Last Updated on Tuesday, 9 May, 2023 at 11:13 am by Andre Camilleri
Results of the Malta Chamber of SMEs barometer for the first quarter of 2023 show that 65% of respondents believe “Malta needs to redefine its strategy and direction going forward.”
The Malta Chamber of SMEs launched the SME Barometer in collaboration with MISCO earlier this year in January to present quarterly surveys which give insights on economic trends, business sentiments and the state of enterprises in Malta.
Several other key findings include the recognition of a volatile international situation, which is leading investors to say that they’re ‘not sure’ about their investment appetites for the coming year, a worry about inflation and the impacts this is having on the day to day running of their businesses, and the government’s important role to play in shifting the economic trajectory of the country.
Speaking at the event were SME Chamber President Paul Abela, SME Chamber CEO Abigail Mamo, SME Deputy President Philip Fenech, and Misco founding-partner Lawrence Zammit.
In total there were 415 businesses operating in Malta who offered their responses in the online survey, with data collected between 21 April and 3 May. “At a 5% margin of error, this survey results in a strong level of representation,” said Mamo.
There were many lines of business represented; the largest category by far was the ‘retail, import, distribution, and wholesale’ at 53% of the answers provided, followed by ‘manufacturing, construction, machinery and production’ at 17%, and professional services at 15%.
56% of businesses surveyed had between 1 and 9 employees, 29% had 10 to 49, and the rest consisted of businesses with over 50 employees.
19% of businesses flagged the employee shortage as an issue to worry about and 14% cited an increase in inflation.
“We don’t have enough employees,” said Mamo, ” and while this problem has been eased by third country nationals, we’re still facing a shortage. Businesses are giving much more importance to the quality of the employees that they seek, and they find a skills mismatch.”
“Maltese employers, by and large, want to hire Maltese employees.” Zammit said.
“It’s not a question of not being able to find foreign workers, merely that the potential employees don’t have the necessary skills to carry out the necessary work. The solution is not to bring more foreign workers but rather for Maltese workers to increase their skills,” he continued.
“This means that we need a much more sustainable way of bringing foreign workers into the country,” said Mamo. “We need to target countries in a better way to bring certain talents and retain these individuals with attractive incentives.”
In terms of issues that the country itself is facing, businesses cited the increase in inflation (23%) and the lack of good governance (22%) as issues they would like the government to do something about.
“While the consumer may think that inflation is brought about by the business-owner, this isn’t always the case. Business-owners, especially smaller ones, have an interest in keeping prices down as well and are just as worried about inflation as the consumer,” said Abela.
“As for the lack of good governance, businesses have said that they wish to move towards a level of fairness ‘across the board’; we need to focus on quality rather than quantity, we need to be more transparent when it comes to public procurement, we need to address unfair competition, and tax evasion, and we need to look at Malta’s international reputation as this heavily affects businesses,” said Mamo.
“We sometimes forget that we don’t want this quality simply to increase our touristic appeal. We are here to stay so we would like to see a higher quality across the board for ourselves too,” said Mamo.
In relation to the public procurement process, Abela also said that the government should take the tenders that it issues, worth “up to €30 million” and break these down into smaller chunks, as “90% of the work is done by subcontractors anyway, so they will be able to directly participate this way.”
11% also said that the environment is of some concern too. “It should be noted that there was no definition given for the ‘environment’, meaning that respondents are likely to have different things in mind, but the environment is increasingly being mentioned as an important subject and we cannot continue seeing this as a limited issue,” said Zammit.
65% of respondents think that Malta needs to redefine its strategy and direction going forward, notably by pursuing an economy of quality rather than quantity and focusing on measures of sustainability. “We have so far not unlocked the way of moving in that direction,” said Mamo.
When it came to describing their investment appetites for the coming 12 months, most businesses (55%) said that they weren’t sure about whether they would invest, 29% said that they were likely to do so, and only a mere 16% said that they were not likely to do so.
The Central Bank of Malta forecast the country’s GDP to slow down from the 2022’s rate of 6.8% to a rate of 3.7% in 2023. When asked whether their business will over or underperform compared to this statistic, a full 64% of respondents said that their business will grow at a slower rate, 28% said that their growth will equal the economy’s rate, and only 8% said that their business will outpace the economy.
When asked whether the Chamber of SMEs is looking into the issue of Artificial Intelligence and the potential impact that these new technologies will have on the world of work, Mamo said that “digitalisation and AI are important topics and while we know they’re coming, what we’re doing about it is quite limited at the moment.”
“As an organisation, we’re looking at different projects that we can start implementing, especially sector-specific interventions as there are some sectors which AI will change dramatically. We need to start moving in that direction,” she concluded.