Human capital is a major driver of inclusive socio-economic growth. Jobs are becoming increasingly skills intensive as a result of ongoing trends such as progressive globalisation, demographic change, technological advances, and digitalisation. Innovation, which heavily relies on advanced knowledge, is a key factor in productivity growth.
These developments underscore the increasing importance of human capital, and the need to achieve a good match between the demand for and the supply of skills. At the same time, there appear to be increasing mismatches between the skills or qualifications of today's workforce and the skills or qualifications required by the economy.
Moreover, there are concerns that these mismatches are hampering productivity growth. In fact, although our economy grew by over 91% between 2014 and 2024, roughly 68.5% of that expansion was driven by an increased volume of employment rather than output-per-worker efficiency. A PwC Malta report highlights that Gross Value-Added (GVA) per worker has slowed down significantly (dropping to a 1.4% increase recently compared to 5% earlier in the decade)
Malta's labour productivity growth averages around 1.79% historically, while GVA per worker (at €67,000) continues to trail the Eurozone average (at €83,000). Growth has been heavily concentrated in lower-productivity, high-headcount sectors. According to Central Bank of Malta estimates, while during 2000-2007 productive capital deepening made a positive contribution of around 0.4 p.p. per year to labour productivity growth, it then declined to around 0.3 p.p. during 2008-2016 and even turned negative during 2017-2023.
Skills mismatches have been studied by various organisations. One such study by the Malta Chamber of Commerce revealed that only one in six workers is in a job that aligns with their field and level of studies, making mismatches between education and the labour market Malta's biggest economic challenge. A third of workers in Malta were found to have a higher level of education than that required for their occupation. On the other hand, one-fifth have a lower level of education or fewer skills than are desirable for their job.
In their study Skills Rush: Have we missed the Bus? Professors Alexiei Dingli and Rose Marie Azzopardi focused on the skills gap in the workforce and the challenges faced by both students and educators. They highlighted several issues that need immediate attention to ensure the sustainability of Malta's economic and educational future.
The study emphasises that, though Malta has invested heavily in its education system, there are still several inefficiencies that hinder its effectiveness. While overqualified workers feel useless and unable to use their qualification, the under-qualified feel they do not have the capacity or skill they cannot do a job they to do so, the study says. It finds that half of the managerial positions display either of the two signs.
At the same time there is significant brain drain particularly in medicine, engineering, and IT. Highly skilled individuals are leaving the country, exacerbating the skills mismatch in the labour market, the study says.
Over the past decade more people have continued their studies and improved their qualifications. But this has led to a problem in overqualification, which increased from 12.5 per cent in 2012 to 20.2 per cent in 2021. This lack of alignment between education and job market needs hinders productivity and leaves many workers feeling undervalued. At the same time only 13.8 per cent of adult workers in Malta undertake lifelong training.
This may have had a hand in recent statistics from the National Statistics Office (NSO) showed that Malta recorded the largest increase in unemployment in the EU, while youth unemployment also saw a significant increase compared to other countries. Commenting on this, economist Professor Philip von Brockdorff argued that this development is "somewhat of a concern as this is probably reflecting low levels of qualifications and skills."
One of the more serious warnings from the Dingli & Azzopardi study related to Malta's MATSEC exams, in which around 50% of students scored a D or lower, raising doubts about the effectiveness of the education programme. In fact, the report calls for a re-evaluation of this system and a shift in its priorities to meet future employment needs.
A long-term vision would promote education as a lifelong process, nurturing soft skills from an early age, and have a greater focus on the individual holistic development of students. Further support for a new vision comes from the National Productivity Board, which has explicitly warned that the public sector and education must embrace massive systemic changes ̶ such as AI integration and twin green-digital transitions ̶ to reverse the widening national productivity slowdown.
In this context, it may not be coincidental that Malta's public expenditure on education sits on the lower side of the EU average, sliding down to 3.4%-4.7% of GDP in recent cycles.
The Cabal
I am not one to exaggerate, but I feel I can now declare that corporate power is fuelling the collapse of democratic choice, feeing on a growing disillusionment with politics. This feeling is fully justified by the revelations during the Yurgen Fenech trial, including his conversations with Planning Authority chief Johann Buttigieg. I don't care whether "there was nothing new" in the revelations because we have heard them before. The passing of time does not make them less relevant.
It is clear that powerful businessmen are influencing government policy and have become part of the nexus of power that creates such policy. They face no significant resistance ̶ their interests have now been woven into the fabric of the State. Systemic failures by government contractors are no barrier to their obtaining further work; the promises of efficiency and value for money in public contracts have failed to materialise.
Malta does not have a dedicated legal framework governing lobbying. There is currently no mandatory public register for lobbyists or statutory requirement to disclose lobbying contacts. The Commissioner for Standards in Public Life has been pushing for a formal legal framework since 2020. Apart from requiring that lobbying should be governed by a code of conduct, he had recommended a transparency register where public officials would log meetings and "cooling-off" periods preventing former ministers from immediate lobbying.
Malta's own National Audit Office had welcomed the proposals made by the Commissioner, particularly in view of the significant governance-related concerns identified in its work. It had pointed out that several of its audits had pointed towards scenarios where lobbying was likely to impinge on the Government's decision-making process.
Bodies like the OECD and GRECO (the Council of Europe's anti-corruption body) have criticised Malta for lacking these guardrails and urged the government to implement stricter transparency rules. Yet, we are assured by government ministers that Malta has made a lot of progress in implementing transparency and governance measures. Like Trump, they believe their own bs.
Many of our businessmen are treated with a deference otherwise reserved for God. They phone ministers, senior civil servants, and others to pursue their private interests, ride roughshod over regulations and policies and, when necessary, have them changed. What's good for them personally is, by definition, also good for the country.
The state-corporate nexus of power is bypassing democracy and making a mockery of the voting process. The current political funding system ensures that parties can be bought and sold. Politicians stand and watch as public services are divvied up by a grubby cabal of privateers.
Some statistics
Numerical data can sometimes be used to support weak arguments. I just mention two instances from a recent week.
The first instance was the claim that Malta's energy demand is not the result of population growth but is the consequence of climate change. Bonkers. During the past decade, Malta's population has increased by 30.8% while energy consumption per capita has grown by 11% to 234.7 MBTU. A higher standard of living has naturally allowed households to use more appliances ̶ such as cleaning robots, AI-powered smart displays, and air-conditioners). How on earth can this be ignored?
The country's energy consumption is naturally also influenced by economic activity, not just households. The country's GDP has risen by 180% over the decade (114% per capita) and the increased economic activity this entails naturally leads to higher consumption. I think it would take some weirdo-economics to claim there is a strong role of climate change in this.
Demand has been immune to energy prices. Government energy support schemes have kept electricity prices low (around €10 to €12 per 100kWh for standard tiers), shielding consumers from steep continental price spikes but also sustaining higher consumption. I abstain from remarking about the economic implications, but artificially low prices undeniably influence energy consumption.
Obviously, climate change has played its part. The average temperature in peak summer has increased by around 1.28oC while there has been a prolongation of the incidence of high temperatures. This has surely contributed to the increase in peak energy demand, which has reportedly climbed to 742 megawatts from 417 megawatts ten years ago - an 80% increase. I quote these figures even though I am not sure what is meant by peak, whether it's 2-3 months, just one day, or somewhere in between.
The second instance was the claim that the country's reliance on foreign workers is going down. The claim was justified by reference to the fact that net migration in the last three years has declined by "one-third." Now, net migration is calculated by subtracting emigration from immigration. Looking at the last three years, I found that immigration fell by 6.3% over the period, but emigration increased by 43%. So, the decline of 36.2% (not 33.3%) in net migration was due to a higher increase in emigration. Not QED.
So, while in 2025 we had 2,220 immigrants less than three years ago (inflow to the workforce), we had 5,672 emigrants (outflow from the workforce). Arguably, we are more dependent on foreign workers now than in 2022.
Quote of the Week. "The diversity of the world's peoples must not be considered as a danger or a threat, but rather as a resource for enrichment and growth." - Pope Leo XIV during a general audience in St Peter's Square, 16 September 2026