Finance Minister Clyde Caruana has warned that a shorter working week cannot be introduced without corresponding productivity gains, as he stressed the need for Malta to remain competitive amid economic pressures.

Speaking to journalists, Caruana said discussions on reducing working hours were a long-term issue that would need to be addressed during the current legislature and beyond.

He argued that reducing working hours would have to be accompanied by higher productivity.

“There’s no manna from heaven,” Caruana said, stressing that any additional benefits introduced into working conditions would carry a cost that would ultimately have to be borne by someone.

He said the issue had to be considered against the current economic environment, highlighting the need for Malta to remain competitive, particularly in the face of higher energy prices.

Government to prioritise energy subsidies

Turning to government spending and the 2027 Budget, Caruana rejected the suggestion that a rising deficit would necessarily indicate tighter fiscal policy.

“If the deficit is going to increase, that means that government is going to expand its fiscal policy,” he said, describing the approach as expansionary rather than contractionary.

Caruana said the government’s approach would be based on priorities, while reiterating his position that Malta must remain within the EU’s 3% deficit limit.

“We have to live within our means,” he said, adding that keeping the deficit at or below 3% of GDP was essential to comply with EU rules.

He identified energy subsidies as a key priority for the coming period, saying the government needed to ensure sufficient resources were available to cover them.

“Government has to readjust its priorities for the coming 12 months,” Caruana said, in order to accommodate expenditure while remaining within the 3% budget limit.

His comments come as the government prepares for the 2027 Budget.