updating itself and complying to the scenario. This is what will reflect a brand that is prepared, that its own people are prepared and where ultimately a brand will win the trust it strives for. Giving back to the community is also another form of communication. Every brand wants to make a difference in its customers’ lives so ask what your business can do to make a difference and bring a positive impact at this point in time. Besides transmitting your company’s values, showing a social dimension generates brand affinity, which is what people will also remember. The past is not always a guarantee for the future, but some of the best lessons are always found when we look back in time. And history has shown that some of the most prominent brands flourished and brought meaningful impact during tougher times. Again, people are watching. So, make this time count.
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Corporate DispatchPro Keith Zahra
Malta’s key enabler:
A digital & green transition The annual country specific recommendations issued by the European Commission tend to pass under the radar except for the experts within the respective line Ministries around Europe. However, it is undeniable that in the current economic fallout resulting from the almost-three month long social restrictions around the continent, a coordinated European economic response is crucial to relaunch economic activity, mitigate damage to the economic and social fabric, and to reduce divergences and imbalances. European economic and employment policy coordination therefore constitutes a crucial element of the recovery strategy. Even though the different proposals for the EU’s 27 member states appear to vary, a closer look shows that they are ultimately structured around two objectives: in the short-term, mitigating the coronavirus pandemic’s severe negative socio-economic consequences; and in the short to medium-term, achieving sustainable and inclusive growth which facilitates the green transition and the digital transformation. The European Commission is seeking to use this opportunity of relaunching economies to push forward an agenda that has long been in the pipeline, centring around the four dimensions of competitive sustainability - stability, fairness, environmental sustainability and competitiveness – while also, as expected in the current circumstances, placing a specific emphasis on health. The recommendations also reflect the Commission’s commitment to integrating the United Nations’ Sustainable Development Goals. Recovery and investment must go hand-in-hand, reshaping the EU economy faced with the digital and green transitions, as we will see later with regard to the recommendations made for Malta. Over and above, the EU is seeking once again to invest in people 29
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Corporate DispatchPro and skills, supporting the corporate sector (in particular small and medium-sized enterprises) and taking action against aggressive tax planning and money laundering. What’s in it for Malta The Commission comes forward with a number of proposals but also takes stock of the current situation. According to the Commission forecast, unemployment is expected to rise to 5.9% in 2020 and to recover to 4.4% in 2021. In order to mitigate the serious impacts of the crisis on employment, Malta took emergency measures, in consultation with social partners, to prevent lay-offs by favouring short time work instead. The adoption of short-time work arrangements on a more permanent basis would also protect jobs in the transition towards economic recovery. Ensuring adequate support and access to social protection for all workers, including the self-employed, and accounting for a possibly extended duration of unemployment are crucial. Malta’s social protection system also needs to ensure that adequate support is provided to foreign workers in finding alternative employment; in retaining work permits when possible and accessing other social services. The EU also calls on Government to ensure effective implementation of liquidity support to affected businesses, including the selfemployed. It recommends the pursuing at an early stage of public investment projects and the promotion. private investment to foster the economic recovery. Placing higher importance on research and innovation and better embedding it in the business environment will support the sustainability of Malta’s knowledge based economic model. In this context, it calls on the authorities to focus investment on the green and digital transition, in particular on clean and efficient production and use of energy, sustainable transport, waste management, research and innovation. In the context of the recovery, the EU urges Malta to work harder on its environmental credentials, particularly referring to the pollution caused by the construction and transport industries.
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Positively, it concludes that the measures taken by Malta are in line with the guidelines set out in the Commission Communication on a coordinated economic response to the COVID-19 outbreak.
As in practically every report commissioned by international institutions, the Commission refers to current shortcomings in institutional capacity and governance and urges reforms to enhance judicial independence. In particular, the EU wants to see efforts to adequately assess and mitigate money laundering risks and to ensure effective enforcement of the anti-money laundering framework. The EU insisted that shortcomings in the investigation and prosecution of money laundering remain a challenge. Enhancing the national supervision of internationally oriented financial businesses licensed in Malta would strengthen the overall governance framework. In its report, the Commission also looks into the measures taken by Malta in the wake of the economic fallout from the coronavirus pandemic. Positively, it concludes that the measures taken by Malta are in line with the guidelines set out in the Commission Communication on a coordinated economic response to the COVID-19 outbreak. Malta went into this crisis with a healthier financial position than most of its peers. The full implementation of those measures, followed by a refocusing of fiscal policies towards achieving prudent medium-term fiscal positions when economic conditions allow, will contribute to preserving fiscal sustainability in the medium term. 33
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Corporate DispatchPro Tonio Galea
The Tripoli mirage The Libyan National Army is enduring its worst days yet since launching an all-out assault on Tripoli to topple the Government of National Accord, more than a year ago. In fact, all indications point towards a total stop to the offences against the city after a series of blows to General Khalifa Haftar’s army. This week, the UN-recognised GNA made important gains in cities close to the border with Tunisia, forcing Haftar to give up the strategic al-Watiya airbase. The LNA downplayed the exit and said that abandoning the area was part of its long-planned tactical game, vowing to recapture the base in the future. Whichever version is more credible, Haftar’s forces have recently suffered several setbacks, including losing support from Paris as President Macron tries to reposition France at an equidistant point between the fighting sides. The LNA still enjoys backing by Egypt and, indirectly, Russia; however, the long-time support by the UAE has started showing signs of cooling down in the last few days. The Emirates appears to have ruled that there is no sure path to a clear winner in the north African country after years of conflict. The economic devastation inflicted by the coronavirus pandemic will have reinforced Abu Dhabi’s decision to gradually pull out of the clash while it still can. The situation on the ground in Libya is further compounded by growing concerns over the presence of foreign mercenaries, mainly Russian, Eastern European and Sudanese Janjaweed. Meanwhile, the GNA has profited from support by Turkey in the form of aerial defence and other weapon systems as well as Turkish military advisors. Ankara’s intervention in Libya is motivated by a double threat for influence in the region presented by the UAE and Egypt from the south, and Greece and Cyprus (and the EU, by extension) from the west. 35
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YOUR PURPOSE IS YOUR BIGGEST ASSET
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Corporate DispatchPro
In March, the European Union launched a military operation to enforce a United Nations arms embargo in Libya. Codenamed ‘Irini’, Greek for “peace”, the initiative is proving to be a thorn in the sides of both the LNA and the GNA as it systematically cut down the smuggling of weapons and illicit oil exports from the sea border. The government in Tripoli exposed the impact of the operation when it publicly questioned the legality of the EU’s action. The situation in Libya remains highly volatile and, although the forces under the control of Prime Minister Fayez Al-Sarraj appear to have the upper hand at the moment, General Haftar has recovered from other defeats before. Hope for peace in Libya has been elusive since the overthrow of Colonel Gaddafi in 2011. The country’s descent into chaos and the global crisis may provide the perfect cover for the LNA to reorganise and launch another deadly offensive on the GNA’s positions before we know it. 37
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Corporate DispatchPro Nathanael Muscat
Catering on a knife-edge A man walks into a bar and finds it open. Even fans of bar jokes will struggle to see the funny in this one at time when the catering industry is facing an existential threat. The closure of businesses to contain the spread of the coronavirus meant that restaurants, cafeterias and bars had to effectively take a loss on a quantity of perishable stock that was purchased with important business dates in mind such as Carnival, Easter, St Patrick’s Day, the Eurovision or Mother’s Day. Already after the Christmas season, many catering establishments will have started gearing up for a busy summer of events, not least the European Football Championship and Olympic Games. It takes preparation and investment beyond foods and beverages to make the most of the foodservice market and business owners have to think of everything from staff schedules to big screens to marketing collateral. Official statistics show that restaurants and hotels enjoyed the biggest growth in Maltese household consumption over the last decade, however, the domestic market alone cannot sustain the increase and the sector is significantly dependant on tourism. In the first quarter, though, inbound tourism registered a dramatic drop or twenty percent, compared with the same period last year – reversing an upward trend literally from one day to the next. Industry experts predict that it may take up to five years for tourism to reach the levels before the pandemic, forcing the catering industry into a tight squeeze. Foodservice itself is an important contributor to the economy and, together with accommodation, it accounts for almost 20,000 39
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Corporate DispatchPro registered jobs, the fifth-largest share by sector. Additionally, other sectors such as agriculture and fisheries or wholesale and imports rely heavily on catering establishments for their trade. Supporting the sector throughout a slow, if not null, tourism market when the consumer confidence of the internal market is already at a low, presents an incredibly tall order. Businesses are experimenting with new models such as off-premises catering including home deliveries, or industrial catering such as school and welfare meals. At the same time, however, restaurants, cafes or pubs are as much about the experience as they are about the food; innovation in the sector needs to pursue that state of delight which cannot simply be found in a take-away box. The foodservice sector certainly requires help, particularly in the stimulation of the market. But, like in every other industry, businesses cannot sit on their hands and wait for the glorious days to return. Opportunities throughout this new period may not come served on a silver platter, but they are still there for the taking.
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Corporate DispatchPro
Annual inflation rate in April above EU average Malta’s annual inflation rate in April stood at 1.1 percent, the eighth highest among EU member states according to figures by Eurostat. The EU average was 0.7 percent, down from 1.9 percent a year before; in the euro area, the rate dropped from 1.7 percent in April 2019 to 0.3 percent in April 2020. The decline reflects the impact of containment measures against the spread of the coronavirus introduced in March and April in most European countries. The highest annual rates were recorded in the Czech Republic (3.3%), Poland (2.9%), and Hungary (2.52%). Slovenia registered the lowest annual rate at -1.3 percent, preceded by Cyprus (-1.2%), Estonia and Greece (both -0.9%). Compared with March, annual inflation fell in all EU states except Italy, where it remained stable at 0.1 percent. The rate in Malta for March was 1.2 percent, right at the EU average. Food, alcohol, and tobacco were the main contributors to the annual inflation rate in the euro area, increasing by 0.67 percentage points, followed by services (+.52pp). The contribution of energy slipped to -0.97 percentage points. 43
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Imports and exports down in first quarter Malta registered a decrease in both imports and exports between January and March this year, according to data released by the National Statistics Office. Figures show a total value of €1.4 billion in imported goods and €827 million in exported goods over the three-month period, narrowing the trade deficit to approximately €628 million compared with the first quarter in 2019. Nearly half of total imports came from the European Union, reaching €714.7 million or a four percent decrease over a year. The biggest drop in imports came from the United Kingdom which was the biggest exporter to Malta in 2019; incoming goods fell by more than four-fifths to €121 million. The main increase in imports was registered from China, jumping by 150 percent to reach €147 million in 2020. Exports to EU countries accounted for 40 percent of total outgoing goods, with a value of €324 million. The main decrease was registered by Italy, falling by nearly 60 percent from last year to reach €32.8 million. The highest increase was directed to Germany, with outwards trade growing by €32.5 million. In fact, trade in goods with Germany went from a €3.8 million deficit in the first quarter of 2019 to a surplus of almost €52 million this year. Malta also registered a trade surplus with Singapore (€35 million), Japan (€19 million) and the United States (€11 million). A decrease of €502 million in imported machinery and transport equipment was the main contributor to the general decline in the value of imports, whereas a €63.8 million fall in dispatched mineral fuel propelled the decrease in exports. Registered unemployment grows fastest among 25-29 age group The number of people registering for work rose by more than 1,800 from March to April this year. Data by the National Statistics Office shows that registered unemployment reached 3,979 in the April, a sharp increase from 1,748 compared with the same month last year. The figures represent those registered with the government employment entity Jobsplus under its Part I and Part II schemes. The former includes people who are new to the jobs market, are re-entrants, or have lost their jobs; the latter comprises those who left their jobs, turned down offers or were 44
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Corporate DispatchPro subject to disciplinary dismissal. Except for 106 people, all those registering for work in April fell under the Part I category. The highest rate of increase in registered unemployment was observed among the 25-29 age bracket, rising by around 300 people from 179 in March. The 45-and-over age group recorded the lowest rate of month-on-month increase (52%) but, at 1,474 registrations, represent the largest number of jobseekers. Three in four of those on the register have been looking for work for under 21 weeks, but the majority were added between March and April. This category numbers more than 3,000 people, well above the roughly 700 counted a year ago. Clerical support workers make up 26 percent of the current job seeking population, the biggest share among registered unemployed, followed by technicians and associate professionals (19.5%) and service and sales workers (15%). Compared with the previous month, however, the proportion of clerical support workers in registered unemployment decreased by a slight 0.3 percentage points while technicians and associated professionals increased by 4.4 points, translating into 454 new registrations. People registering for work in managerial positions recorded the second-highest rate of increase jumping from 6.3 percent of jobseekers in March to 8.6 percent in April, rising from 138 to 342.
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Corporate DispatchPro Industrial production down by 7 percent Industrial production fell by 6.9 percent in March from the previous month, reflecting an EU-wide slump of 10.4 percent. Figures by Eurostat show that only four countries registered increases: Ireland (15.5%), Greece (1.9%), Finland (1.9%) and Lithuania (0.7%). Production in the euro area was even more heavily impacted by the Covid-19 pandemic, dropping by 11.3 percent following a slight decrease of -0.1 percent in February. Nevertheless, compared with March last year Malta reported a growth of 5.7 percent in industrial production, one of only four states to experience a rise and second only to Ireland where the sector output jumped by more than 25 percent. The worst performers year-on-year where Luxembourg (-32.7%), Italy (-29.3%) and Slovakia (-19.6%), scoring well below the EU and euro area averages of -11.8 percent and -12.9 percent, respectively. Durable Consumer Goods suffered the greatest decline from February to March, falling by nearly 24 percent across EU states. On the other hand, production of Non-Durable Consumer Goods shrank by 1.2 percent. Capital Goods fell by 15 percent, Intermediate Goods by 10 percent and Energy by 3.5 percent. Negative consumer goods sector curbs industrial revenues Industrial turnover fell by 2.1 percent over the first quarter this year compared with the last three months of 2019. Data released by the National Statistics Office shows that the overall decrease was triggered by a significant drop in the consumer goods sector, which suffered the heaviest loss in the 15 months under review since January last year. Durable consumer goods declined by 13.6 percent from the last quarter of 2019, which had itself registered a three percent loss from the previous quarter. The fall in non-durables stood at 5.8 percent between January and March, the first time it went into negative territory in 12 months.
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Outbound tourism falls by a fifth from last year The number of visitors from Malta to other countries decreased by more than 30,000 between January and March, compared to the same period last year. Figures by the National Statistics Office reveal that outbound tourism declined by 21.3 percent from the 146,841 registered in the first quarter of 2019. The drop in the total number coincides with Covid-19 measures that restricted flights to high-risk countries over March until the airport was completely closed to all destinations on the 21st of the month. Travel to EU states fell by over 40 percent, reaching just over 75,000 tourists – less than 10,000 of whom visited non-euro area countries. On the other hand, outbound tourism outside the EU increased by 22,500, a growth of 125 percent from under 18,000 in the first three months of 2019. The non-EU market includes the United Kingdom which, together with Italy, represents half the outgoing travel figures. In fact, Italy remained the most popular destination receiving slightly less than 34,000 tourists from Malta while the UK received around 23,000 visitors. Travel to Italy, however, followed the general trend and dipped by 20 percent since last year. In the case of the UK, this was the first time that it classified as a non-EU destination and, without it, the category would have still registered a decrease of five percent. Lower numbers also meant a decline in total estimated expenditure by outbound tourists, which this year stood at €81.3 million or 28 percent less than 2019. However, the average €704 spend per person abroad is also the lowest amount in the seven years under review. Total expenditure per night per capita was calculated at €121 – only in the first quarter of 2014 did outbound tourists spend less. The largest share of travellers were people between 25 and 44, representing close to half of all tourists, while the smallest age group were people over 65 years, at less than seven percent of the total. Most outbound travel was either for holiday purposes (57%) or to visit relatives and friends (24%). Business, educational, health and other categories of travel accounted for under a fifth of total outbound tourism. 48
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Corporate DispatchPro €700 million trade deficit in first quarter Balance of trade in Malta stood at -€700 million between January and March, according to estimates published by Eurostat. The economy registered a trade deficit of €400 million in intra-EU trading and of €300 million in extra-EU trading. The results indicated a narrower balance of trade compared with the first quarter of 2019, which reached -€1.3 billion. The EU27 recorded a trade surplus of €42.7 billion over the same period, higher than the €34 billion produced the year before. Exports to countries outside the bloc decreased by 3.2 percent yearon-year while imports also fell by 5.3 percent. In March, when member states were introducing drastic anticoronavirus measures, EU exports and imports shrank by 10.2 percent and 12.2 percent, respectively. The trade balance with extraEU partners stood at €22.2 billion, nearly six percent higher than the same month last year. Total intra-EU trade in the first quarter of 2020 was of €760 billion, a decrease of 2.4 percent compared with the same period the previous year. In March, trade among EU members was 7.9 percent lower than March 2019, reaching just under €250 billion. The European Union’s main trading partners between January and March were the US, the UK, and the China. Balance of trade stood at €37.7 billion and €29.5 billion with the anglophone countries, respectively, while a trade deficit of €39 billion was registered with China.
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Corporate DispatchPro keith zahra
CommuniqEU
Environment & Biodiversity The European Commission has adopted a comprehensive new Biodiversity Strategy to bring nature back into our lives and a Farm to Fork Strategy in its efforts towards a fair, healthy and environmentally friendly food system. The two strategies are mutually reinforcing, bringing together nature, farmers, business and consumers for jointly working towards a competitively sustainable future. In line with the European Green Deal, they propose ambitious EU actions and commitments to halt biodiversity loss in Europe and worldwide and transform our food systems into global standards for competitive sustainability, the protection of human and planetary health, as well as the livelihoods of all actors in the food value chain. The COVID-19 crisis has demonstrated how vulnerable the increasing biodiversity loss makes us and how crucial a well-functioning food system is for our society. The two strategies commit to increase the protection of land and sea, restoring degraded ecosystems and establishing the EU as a leader on the international stage both on the protection of biodiversity and on building a sustainable food chain. The new Biodiversity Strategy tackles the key drivers of biodiversity loss, such as unsustainable use of land and sea, overexploitation of natural resources, pollution, and invasive alien species. The strategy brings forward concrete steps to put Europe’s biodiversity on the path to recovery by 2030, including transforming at least 30% of Europe’s lands and seas into effectively managed protected areas and bringing back at least 10% of agricultural area under high-diversity landscape features. 51
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Corporate DispatchPro keith zahra
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Financial Services The European Securities and Markets Authority (ESMA), the EU Securities Markets regulator has asked companies to called for transparency with regard to the implications of the Covid-19 pandemic on the half yearly financial reports of listed companies. The European Securities and Markets Authority (ESMA), the EU Securities Markets regulator has asked companies to called for transparency with regard to the implications of the Covid-19 pandemic on the half yearly financial reports of listed companies. ESMA insisted on the importance of providing relevant and reliable information, which may require issuers to make use of the time allowed by national law to publish half-yearly financial reports while not unduly delaying the timing of publication. The regulator said that it was of utmost importance to update the report’s information to adequately inform stakeholders of the impacts of COVID-19, in particular in relation to significant uncertainties and risks, going concern, impairment of non-financial assets and presentation in the statement of profit or loss; and It called for the need for entity-specific information on the past and expected future impact of COVID-19 on the strategic orientation and targets, operations, performance of issuers as well as any mitigating actions put in place to address the effects of the pandemic. ESMA further emphasises the role of audit committees in promoting highquality half-yearly financial reports at this difficult junction in time. ESMA and European national enforcers will monitor and supervise the application of the IFRS requirements as well as any other relevant provisions outlined in the Statement, with national authorities incorporating them into their examinations and taking corrective actions where appropriate. 53
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Neighbourhood Relations The EU has approved €3 billion in loans to help its neighbours and partner countries deal with the fallout of COVID-19. The loans, which will be given on highly favourable terms and disbursed over a year, will help the following ten countries whose economies have been pushed into recession by the pandemic: the Republic of Albania (€180 million), Bosnia and Herzegovina (€250 million), Georgia (€150 million), the Hashemite Kingdom of Jordan (€200 million), Kosovo (€100 million), the Republic of Moldova (€100 million), Montenegro (€60 million), the Republic of North Macedonia (€160 million), the Republic of Tunisia (€600 million) and Ukraine (€1.2 billion). The goal of the funding is to allow these countries to mitigate the negative social and economic effects of the crisis while preserving the state’s financial stability. The assistance can start being disbursed once the countries sign their respective Memorandum of Understanding, which will list the conditions of the loans. The European Commission expects the first tranche to be disbursed in the autumn of 2020, and the second and final tranche in early 2021. EU assistance will help these jurisdictions cover their immediate financing needs which have increased as a result of the COVID-19 outbreak. Together with the support from the International Monetary Fund, the funds will help enhance macroeconomic stability and create space to allow resources to be allocated towards protecting citizens and to mitigating the negative socio-economic consequences of the coronavirus pandemic. 55
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Corporate DispatchPro keith zahra
CommuniqEU
Foreign Affairs The European Council criticised decisions by Turkey to dispatch a drilling ship to within Cyprus’ Exclusive Economic Zone and accused Ankara of breaching international law.
The European Council criticised decisions by Turkey to dispatch a drilling ship to within Cyprus’ Exclusive Economic Zone and accused Ankara of breaching international law. The European Council urged Turkey to pursue good neighbourly relations in the region and said that it backs a proposal by the governments of Cyprus and Greece to develop a common maritime delimitation between relevant coasts. The EU’s High Representative for Foreign Affairs, Josep Borrell, said that member states are united in their position: “We have sent a strong message to Turkey today in support of Cyprus and Greece,” he explained, “We continue our diplomatic efforts for a creative partnership.” The Council’s statement warns that the continued illegal actions by the Turkish government would have a negative impact on broader EUTurkey relations.
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Corporate DispatchPro John Foley | Reuters Breakingviews
Handshake will be relic of a more trusting time Finance will be different after Covid-19, and not just because the economy will be in the doldrums. Social shifts that outlast the pandemic – things as simple as a reduced willingness to shake hands – will make trust a scarcer commodity. That is the last thing an already misanthropic Wall Street needs.
Handshakes bring people closer, both literally and figuratively. Sure, the five-finger salute is likely to be a pretty effective way of transmitting the coronavirus, compared with an elbow-bump, foottap, bow, or any number of similar greetings. But pressing the flesh instills trust. Assyrian King Shalmaneser III seems to have been an early adopter, judging by a three-millennia-old carving. Clasping digits is, if nothing else, a good way to check for daggers concealed up sleeves. What worked for Shalmaneser III then works just as well today. A study at University of California, Berkeley’s Haas School of Business in 2018 found that when negotiators shook hands before talking turkey, they reached a more mutually beneficial outcome. In a simulated house-selling negotiation, buyers and sellers who shook hands tended to end up unwittingly splitting the profit 5050, compared with 80-20 otherwise. Fewer handshakes, it seems, directly resulted in less goodwill. The financial community starts at a low base. In surveys asking people how they feel about the general public, finance professionals are less trusting than the population overall, researchers at the University of Cologne found by analyzing U.S. data. Their trust has fallen significantly – around 40 years ago, financiers were more trusting than the population in general. 59
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Corporate DispatchPro Wall Street’s employers might not mind a world with less trust. It is in their best interest to get the upper hand in any negotiation. If fewer warm feelings mean more alpha, that’s progress. Indeed, deal-loving President Donald Trump – a self-described clean freak – in a 1997 book called the handshake “one of the curses of American society.” The pandemic might give him and other hard-nosed dealmakers something they wished for all along.
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Corporate DispatchPro Ann Marie Cutajar
Homing in on homelessness in Malta Defining ‘homelessness’ and the ‘homeless person’ might not be the most straightforward task. The definition of homelessness varies according to the person defining it, the purposes of defining it and the different lenses used to examine and describe the phenomenon and its prevention and management. Irrespective of whether one intends to explore or measure homelessness, the resulting outcomes will depend on the particular definition used and the approach taken.
The way in which we define homelessness is important because, when attempting to quantify the number of homeless persons, results will depend on the definition and methods which are used to count the homeless. Adopting a narrow definition of homelessness risks ignoring the large number of persons living in dire conditions and situations and those who are far from living in safe and secure housing. A substantial proportion of the homeless population is not accessible to researchers. Most are invisible, sometimes also by choice, often due to embarrassment, stigma or unwanted social control. Those sleeping rough, those living in unstable housing arrangements, those living in vehicles and those doubled up with friends and family are excluded from being counted. Quantifying the homeless population in Malta is even more problematic. This is because data on homelessness is lacking, and also because very often the numbers of homeless persons presented by authorities merely reflect those persons reported to be sleeping outdoors. Causes of homelessness The main causes of homelessness amongst the homeless population in Malta are social problems, such as domestic violence; 63
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difficult childhood experiences; childhood homelessness (including out-of-home placements and any other situation in which children live a separated life from their immediate family); dysfunctional marriages; the loss of significant others such as parents; unhealthy or dysfunctional relationships with family members; unemployment; debt; addictive behaviour (one’s own or that of family members); mental health conditions; past imprisonment; and a lack of secure accommodation further to leaving care (Demanuele, 2004; Mifsud, 2009). All these factors contribute to the risk of homelessness as well as prolong the state of homelessness. Research also shows the crucial role of immediate family as the main source of support and stability in the Maltese society (Vakili-Zad, 2006; Mifsud, 2009). Therefore, the lack of such support acts as a risk factor in relation to homelessness. Moreover, strong family ties and support act as important factors to move out of the homeless state. In fact, literature shows that a large number of homeless persons in the Maltese population do not have, or have lost, a support network (Demanuele, 2004; Vakili-Zad, 2006; Busuttil, 2007; Mifsud, 2009). The fact that homeless persons sleeping rough on Maltese streets are not visible in the same way as can be witnessed in other countries must not hinder the Maltese society and authorities from acknowledging the existence of homelessness and addressing this issue. One reason behind such invisibility could be that, given the small size of Malta where everyone knows one another, and in a context wherein owning a home is valued, one might feel a sense of shame if spotted sleeping rough. Thus, the most common kind of homelessness in Malta involves people living in inadequate and insecure housing.
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Not just an economic issue Homelessness is not merely an economic issue. In fact, socioeconomic issues produce the necessary conditions which place particular individuals and groups in the community at a greater risk of becoming homeless and at a disadvantage when trying to move out of the homeless state. Remarkable economic growth and the need for foreign labour to make up for resulting labour shortages has given rise to increasing rental prices in Malta. This does not help the situation of homeless persons or persons at risk of homelessness. Old houses which could have otherwise been used for cheaper renting are now being sold, demolished, and converted into
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Corporate DispatchPro numerous apartments which generate a higher income for owners. Many explain that, while the bank would not offer the necessary financial assistance to purchase a home, it is also very difficult to rent accommodation while on social benefits or engaged in low paying employment (Mifsud, 2009). The homeless are not a single entity but rather a highly heterogeneous group with a variety of problems and needs, and the homeless population contains sub-types that need to be distinguished. In doing so, we can more fully understand the human dimension of this major problem in both rich and poor nations. Amongst the increasing number of people experiencing housing difficulties, there are particular groups who are at a higher disadvantage and thus facing greater risks of becoming homeless when compared to other individuals. Structural conditions mostly impact on groups with particular attributes. In fact, variables such as age, gender, race, mental health, disability, and poverty have, nearly always, acted as predictors of homeless situations (Johnson, Scutella, Tseng, & Wood, 2015). The needs of homeless individuals are not just material. All individuals need a sense of belonging and human fulfilment. Thus, social care is just as important as physical care when it comes to wellbeing. Homeless persons tend to have weaker personal support network resources, as they face various challenges for maintaining and developing networks of supportive relationships. The provision of valid and effective social support services is crucial for homeless persons who would otherwise rely on their immediate social surroundings. Educational programmes Another crucial factor to improve the state of the homeless person is the provision of training services. It is important to have educational programmes which address issues such as employment and job development; financial planning; discrimination; family support and communication; diversity; and cultural connections. Nevertheless, it might not always be easy to engage homeless persons in training programmes due to the difficulties encountered to reach such persons and the reluctancy from their end, being more preoccupied with resolving their housing problem. 65
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Corporate DispatchPro When it comes to interventions aimed at preventing homelessness, the state has an obligation to prevent homelessness by ensuring the physical infrastructure for adequate housing; encouraging the supply of affordable housing; and providing measures such as housing subsidies to assist groups or individuals in society who would otherwise be unable to enjoy the right to adequate housing. Specific assistance should be given to persons – men or women – fleeing domestic violence since such individuals and their children are driven back to their violent homes if no alternative accommodation is found once their period at the shelter expires. Homeless persons are offered a period of approximately six months at shelters and very often they would still be waiting for their social housing application to be processed when it is time for them to leave the shelter. In view of the significant social housing list and the ever-rising prices for renting adequate accommodation, homeless persons in Malta find themselves in a continuous struggle for accommodation. Homelessness is not an issue which can be automatically resolved by improving the housing market or the overall economy. Rather, any attempt to eliminate homelessness must identify and target the causal factors of such a phenomenon. Apart from the number of persons who are actually homeless, it is also vital to gain in-depth knowledge on those who are at risk of becoming homeless. Therefore, solutions should not only be found for those who have no home but also for those who live in inadequate housing conditions, those who live with friends or family, those planning to leave abusive and violent homes and those paying more than half of their income for rent or housing loans. Moreover, solutions for homelessness situations must be based on a flexible and on-going process of evaluation. Human rights Housing rights have increased in importance in international human rights instruments and st`ates are obliged to adopt the necessary measures and policy to exercise the right to adequate housing for all. Such policy must clearly define its objectives while particularly focusing on the disadvantaged and vulnerable in society. It should also identify the resources available to reach its objectives in the most cost-effective way in a given time-frame. Results also need to be monitored and adequate measures for violations should be planned. Nevertheless, housing rights still remain a rather vague issue under 67
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Corporate DispatchPro the Maltese legislation which lacks any express provisions to guarantee adequate housing for persons living in Malta. Thus, the State’s housing obligations stem from international instruments which Malta ratified. One must bear in mind that in virtue of Malta’s dualist system, international law does not become part of domestic law automatically and must be passed through an Act of Parliament. Contextual factors Homelessness is considered a result of both structural and individual factors which intersect and contribute to a person entering into and exiting homelessness. Evidence shows us that certain groups of people in a particular society and at a particular time are at a greater risk of entering into homelessness and at a lesser chance of exiting the homelessness state. This means that analysing the interaction between personal and contextual factors is crucial for the development of valid and effective policy to target this issue. Identifying the main groups of people in Maltese society who face the highest risks of becoming homeless is the first step to tackling the homelessness phenomenon. Focusing on and suggesting permanent shelter accommodation, services, and benefits results in targets towards emergency assistance, rather than towards providing stability and preventing the movement into and out of homelessness. Such interventions usually target individuals rather than groups in society, thus ignoring socio-economic factors which produce the necessary conditions that place particular groups at a higher risk of becoming homeless.
References Busuttil, D. (2007). Yearning for compassion: the silent plight of the homeless in Malta. (Unpublished Bachelor Dissertation). University of Malta, Malta. Demanuele, K. (2004). Homelessness in Malta – a public policy approach (Unpublished Master’s Dissertation). University of Malta, Malta. Johnson, G., Scutella, R., Tseng, Y., & Wood, G. (2015). Entries and exits from homelessness: a dynamic analysis of the relationship between structural conditions and individual characteristics. AHURI Final Report Series-Project: The interrelationship between structural factors and individual risk factors in explaining homelessness-AHURI Final Report No. 248, 248, 1-67. Mifsud, M. (2009). The unexplored journey to homelessness: the social factors that may contribute to adult homelessness in Malta (Unpublished Bachelor Dissertation). University of Malta, Malta. Vakili-Zad, C. (2006). Counting the homeless in Malta. Journal of housing and the built environment, 21(2), 141-157.
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