Wednesday, September 21 2022


The Maltese Chamber of Commerce, Business and Industry has expressed particular concern at the significant wage inflation characterized by several rounds of wage reviews in the same year for private sector jobs which require a certain level of competence.

This is a problem that will not only erode our competitiveness in export markets, but will also have a negative impact on low-income people, as they will have to deal with persistent inflation in the cost of services that are not neither imported nor due to the war in Ukraine and therefore transitory, as is the case with international energy prices, the chamber said.

The dire state of our labor market is the result of overemployment in the public sector; a lagging education system; inefficient procedures for recruiting third-country nationals which encourage abusive practices; and low retention of skilled foreign workers due to lack of adequate policies to support long-term retention of skilled resources. These issues predate both Covid and the war in Ukraine, and recommendations to address them have been made for years by various stakeholders, including the Malta Chamber, but the situation continues to deteriorate.

The Malta Chamber has once again made a number of proposals to address these issues.

Public sector

According to official statistics, more than 51,167 people were working full-time in the public sector in January 2022. This equates to an increase in public sector employment of around 1,000 people over the previous 6 months. Public sector employment has been on the rise for nearly a decade, increasing by 10,000 workers since 2013 (a 20% increase). While it is understandable that the public sector needs personnel at certain levels, it is also evident that there is overstaffing in various strata and in various government departments and entities. It is contrary to business competitiveness to have a situation where the government indirectly solicits human capital from the private sector. In addition, public sector outsourcing is not included in the statistics. The real share of employment in the public sector is therefore significantly higher than indicated by official statistics. Additionally, since many contract workers are recruited through temp agencies and remain on temp agency books for the duration of their employment, our labor statistics are likely to be inflated in terms of employment in the professional services in which these companies are classified and underestimated. in all other sectors in terms of employment in the public and private sector.

PROPOSALS

1. Conduct an independent audit exercise to take stock of the skills and production of human resources currently employed by government, with surplus staff seconded to the private sector.

2. Adopt a good practice of avoiding hiring people who are in full-time, well-paid jobs in the private sector, within the public sector, in view of economic recovery and the long-term sustainability of public finances.

Third country nationals

It is indisputable that many businesses and industries cannot survive, let alone thrive, without Third Country Nationals (TCNs) to complement the local and European labor market.

While many argue that the employment of third-country nationals in the local workforce has a deflationary effect on local wages, the data shows that wages have increased across all sectors and at all levels, although at a slower rate among the unskilled.1

The Malta Chamber recognizes that third country nationals cannot be the answer to all local labor shortages and, as illustrated in other parts of this document, is committed to promoting a strategy of education and digitalisation which feeds into our wider workforce strategy.2 believes that having recognized how critical third country nationals are to the short to medium term functionality of the Maltese economy, the Government should undertake special efforts to ensure that the visa and related clearance process is expedited.

Among the main obstacles to the effective integration of third-country nationals into the local labor market is the bureaucracy involved in the current authorization procedure, which can be costly for employers. This procedure requires employers to submit a rental agreement at an early stage in the process, which means that the employer will often have to incur months of rental costs before the employee even arrives in Malta.

Although the bureaucracy and inefficiency of the sequence of procedures can be a substantial obstacle for employers, this is further exacerbated by the administrative problems encountered when dealing with Identity Malta. The Malta Chamber is aware of several cases where companies have encountered issues related to conflicting information provided by different contact persons at Identity Malta. This conflicting information can lead to a degree of uncertainty among employers and potentially a lack of confidence in the fairness and universal application of agency processes.

A key element when it comes to attracting and retaining the right talent from third countries is an effective system that processes applications for family reunification quickly and fairly. Unfortunately, the duration of administrative authorizations for these family members is exorbitant and can have a real impact on the attractiveness of the Maltese labor market.

PROPOSALS:

1. Ensure that once a TCN is permitted to work in Malta, they have access to a free labor market without any property rights derived from the original employer when changing jobs.

2. Broaden the scope of the Key Initiative for Employment program to attract people with certain key skills and qualifications that are lacking in the labor market.

3. Raise the issue of visa delays with relevant service providers to ensure that appointments are granted within a reasonable time.

4. Adopt a better enforcement and sanctioning regime, particularly with respect to foreign workers, to combat gross abuses.

5. Undertake a comprehensive and in-depth study of Malta’s optimum and sustainable carrying capacity.

work incentives

The Malta Chamber advocates a framework built around 4 interrelated and reinforcing policy priorities to nurture, develop, attract and retain talent, which underpin our National Jobs Strategy report released in August 2021.

PROPOSALS

1. Set up a system allowing households to benefit from a tax deduction on tax revenue related to services rendered for renovation, repair, cleaning and maintenance work on housing, in order to combat tax evasion through undeclared work.

2. Ensure that workers who are entitled to a pension before retirement age and choose to take it have the possibility of working part-time.

3. Revise the ceiling on pensionable earnings, as wages have been rising for many years and the ceiling on pensionable earnings has stagnated.

4. Introduce an automatic enrollment with opt-out system for employees in order to encourage the subscription of supplementary pensions, in particular by young employees.

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