70% of SMEs think that Malta is moving in the wrong direction, with 30% thinking otherwise and indicating that they believe the country is moving in the right direction, the Malta Chamber of SMEs detailed in its survey findings from the SME Barometer Q1 2025.

These results show a partial shift from earlier SME Barometers, as 72% of respondents in Q4 2024 said that the country was moving in the wrong direction, with that percentage having been higher in Q3 2024 at 79%. The Chamber commented that this decrease from previous quarters is a result of concerns spreading to other issues.

The SME Barometer Q1 2025, which was conducted in collaboration with MISCO, had 427 respondents, all of which were businesses operating in Malta. The survey took place from 7th to 18th April and had a 4.8% margin of error.

The most common type of business among the respondents was retail, import, distribution, and wholesale, followed by manufacturing, construction, machinery, and production. 40% of respondents were businesses with 1 to 9 employees, followed by businesses with 10 to 49 employees at 31%, then 50+ employees at 16%, with the remainder of the respondents replying that the business consisted of “just myself.”

Asked to indicate what these businesses feel are the most important issues they are facing, a shortage of employees was the most chosen issue by a fair margin at 43%, followed by unfair competition at 24% and excessive competition at 19%. Other issues brought up by respondents included issues with line payments, traffic congestion, and increasing inflation.

The respondents were also asked to indicate what they believe are the most important issues that the country. With regard to this prompt, the most common answer, at 33%, was that Malta has a lack of good governance. The second and third most common answers were the level of corruption and overpopulation, followed by increasing inflation. More respondents during the Q4 2024 Barometer listed a lack of good governance as a top issue, as over 40% of respondents at the time did so. 40% of respondents in the Q4 2024 Barometer also said that the level of corruption was a top issue, with this now having decreased to 30% of respondents.

Of the 427 respondents, only 16% believe that the next twelve months will be a good time to invest, with 54% saying that they are not sure, and 30% saying that they do not believe it will be a good time to invest.

On the matter of AI, the businesses surveyed were almost evenly split in responding to a question asking whether any of their employees make use of AI tools within their day-to-day business operations. 49.2% said no, while 50.8% said yes. Furthermore, 71% said that they do not have plans to implement AI in their business over the next twelve months, and 65.9% said that their employees have not participated in training concerning the use of AI tools.

Going over its observations and recommendations resulting from the survey, the Chamber of SMEs said that employee shortages and difficulty in sourcing skilled talent locally are causing disruptions, especially in industries heavily reliant on skilled labour. Another issue, it continued, is that the perception of unfairness and inequality is undermining trust in the system.

It stated that issues for businesses are “spreading further and hitting closer to home,” and referred to increasing inflation, ease of doing business, and consumer buying power as examples.

It also said that businesses are still lacking in training when it comes to AI adoption, as well as the use of AI and the risks associated. With that in mind, the Chamber recommended that public awareness campaigns should be launched in order to educate businesses about the benefits and risks associated with the use of AI tools.

The Chamber also recommended that policies tied to labour migration need to reflect the country’s economic vision to address business-specific concerns. Additionally, the Chamber said that “in line with the spirit of the Omnibus Directive,” a thorough review of all existing regulations impacting SMEs locally should be conducted with the goal of identifying and eliminating unnecessary or bureaucratic requirements.

On the matter of unfair competition, the Chamber stated that the government “needs to seriously address issues of unfair competition in its entirety as this is negatively impacting business and their daily operations”. It added that there should be a reform on public procurement and tendering processes so that the process is more transparent, competitive, and accessible.

The Chamber of SMEs concluded that transparency and anti-corruption measures need to be strengthened in order to increase trust in public institutions.