Prime Minister and Labour Leader Robert Abela said the challenge of employee shortages and population pressures must be addressed through realistic economic planning, stronger regulation, digitalisation and investment in skills, rather than by creating more authorities or offering slogans.

Replying to the first question in the SME debate organised by the Chamber of SMEs, moderator Fabian Demicoli referred to the SME Barometer, where members consistently identify employee shortages as one of their biggest concerns, while also expressing concern about overpopulation and its impact on smaller businesses.

Abela said Labour’s approach is based on facts: where Malta was, where it is today, and where it needs to go next.

He said that under previous Nationalist administrations, the country faced the opposite problem, unemployment, with around 8,000 people out of work because the economy was not generating enough jobs. Labour, he said, changed that reality by creating work, quality careers and a diversified economy.

The Prime Minister rejected what he described as populist rhetoric that Malta’s economy grew because foreign workers were imported. He said basic economic logic shows the opposite: economic growth creates demand for more workers.

He noted that young Maltese and Gozitan workers are increasingly furthering their studies and entering high-value sectors such as architecture, artificial intelligence, digital industries and STEM. At the same time, he said, the level of job creation has exceeded what the local population alone can supply in terms of labour.

Abela said Government inherited a labour market that was not properly regulated, including a situation where temping agencies operated under a generic legal notice without adequate regulation. This, he said, changed through the Labour Migration Policy, a robust framework developed with stakeholders, including businesses, to regulate a sector that had previously lacked proper structure.

He said labour market studies are carried out regularly by Jobsplus across different sectors. Where a sector is found to be saturated, such as in the case of Y-plates, Government acts to stop additional workers entering that sector. The approach, he said, is to map the real labour needs of each area of the economy and authorise foreign workers only where they are actually required.

This, Abela said, is how responsible policy is made.

He contrasted this with what he described as the Opposition’s inconsistent approach, referring to proposals to regularise people in Malta without a permit. He warned that regularising people who are in the country illegally would be a serious mistake, because it would create a pull factor for more people to come to Malta illegally.

The Prime Minister said the solution is not to create an “overpopulation of regulatory authorities”, but to continue strengthening coordination between existing entities such as Identità, Jobsplus and the Migration Police. The next step, he said, is simplification, shortening timeframes for job and visa applications while maintaining checks to ensure that Malta does not attract unskilled workers who are not needed by the labour market or people who may pose a security risk.

Abela said one of the main answers to labour shortages is digitalisation and investment in artificial intelligence. He referred to the €100 million being invested in every Budget in digitalisation, saying AI is one of the strongest tools available to reduce the growth in demand for foreign labour.

He gave the example of an investment in Gozo where an expansion that would previously have required 10 additional workers will now require only two, with the rest of the growth supported by artificial intelligence.

However, he insisted that this does not mean AI will replace Maltese and Gozitan workers. On the contrary, he said this is why Labour is proposing the Individual Learning Account, study leave, reskilling and upskilling, so that workers can continue improving their skills and embrace new technology.

The Prime Minister also said Malta must keep directing its economy towards high-value sectors, including automation, robotics, aviation, generic medicine manufacturing, digital services, healthcare and care services, including support for persons with disability. Some of these areas, he said, will continue to require foreign workers, but the aim is to make businesses less dependent on labour numbers and more dependent on technology, productivity and efficiency.

For SMEs, he said the plan is clear: ensure the economy continues growing, bring in only the workers actually required by the local labour market, remove unnecessary obstacles to business operations, and help businesses re-engineer their operations to depend less on additional workers and more on technology.

Abela also used his reply to question the credibility of Opposition proposals, particularly those linked to new economic niches. He referred to claims about the space sector, saying that on 6 May the PN had stated this niche would generate €100 million over five years, or €20 million annually, while its manifesto later suggested it would generate €500 million a year.

He said such a jump in figures within two weeks raises serious questions about stability, credibility and whether the country’s fiscal forecasts could be trusted under a different administration.

He also referred to another Opposition proposal, which he described as a “petrol station in the middle of the sea”. He said this had initially been presented as generating €450 million over three years, then €350 million, while the PN manifesto suggested that in the first five years it would not generate any revenue at all.

Abela said these contradictions do not inspire confidence among businesses that need stability, predictability and direction.

The Prime Minister said Labour’s plan is different because it is rooted in real economic niches, costed proposals and a clear understanding of how each measure contributes to the economy. He said SMEs need a Government that knows how much each sector can realistically contribute, how labour needs will be managed, and how the country can keep growing without placing unnecessary pressure on infrastructure.

His message to SMEs was that employee shortages and population pressures require serious policy, not easy slogans. The answer, he said, lies in regulated labour migration, stronger digitalisation, investment in AI, better skills, less bureaucracy and a clear economic direction that gives businesses the confidence to plan ahead.