Gozo: Riding the Wave

Gozo is no different to other locations in terms of COVID-19’s impact. Before the pandemic, the Gozitan economy was experiencing unprecedented growth. People were experiencing a reality that was unthinkable a few years earlier.

The impact on Gozo was potentially larger than that on the mainland. One needs to keep in view that tourism accounts for a much larger share of the Gozitan economy than it does at a national level. Besides this, Gozo’s economy is less diversified, and important activities such as iGaming and financial services – which were almost untouched by the pandemic – are almost non-existent in Gozo when compared to the share at a national level. These facts exposed Gozo to a larger shock.

Economic activity was halted with the introduction of a series of stringent measures in 2020 and retained during the first half of 2021.

During most of these months, travel to and from Gozo was restricted to work, health and education purposes and other non-essential travel prohibited. This unprecedented shock led to a significant loss of revenues to economic sectors directly and indirectly related to tourism.

The impact of the pandemic on tourism activity in Gozo could be seen by the drop in the number of guests in collective accommodation establishments which were slashed by half in 2020. This was also reflected in the number of passengers and vehicles which crossed between the two islands – which dropped by 36% and 13%   by 13% respectively over the previous year.

Given these figures, one would have expected a significant impact on the labour market with a drop in jobs and opportunities. However, this did not occur. Employment remained strong, with several bodies representing businesses complaining about staff shortages.

This begs the question: What were the reasons behind this apparent paradox? How could employment remain strong during a time when the main economic driver of Gozo was severely impaired by the pandemic?

How could employment remain strong during a time when the main economic driver of Gozo was severely impaired by the pandemic?

The answer to this is the support given by the Government. This support was even stronger for Gozo than it was for Malta.

Indeed, the Maltese government introduced several economic and liquidity support measures to mitigate the negative economic effects of the pandemic.

The Wage Supplement Scheme was one of them. This scheme, administered by Malta Enterprise, targeted firms which were severely or adversely impacted by the restrictions.

The scheme was initially introduced in March 2020 and subsequently extended to cover the summer months and till the end of the year. It was lately extended till the end of January 2022. Due to the special conditions Gozitan businesses face, the wage supplement for Gozitan enterprises was more generous when compared to that in Malta.  

Another effective measure was the introduction of government vouchers. These proved of particular importance to Gozo as theynot only incentivised consumption but also offered an additional incentive in terms of internal tourism as many Maltese opting to spend their holidays in Gozo.

Other measures included support to people in quarantine leave and parents who could not work to care for their children, reduction of stamp duty on property purchases, support to bars and clubs, and schemes to facilitate investment in teleworking systems and training and development of employees.

The latest figures issued by the National Statistics Office also confirm that the drop in terms of economic activity in Gozo was relatively moderate. Indeed, in 2020, the GVA at basic prices in the regions of Malta, and Gozo and Comino was estimated at €11,326.6 million and €506.9 million respectively; meaning that the decline in Malta was 5.7% while that in Gozo was slightly less at around 5.6% over 2019. Considering the higher vulnerability of the Gozitan economy to external shocks, these figures are truly encouraging.

These support measures proved fundamental. The challenge posed by the pandemic is not yet over. However, Gozo’s resilience built over the past few years augur well for the future.  

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