Malta's economic performance has been particularly strong when compared to the EU's average, and although the business downturns highlighted key vulnerabilities, growth rebounded right after.

The strong economic performance was reflected in a buoyant labour market. The impact of the crisis on the labour market was successfully countered by government support measures. As at 2021, Eurostat figures show that the unemployment rate in Malta stood at 3.5% (compared to the EU's average of 6.4%), being the third lowest rate reported following Czechia (2.8%) and Poland (3.4%).

Except for 2020, Malta has been registering a decrease in the unemployment rate recorded. In fact, looking at the past decade, the rate of unemployment in Malta has declined from 6.9% in 2009 to 3.5% in 2021, that is a decrease of 3.4 percentage points. The leading Public Employment Service in Malta is Jobsplus, which seeks to keep a register of job seekers and by engaging in the matching of job vacancies with job seekers; a register of persons in employment is also kept to supply data on Malta's gainfully occupied population.

Jobsplus runs the community scheme with about 1,200 persons on minimum wage, implements training programmes and schemes to assist job seekers as well as offers training to upskill employees.

Over the longer-term, the availability of skilled workers will continue to be a major bottleneck for the Maltese labour market and skill gaps with other European economies are projected to widen. The labour market policies introduced in Malta took the form of two main types of policies - work-first oriented schemes and human-capital oriented schemes.

The former type of policies aims to incentivise the unemployed to re-enter the labour market and subsequently help prevent them from falling back into unemployment after a period of time. These include the free childcare scheme, the In-Work benefit scheme and the tapering of benefits scheme. To support working parents there is the breakfast club and the Klabb 3-16, where such services occur before and after school hours respectively. 

In addition, mothers returning to the labour market are entitled to one year of tax exemption or a maximum of €2,000 in tax credit, while self-employed women who re-enter the labour market are entitled to a tax credit of €5,000.

On the other hand, the human-capital oriented schemes are intended to make the unemployed more attractive to potential employers. These include the youth guarantee scheme, the training pays scheme and the work programme initiative. So why do we still face a chronic scarcity of workers? The president of the Chamber of Commerce, Marisa Xuereb, specified that a bloated public sector employment is causing problems in the labour market and that the cutting down on certain employment in the public sector will free up human resources to be used in the private sector. In the public sector, there are areas of employment where individuals are employed for political reasons, where there is an overstaffing in government departments and entities.

However, these factors do not affect the health, education sectors or the police force because the latter still require staff. To tackle the excessive employment in the public sector, Xuereb put forward two proposals. Firstly, to carry out an independent audit exercise to evaluate the skills and output of the human resources currently employed within the government so that surplus employees would then be transferred to the private sector.

Secondly, in order to promote economic recovery and the long-term sustainability of public finances, it is advisable for the State to resist hiring people who are already employed full-time and at a competitive salary in the private sector. 

According to the Chamber of SMEs, businesses are also having a difficult time competing with the government.

This is due to the fact that businesses are unable to offer the same benefits as the government. In order to boost productivity and encourage employment in the private sector, the Chamber of SMEs also recommended implementing an attractive secondment plan with the private sector.

The purpose is to have the government cover the wages for the first few years of the secondment to the private sector, which will pay off in the medium- to long-term. Additionally, through increased digital innovation, a better use of human resources in the public sector could be attained. Officially during the pandemic, all state workers kept enjoying their work conditions and some private sector jobs were protected, apart from the exodus of third country nationals. On paper, there is no logical reason for perennial shortages.

These shortages are confirmed in one of the surveys of the Malta Chamber of Commerce. It highlighted that 77% of businesses reported having trouble finding workers, of varying skills, with operations being negatively affected as a result. Sixty-one per cent stated that hiring challenges are limiting their company's ability to operate at full capacity. In the hospitality and restaurant arena, one reads about the claims of Malta Hotels and Restaurants Association to help the sector post-pandemic. It wants government to reduce VAT, grant tax exemptions on overtime and part-time income to those employed in the sector to encourage more employees to fill the numerous vacancies in the industry.

This has resulted in a controversy as ADPD chairperson Carmel Cacopardo argues that "any aid to the sector must be linked to better conditions of work and a change in the business model to one of sustainable tourism". In his opinion, both tourism policymakers and operators should really be asking whether the business model funnelled by JobsPlus policy on foreign workers, is the right one for their industry. A popular argument states that both the Malta Tourism Authority and the Minister for Tourism continue to ignore the hazard of excessive hotel permits and a Deloitte study on capacity of hotel rooms shockingly points out that Malta needs to attract 4.7 million visitors a year. Surely faux pass is lamentable a catastrophe. So who is to debunk the mystery of missing workers? Castille reminds us that less than 1,000 jobless bother to register but the Labour Force survey lists thousands.

The NSO declares seasonally adjusted monthly unemployment rate for June stood at 3.6%, at par with the previous month while the number of unemployed persons was 9,840.

The seasonally adjusted number of unemployed youths amounted to 1,983, whereas those aged between 25 and 74 years stood at 7,857. Solving this dichotomy about the true level of persons reporting for work may shed some light on the mystery of missing workers. 

 

 

George M. Mangion is a partner in PKF, an audit and business advisory firm