Since documented history, a persistent feature on the Maltese Islands was lack of jobs. People struggled across centuries to put food on their table. At times it was a matter of survival. The working class, both from the relatively urbanised Malta and the largely rural Gozo, sought opportunities away from the Islands. It is difficult to go back in time and identify a period where the challenge of finding enough work for the local population was not top on the agenda in national discussions.

This makes the current situation rather unusual, with labour shortage featuring in national debates. A look at the recent past provides useful insights into the labour market dynamics.

Data published by the National Statistics Office shows that in 2013, employment rates stood at 62%, meaning that out of 100 persons of working age only 62 were in employment. This rate increased steady to over 74% in 2020 and remained stable even during the pandemic. This 12% increase in the employment rate was underpinned by an impressive increase in the number of women who opted to go into employment. The reasons of this shift were both cultural – with more women having higher education and ambitions – and institutional – largely triggered by the provision of free childcare.

As a result of these changes, the unemployment rate declined over the years: from a rate of 6.1% in 2013 to just over 3% in 2020.

Unemployment rate declined from a rate of 6.1% in 2013 to just over 3% in 2020.

These changes in the labour market were the result of the social and macroeconomic environment that was nurtured during the last decade. From a situation of persistent challenges in creating employment opportunities, Malta moved towards a situation of tight labour conditions, despite high inflows of foreign workers.

Over the last few years there has been sporadic claims and complaints arguing that the private sector is facing strong competition from the Government in terms of finding people. Over the last few weeks, such claims seem to have gathered momentum with the Malta Employers’ Association stating that employers are “feeling the talent drain from the private sector as several employees migrate to government jobs”. 

The Malta Chamber of Commerce, Enterprise and Industry and the Gozo Business Chamber followed suit a few days later claiming that their members were experiencing a “drastic employee drain to the public sector, even when such jobs come with lower salaries”. Somehow, the Malta Union of Midwives and Nurses was reported to have stated that the “health division is allegedly keen to poach hundreds of nurses from private companies that provide care to elderly people in residential care.”

This merits attention. However, any useful assessment need not be based on perception or personal experience but must be backed by hard evidence. One has to look at the reasons behind this shortage. A look at official figures over an 8-year period from March 2013 to March 2021 sheds light on this.

So, if it is not the Government behind the shortage in labour, what has or is still contributing to this phenomenon? There is more than one single motive, but the most plausible in my view is that some employers are facing the tight labour market from a position of weakness.

Labour supply, especially the unskilled or semi-skilled, was and still is highly dependent on import of workers from the EU and third countries. The pandemic created a wedge. The position taken by many employers at the very outset of the pandemic with declarations such as they would start making redundant their workforce unless government intervenes, sent a powerful message.

The fact that Government acted with a massive programme in the form of the wage supplement – which was equivalent to paying tens of thousands of workers from public funds – mitigated the immediate impact. Despite such intervention, important sectors of the economy still lost valuable human resources when non-Maltese left the Island while Maltese started to revise the risk and reward trade-off of private employment vis-à-vis public employment.

Putting the blame on Government for labour shortage leaves more questions than answers. While the Government needs to be careful in his recruitment, sections of the private sector need to go beyond the simple and easy rhetoric and to look at ways of making themselves attractive enough not only to skilled workers but also to the unskilled and semi-skilled.