A recent study by Dr Aaron Grech, Chief Economist at the Central Bank of Malta, has brought to light a remarkable shift in the country’s labour market over the last decade. Between 2013 and 2023, Malta underwent a complete transformation in employment rates, making a massive leap from having the second lowest employment rate in the European Union to achieving the second highest.

Dr Grech noted that the dramatic increase in Malta’s employment figures exceeded expectations, with foreign institutions, including the European Commission, having forecasted a modest growth rate of just 0.2% annually in 2013. Malta surpassed all projections, achieving a growth rate of 5% per year, or 25 times higher than expected.

The numbers speak for themselves. Over a short span of ten years, the number of people employed in Malta grew by 20,000, a figure that surpassed the total increase in employment seen over the previous thirty years combined. This growth occurred at a time when the number of individuals reaching the age of 61 each year exceeded the number of young people entering the workforce at age 16 by nearly 2,000.

The study also reveals an encouraging trend in migration patterns. While the number of Maltese leaving the country has decreased, an increasing number of Maltese expatriates have been returning home, helping to mitigate the effects of demographic decline.

Policy Changes Driving Employment Growth

The significant rise in the number of Maltese workers can largely be attributed to changes in employment policies introduced by the government since 2013. Dr Grech pointed out a key shift in the workforce dynamics: in 2012, 50% of men who worked at the age of 60 would stop working by the time they reached 61.

Today, that figure has fallen to just 20%, a change he attributes to pension top-ups introduced in 2016. These changes alone have seen around 8,600 Maltese workers continuing their careers beyond the age of 60. Dr Grech cautioned against introducing alternative schemes that could undermine this success, referencing international examples where such schemes led to a reduction in older workers remaining employed.

In addition to pension reforms, Dr Grech highlighted the success of Malta’s tapering scheme for social benefits, which he estimates has contributed to around 5,600 more Maltese workers. Notably, a significant portion of these workers were women on low incomes, showing how targeted support can drive higher participation rates. Further contributing to this trend is the free childcare initiative introduced in 2014, which has reduced the number of women dropping out of the workforce after childbirth. Dr Grech estimates that around 6,200 mothers have remained employed due to this policy.

Importantly, Dr Grech pointed out that two-thirds of the 20,000 additional Maltese workers since 2013 can be directly attributed to these government policies. This shows the crucial role that such reforms have played in increasing employment across the country.

A Changing Workforce Composition

The study also revealed notable shifts in the composition of the Maltese workforce. Dr Grech pointed out that while the number of Maltese working in basic jobs declined by nearly 7,000, the number of professionals, managers, and technicians increased by almost 10,000. Indeed, nearly 80% of the 30,000 additional workers were employed in higher-skilled roles, which reflects a broader trend of increasing professionalisation within the workforce.

Another significant finding was the growing number of older workers, especially in manual sectors. Almost half of those working in manual jobs in Malta are over the age of 50, a figure that is double the proportion seen in professional careers. In contrast, sectors such as gaming, computing, and financial services have a lower proportion of older workers, indicating a generational divide across industries.

Challenges and Opportunities for the Future

While Dr Grech praised the country’s success in increasing employment, he also warned of the challenges posed by the ageing workforce. He highlighted that sectors such as tourism, construction, and manufacturing may face difficulties due to the higher age profile of their workers. Dr Grech stressed that the government must prioritise training and lifelong learning programmes to ensure that workers continue to enhance their skills throughout their careers.

Technological advancements and changes in government policy in the basic jobs sector may reduce the demand for foreign workers in certain areas, according to Dr Grech. He advocates for a new employment policy that focuses on upskilling, ensuring that Malta’s workforce remains adaptable and competitive. Such a policy, he argues, is vital to ensuring sustained economic growth in the coming years.

Malta’s transformation into one of the top performers in Europe for employment growth over the past decade is a direct result of strategic policy changes. By continuing to focus on skills development and ensuring that workers remain employed throughout their careers, Malta can build on this success and maintain a dynamic, thriving workforce for the future.