The big news of 2020 was that despite the pandemic, the Maltese labour market was very well protected. The forecast 50,000 unemployed failed to materialise and instead by mid-2021, the number of those registering for work had fallen to record lows and employers were complaining of acute labour shortages. So much so that the Malta Employers Association has prepared a position paper with several suggestions on how to try to address this shortage, including trying to induce workers not to retire completely.
The presence of such an acute labour shortage confirms that the various measures undertaken by Government not only safeguarded existing productive capacity, but also created a demand for labour that exceeded that which existed before the pandemic.
A recent NSO release reveals that despite the pandemic, by end 2020 there were 16,167 employers in Malta. Between 2019 and 2020 the number of active sole owners and partnerships continued to drop, as it had also done between 2018 and 2019. The decline was much more contained during 2020, however. On the other hand, the number of limited liability companies that employ workers rose by 200, mostly in construction, professional and financial services. Every working day there was a net increase of one company that employed workers. That in the middle of a pandemic, the Maltese entrepreneurial spirit remained so dynamic is testament to the resilience of our economy.
The number of firms employing more than 250 workers rose by 4, after having remained unchanged between 2018 and 2019. This possibly explains part of the drop seen in the number of firms employing between 50 and 249 workers, as some of these firms managed to continue to expand. There was, on the other hand, some expansion in the number of firms employing between 10 and 49 workers.
There were some 2,859 new registrations of firms, as against 1,738 firms that were de-registered. Thus, by the end of2020 there were 53,348 active business units in Malta, an increase of 4.6% over the previous year. In 2019, when there was no pandemic and the economy was growing, the number of active business units had risen by just 2.6%. This acceleration reflected a rise in the number of active sole owners and partnerships that do not employ workers.
This may partly reflect the continued growth of the gig economy in Malta, with several operators registering very fast growth because of the pandemic. It could also reflect the fact some persons reacted to worse employment conditions by shifting to working as self-employed. However, no matter the cause it demonstrates the strong entrepreneurial spirit that continued to characterise operators in the Maltese economy.
Thus, on the one hand, the number of employers remained stable and larger employers continued to grow, and on the other there was an expansion of self-employment. Both these developments were not the ones most business experts were anticipating at the start of the pandemic.
The resilience of the Maltese economic growth model truly continues to surprise. It is for this reason that most international agencies are issuing significant upward revisions to their forecasts for Malta’s economic progress in the coming years.