The report, titled Rediscover to Align, argues that the country’s tourism success should now be guided by better alignment between visitor growth, infrastructure, environmental sustainability, residents’ quality of life and broader national priorities.

Presenting the document, Malta Chamber President William Spiteri Bailey said tourism remains one of Malta’s most important economic sectors, but its significance extends well beyond its financial contribution.

“Tourism is the primary way Malta presents itself to the world, through our people, culture and landscapes,” he said.

He noted that after the strong post-pandemic rebound, the central issue is no longer recovery but stewardship. The sector has regained momentum, with visitor numbers and air connectivity restored, but that very success is now creating fresh pressures.

Spiteri Bailey said the Chamber had first started this discussion during the Covid-19 crisis, when it asked what Malta’s tourism model should look like in the future rather than simply waiting for conditions to improve. That process led to the original Rediscover document in 2021, while Rediscover to Align is intended as the next stage of that long-term vision.

EY Malta Senior Manager Glenn Fenech said Malta’s tourism performance has continued to reach new highs, with tourist arrivals climbing to around four million last year, more than double the 1.8 million recorded in 2015.

Tourism expenditure also rose sharply, reaching €3.9 billion. However, Fenech pointed out that the average expenditure per tourist has fallen, dropping from €919 to €771. This decline is partly attributed to shorter stays, with the average tourist now spending 6.3 nights in Malta in 2025.

He also highlighted changing accommodation trends. Around 61% of tourists are now staying in collective accommodation, including short-let properties, while 31% stay in traditional non-collective accommodation and 8% in non-rented accommodation.

At the same time, seasonality is becoming less pronounced. October has now emerged as one of the busiest months for tourism, alongside August, replacing July as the second peak month. Malta has also become less dependent on its traditional core markets – the United Kingdom, Germany, Italy and France – as it broadens its tourism base.

Fenech said the strategy is the result of broad consultation involving more than 30 public and private sector stakeholders, backed by data analysis and sector research. Its central message, he said, is that tourism growth must be matched by the country’s ability to sustain it.

“We need to manage success through alignment so that growth remains sustainable and resilient,” he said.

Malta Chamber Board member Alan Arrigo outlined the strategy’s three main pillars.

The first focuses on improving the visitor journey and reshaping the tourism offer. Among the proposals are calls for the Malta Tourism Authority to place greater emphasis on value rather than sheer visitor volume, with stronger promotion of Malta’s heritage, gastronomy and cultural identity. The strategy also recommends expanding niche, experience-driven tourism and creating a smarter tourism ecosystem that uses data to manage visitor flows more effectively.

Arrigo said the report also pushes for a shift from “more beds to better beds”, including a review of hotel planning incentives and closer alignment between tourism development and infrastructure capacity.

The second pillar centres on authenticity and environmental protection. It calls for stronger safeguards for Malta’s landscapes, historic streetscapes and village identities, as well as firmer protection of ODZ areas from damaging development. Proposed measures include a national aesthetics and landscape policy, tighter limits on projects that harm natural surroundings, and stronger links between tourism and culture.

The strategy also encourages the expansion of year-round tourism niches such as conferences, educational travel, diving, maritime tourism and cultural events, in a bid to reduce pressure from seasonal peaks.

The third pillar addresses governance and coordination. It proposes stronger collaboration across ministries and agencies, alongside the creation of a Tourism Resilience and Reinvestment Reserve. Other recommendations include industry-led skills frameworks, greater investment in innovation and digitalisation, and improved working conditions across the sector.

Tourism Operators Business Section Chairperson Joe Galea said the sector’s strong recovery after the pandemic has created new obligations for both industry and policymakers.

“If there is an industry that was successful after the pandemic, it is tourism, but that success brings responsibilities,” he said.

He stressed that Malta must now focus on exceeding visitor expectations while ensuring that tourism does not erode residents’ quality of life. Galea said locals must remain central to the tourism experience, noting that visitors are drawn to authentic destinations where residents themselves remain proud of where they live.

The Chamber said the document is intended as a living strategy that will evolve over time. But its message is clear: Malta’s tourism future should no longer be measured by numbers alone, but by whether success can be sustained without undermining the islands’ communities, identity and environment.

The post Malta Chamber of Commerce urges shift from tourism growth to tourism stewardship first appeared on The Malta Business Weekly.

Borg was responding to a question by The Malta Independent on how the government plans to move Malta’s tourism sector toward higher-quality tourists rather than simply increasing numbers, as Malta is nearing 4 million tourists this year.

He was asked what the government’s approach towards sustainable tourism will be, as the matter was not mentioned in the 2026 Budget.

Borg said that, for example, investing in cultural or music-related activities during the shoulder months, rather than the peak summer season, would better position Malta as an art and cultural destination for foreign visitors.

“I believe that you do not need more budgeting for marketing; it is the manner that we use it, and there will be a shift on how we will use these same funds,” he said.

On airline routes, Borg said that the government would prioritise developing certain new routes over short-haul ones, as part of the strategy to attract higher-value tourists.

“God forbid each time we decide we need to shift priorities, we create a bigger pot of money. I hope that we manage to slowly make that change with the same budget,” Bord said.

Borg also addressed the eco-contribution tax and the Gozo Tourism Authority’s call to ring-fence funds collected from accommodations on the island.

He said the current system works by collecting the tax, which goes to the consolidated fund, and the Ministry for Tourism then identifies projects to reinvest the revenue locally.

“I have no problems for the adequate amount of tax paid by Gozitans is re-invested in Gozo,” Borg said, noting that while the GTA might have preferred this to be explicitly mentioned in the budget, he has communicated the process publicly.

Regarding a potential mass transport system, Borg echoed the messages of the Prime Minister and Finance Minister, saying that Malta does need some form of mass transport.

However, he pointed the significant expenditure and impact involved, saying the government must carefully consider how to approach it.

He expressed openness to collaboration with the Opposition, which has also shown interest in discussing potential plans.

The post Tourism Minister says shift to quality tourism will rely on strategy, not extra budget first appeared on The Malta Business Weekly.

In a joint press conference, the two ministers said that Malta is entering a “new phase” of development, one focused not only on economic expansion but also on improving people’s quality of life, as the government prepares to implement its Vision 2050 strategy.

Borg said that Malta’s tourism sector had reached record highs in visitor numbers and guest nights, but must now address new challenges.

“Tourism is not just about hotels and restaurants, it is about people. The Maltese are part of the product,” Borg said, stressing that the hospitality of residents is central to the sector’s success, as tourists are welcomed by the Maltese.

He spoke of the increase to the eco-contribution paid by tourists, to strengthen public revenue, with proceeds reinvested in projects that “directly benefit residents.”

A pilot project in Swieqi and Valletta have already shown promising results in improving waste collection and addressing short-stay accommodation issues, with Borg to be expanding on this during his address for the Budget for his Ministry.

“We will replicate what works and improve what doesn’t in other localities,” Borg said, adding that better regulation of accommodation and improvements to key areas like Paceville are priorities, adding that government is seeking to improve Paceville’s aesthetics.

“The first projects to upgrade internal streets will be accompanied by more enforcement and coordination between authorities,” Borg said.

The government is also working to diversify source markets and extend the tourism season, with Borg mentioned upcoming routes, including Delta Airlines flights to New York and the return of Qatar Airways, which he said would enhance competition and connectivity.

He continued that training and skills remain crucial, as tourism is a sector where human presence is essential, but technology can help improve efficiency.

Borg said that the Skills Pass programme will be extended beyond tourism to all sectors, to create a level playing field across industries.

He said that marketing efforts will also increase to showcase Malta’s cultural and historical identity, as a “place where many civilisations met and left their mark.”

Borg said that next year, Malta will host an international tourism industry summit, bringing global leaders and investors to the island.

“We must continue understanding people’s sentiments and working on them,” Borg said.

Minister Schembri said that while Malta had enjoyed “remarkable economic success” over the past decade, the country must now take the next courageous step to measure success not only through GDP but also through living standards and social well-being.

“The economy is not static, it changes every day. We’re now focusing on human development, disposable income, and quality of life,” Schembri said.

Schembri said that international institutions, including the IMF, forecast Malta to remain among the EU’s fastest-growing economies. However, growth must go hand in hand with fairness and sustainability, he said.

To guide this transition, the government is launching Malta’s first industrial policy, designed to give local and foreign investors clear direction and long-term confidence.

“We want to incentivise high-value investment and disincentivise what doesn’t fit our future,” he said, speaking of upcoming legislation to regulate INDIS and Malta Enterprise.

Schembri said that 2024 saw the highest quality and value of foreign direct investment (FDI) ever recorded in Malta, a promise he said would be surpassed next year.

“It is not about the number of projects, but their value,” he said.

He said that unprecedented measures would soon be introduced to support Maltese companies in automation and innovation, reducing dependence on foreign labour.

“Government will finance up to 60% of investments through tax credits, we want Maltese firms to grow and elevate their products,” he said.

Schembri said that the government will dedicate €100 million to help businesses digitalise and adopt artificial intelligence, while €40 million in schemes will target SMEs.

“In a digitalised world, microchips are the new oil,” he said, adding that Malta’s STMicroelectronics plant will double its capacity through automation, without increasing employees.

Schembri said that Malta has positioned itself on the world map for semiconductors and is working with IMAC on AI and data infrastructure. A new submarine data cable will also boost resilience against cyberattacks and ensure connectivity, he said.

Schembri spoke of initiatives to make Malta “AI-literate”, including free accredited online AI courses open to all citizens.

He also spoke of upcoming legal changes allowing 16-year-olds to start and manage businesses under a new “sandbox” system until they reach 18.

“We want to cultivate an entrepreneurial culture, not just train young people to find jobs,” he said.

Support for start-ups will expand, with grants starting from €10,000 for innovative ideas and rising to millions as they scale, he said.

“Some of these start-ups are even investing in culture and the Maltese language,” he said.

To address mental health in the workplace, Malta Enterprise will launch a scheme helping private companies support employees’ well-being, he said.

Schembri said that family business schemes will be extended, while a new MicroInvest measure will reward SMEs that raise salaries for long-serving workers, as the government will cover 65% of the increase in Malta and 80% in Gozo for two years.

Schembri said these measures were designed to sustain competitiveness and push the country toward “smarter growth” through digitalisation and high-value jobs in aviation, fintech, blockchain, and logistics.

“Our economy is strong so that Maltese and Gozitan families can be strong too,” Schembri said.

The post Government outlines economic and tourism vision for Malta’s next 25 years first appeared on The Malta Business Weekly.

Investor confidence in Malta has surged to its highest level in years, according to the EY Attractiveness Survey – Malta 2025, with 79% of foreign direct investment (FDI) companies – up by 25%, now describing the country as an attractive location for investment.

The findings mark a strong rebound from 2024’s recorded 54% and suggests renewed optimism about Malta’s stability and competitiveness, though long-term concerns over skills shortages, infrastructure challenges and cost competitiveness remain.

The results were unveiled at the EY Future Realised Conference 2025 held at the Mediterranean Conference Centre, marking the 21st edition of the annual survey, which gauges the sentiment of foreign-owned businesses operating across Malta’s key sectors.

The survey was carried out between May and July 2025 and is based on responses from 120 foreign-owned businesses across financial services, gaming, technology, manufacturing, and tourism.

Speaking during the conference, President of the Malta Chamber of Commerce William Spiteri Bailey said that the timing of this year’s event “has never felt so urgent,” given the global fragmentation of trade and Europe’s shift in industrial policy.

“We are at a critical point. The choices we make today will shape Malta’s trajectory for decades. Trade is fragmenting into competing blocs and Europe is changing its agenda. Malta must respond with clarity, resilience, and ambition,” Spiteri Bailey said.

Spiteri Bailey said that Malta’s economic model must evolve toward “quality-driven, high value-added work” rather than quantity-based growth.

He urged the country to strengthen its connectivity and position itself as a “trusted international logistical hub” while embedding AI “not only in business and client services, but also in government operations, through transparent and responsible use.”

“These global shifts cannot be addressed by policy alone,” he said, adding that Malta must “urgently address structural issues” that limit competitiveness.

Remarkable resilience

EY Malta Country Managing Partner Ronald Attard said that Malta had shown “remarkable resilience” in a shifting global landscape.

“This year we have witnessed a substantial rebound in foreign direct investment attractiveness,” he said, noting that Malta’s small size, openness to innovation, and favourable business environment continue to appeal to investors.

However, Attard cautioned that optimism must be tempered by realism, as 60% of investors cite skills shortages as the top risk,” he said.

“There is a strong call for an overhaul of the education system. Competition for investment is intensifying, and Malta must ensure that its workforce remains equipped to meet future demands,” he said.

Attard added that while investors are not retreating from Malta, they are “rebalancing” their strategies amid global uncertainty.

“Malta can be compared to a little garden, it can flourish if nurtured and cultivated properly,” Attard said.

Presenting the survey results, EY’s Simon Barberi said the findings reflect a shift in investor sentiment, with technology and artificial intelligence (AI) emerging as central themes.

Barberi said that Malta’s overall FDI attractiveness has improved, with corporate taxation, social stability, and strong telecoms infrastructure ranking among its strongest assets.

Participants also expressed hopes for Malta to evolve into a country “where people want to work, live, relax, and create,” a greener island that offers a high quality of life and safety alongside competitiveness.

Tax regime, stability, and connectivity cited as Malta’s main strengths

Malta’s tax framework, social stability, and telecommunications infrastructure emerged as the top factors underpinning its attractiveness, with 78% of investors citing the tax system as a key positive, followed by 70% highlighting stability and 68% praising connectivity.

The EY survey noted that these pillars continue to sustain Malta’s position as a competitive business hub, particularly for digitally driven industries and service-based investment.

However, weaknesses were again pointed out, as only around one-third of respondents viewed labour costs (33%) and skills availability (34%) as competitive, while transport and logistics infrastructure received positive ratings from just 18%.

The survey showed that Malta’s R&D and innovation environment, and its transport and logistics infrastructure, remain Malta’s least attractive FDI parameters.

Although nearly half (49%) said Malta’s political, legal and regulatory environment had improved, it remains below previous highs, while innovation capacity, at 20%, lags behind other EU jurisdictions, the survey showed.

The survey found that Malta still benefits from a relatively favourable cost base compared with other countries.

Most investors said Malta’s taxation (62%), energy (58%), and labour (48%) costs were lower or significantly lower than in competing jurisdictions.

The EY survey showed that the country’s value proposition is increasingly under pressure from skills shortages, cost inflation, and international tax reforms.

Investors pointed to tax competitiveness (55%), workforce quality (52%), and the regulatory environment (41%) as their top criteria when making investment decisions.

When asked about Malta’s economic direction, nearly half (48%) of investors said they supported a strategy focused on “better and more” growth, combining productivity and value creation, while 36% preferred “better and less,” prioritising quality over rapid expansion.

Only 13% of respondents backed volume-led growth, the survey showed.

According to EY, this shift illustrated a maturing investment outlook that values sustainable, high-value activity rather than growth by scale alone.

Tourism, gaming, fintech, and AI seen as key growth sectors

Investor sentiment remained particularly strong in sectors such as tourism and leisure (70%), gaming (58%), payments and fintech (48%), and artificial intelligence (47%), all identified as areas with the greatest growth potential over the next five years.

The survey showed that AI is viewed as an especially important driver of future competitiveness, with 42% of companies planning to invest in AI-related initiatives.

However, the lack of specialised talent continues to be a major barrier, as 43% of respondents cited the shortage of AI and data professionals as the biggest obstacle to adoption of AI-related initiatives, surpassing concerns over costs or regulation.

90% of foreign investors in Malta said that they plan to either maintain or expand their operations in the coming year, with only 5% considering reductions and 1% planning to exit.

However, the long-term picture is more cautious, as 61% expect to remain in Malta over the next decade, down from 70% last year, citing rising uncertainty globally.

Moreover, a growing number of investors, 33%, up from 20% in 2024, are unsure about their future commitment.

Infrastructure, skills, and planning seen as national priorities

The gap between Malta’s growing population and its infrastructure capacity remains a pressing issue for investors, the survey showed.

More than half (56%) rated Malta’s infrastructure preparedness as inadequate or very inadequate, and 80% identified infrastructure enhancement as the single most important priority for the country’s future success.

Other key investor priorities include nurturing existing investment (63%), attracting new investment (54%), and improving education and skills, the survey showed.

The top risks to Malta’s attractiveness were ranked as skills shortages (60%), international tax reform (48%), and cost competitiveness (42%).

Commenting on the results, Attard said the rebound in investor sentiment confirms that Malta’s fundamentals remain solid but warned that long-term competitiveness depends on sustained investment in people and infrastructure.

“We have witnessed a substantial rebound in investor confidence, with 79% of respondents now viewing Malta as an attractive location for foreign direct investment,” Attard said.

He said that while the overall sentiment is positive, the emerging pressures that could impact Malta’s attractiveness must be acknowledged.

“Skills shortages, infrastructure challenges, and cost competitiveness have been identified as key risks that require our immediate attention,” Attard said.

He added that 61% of investors now consider skills shortages as the top risk, speaking of the need for a “strategic focus on education and workforce development.”

Attard also cautioned that Malta cannot afford complacency, and said that competition for investment is intensifying, and investors are increasingly discerning in their choices.

“While Malta is viewed as a stable location, we must not take our competitiveness for granted,” he said.

Attard said the findings show Malta continues to attract committed investors but must address structural constraints that could limit growth, ensuring the country remains competitive within the European investment landscape.

He said that Malta’s future competitiveness will depend on how well it adapts to global economic realities and technological change.

“Investors are now rethinking how to grow within limits, pivoting to higher-value activities and using automation to reduce dependency on labour,” he said.

He said that investors are calling for an overhaul of Malta’s education system, enhancing infrastructure, improving skills availability.

“Malta, with the right focus, can continue to play a significant role in a global economy built not on size, but on specialisation, agility, and execution aligned with foresight,” Attard said.

Abela, Borg address event

In his address, Prime Minister Robert Abela compared Malta’s current economic outlook with that of larger European economies, many of which have faced slower growth, higher debt, and declining living standards.

“While in many countries the economic picture has darkened, in Malta the opposite has happened,” Abela said, pointing to reaffirmed positive ratings from international agencies and a significant improvement in Malta’s investor appeal.

“Only 6% of investors plan to leave Malta in the next decade. My job is to convince them to stay,” he said.

The Prime Minister said Malta’s economy is now a third larger than before the pandemic, crediting progressive economic policies for preserving productivity and competitiveness.

“Those who told us to save during the crisis paid more afterwards,” he said.

Abela said that his government’s long-term goals under Vision 2050, which aims for Malta to rank among the top ten EU countries in GDP per capita, for household disposable income to exceed the EU average by 15%, and for Maltese life satisfaction to rank among the highest in Europe.

“These objectives cannot be achieved without a dynamic economy that values human resources and prioritises investment, not just in physical capital, but also in skills and innovation. Let us bring the vision to life and begin building the Malta of tomorrow, today,” Abela said.

Addressing the event for the first time as Opposition Leader, Alex Borg commended EY for fuelling over two decades of dialogue shaping Malta’s economic vision.

“Malta’s attractiveness is bouncing back, a big leap from last year’s 54%, a clear sign of recovery, but not yet a sign of stability. It is progress, not permanence, and that’s why what we do next matters,” Borg said.

Borg warned that skills shortages, reputational issues, and infrastructure pressures show that Malta’s economy “has outgrown its foundations.”

He called for an education system that “prepares children for tomorrow’s jobs, not yesterday’s,” and said that investors will not commit to a system they cannot trust.

“Malta cannot rebuild its brand with slogans, only with integrity. Every tender must be transparent and open to public scrutiny,” he said.

Borg urged collaboration between government, opposition, unions, and employers to design a national competitiveness strategy.

“Our ambition is simple and powerful, to make Malta the easiest country to innovate in, and the hardest to leave,” he said.

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Speaking at a press conference on Friday morning, Caruana said that the upcoming Budget will again be “a responsible one, fiscally sound, pro-growth, and family-focused,” adding that Malta continues to outperform much of Europe in terms of growth, employment, and fiscal discipline.

“This is not a coincidence but the fruit of the decisions we took in the past, and those we continue to take today,” Caruana said.

Caruana opened with a comparison between Malta’s economy and those of Europe’s largest states. While ‘giant’ countries such as Germany, France and the UK are struggling with negligible or stagnant growth, Malta has consistently expanded at a much faster pace.

Malta’s economy set to grow three times faster than EU

Caruana said that the global economy remains susceptible to external shocks, citing the effects of two ongoing wars, tariff disputes, and trade tensions. Yet Malta is expected to remain on a steady growth path.

In 2024, Malta’s real economic growth hit 6.8%, compared to just 1.1% in the EU and 0.9% in the euro area. For 2025, growth is projected at 4%, three times higher than the EU average, that of 1.5% in the EU.

Caruana attributed this success to earlier decisions, especially the controversial energy subsidies introduced during the war in Ukraine.

He defended the energy subsidies, which he described as crucial to shielding households and businesses from global shocks.

“When the wars broke out, I said our energy policy would not be a sprint but a marathon. If we hadn’t acted as we did, Malta’s story today would be very different, as it is in other countries” he said.

Employment was also described as the cornerstone of Malta’s economic success, Caruana said.

Over the past decade, the country has undergone what Caruana called “a large transformation, a quiet one, one of success”, moving from among the lowest to the highest employment rates in the EU.

The overall participation rate rose from 80.7% in 2023 to 82.1% in 2024, placing Malta 6.8 percentage points above the EU and euro area averages.

By the first quarter of 2025, Malta’s employment rate reached 84.1%, compared with 75.8% in the EU.

Caruana said that unemployment stood at just 2.5% in June 2025, the lowest in the EU, compared with 5.7% in the EU and 6% in the euro area.

“For the first time, Malta has the lowest number of people on social benefits and the highest employment in the EU. This is why, year after year, I can say we don’t need to increase taxes or add new ones,” Caruana said.

Inflation, which spiked across Europe in recent years, has cooled considerably, he said, adding that Malta’s rate stood at 2.5% in 2024, nearly identical to the EU average, and is projected to drop further to 2% in 2026. In 2025, inflation rates stood at 2.3%.

Caruana argued that this reflects government intervention and subsidies, though he acknowledged that social partners are calling for revisions to the cost-of-living adjustment (COLA) mechanism to better protect the most vulnerable.

Revenue collection and tax policy

Caruana said that government revenue rose by €1.2 billion, or 20%, in the past year. This came from across all tax components: customs and excise duties, licences, taxes and fines, income tax, VAT, and social security contributions.

Caruana pledged tougher enforcement, saying that 10 years ago, government pledged for no more abuse of social benefits.

“With the same firmness I say today: the time when one does not pay taxes must end,” Caruana said.

He said that the government has invested in IT systems for tax administration, allowing businesses to receive VAT refunds within a month, while also improving compliance.

Caruana said the IMF and European Commission have recognised Malta’s progress, noting that revenue growth has outpaced GDP growth.

Still, he warned against unrealistic calls for corporate tax cuts. He said that currently, 72% of companies do not pay tax, and half of those that do are foreign-owned.

“It would cost €100 million to reduce the corporate tax rate from 35% to 25%. Be careful what you wish for, you would not necessarily get what you expect,” he cautioned to several business moguls at the conference.

Caruana said that while expenditure has continued to increase, it grew at a slower pace than the revenue collected, helping reduce the deficit. He said that much of the recurrent increases came from collective agreements for workers in various public sectors.

Caruana said that in 2002, Malta spent almost 8% of GDP on these food and energy, but by 2025 that figure has dropped to 0.8%, despite the government spending around €200 million annually on energy subsidies. The forecast for 2026 is 0.7% of GDP.

“For many businesses, those €200 million a year are the difference between staying open or closing. 20 years ago, Malta had the highest energy rates in Europe, now they are the lowest, not by a slight margin, but by a lot,” Caruana said.

Deficit and debt reduction

Caruana said that Malta’s deficit shrank from 4.6% in 2023 to 3.6% in 2024 and is projected to fall below the 3% threshold in 2026 – two years earlier than required under the Excessive Deficit Procedure the country is currently in.

“The EU gave Malta four years to bring its deficit below 3%, but it will be achieved in just two years. Our message to the European Commission is clear: what we are doing is sustainable. I am certain we will reach under 3%,” he said.

Caruana insisted on a gradual, sustainable correction on the disbalance, rather than sudden austerity.

On debt, Caruana said that Malta remains below the EU’s 60% threshold, with a 48.1% debt-to-GDP ratio in 2024, falling to 47.2% in 2025. This compares to 81.8% in the EU and 88% in the euro area.

Caruana said his aim is to lower debt closer to 40%, leaving future governments enough flexibility to respond to global crises.

“This next Budget does not leave room for many interpretations, aside from a country which made a number of decisions in the past, which led to current results, putting us on a strong foundation for tomorrow.

“Despite challenges in several sectors, this budget will continue to ensure citizens’ well-being grows year after year, while strengthening the country’s foundations in Europe,” he said.

“The next Budget needs to be another responsible one, a Budget that will continue helping families, employers, and another Budget which will continue strengthening the country’s foundation and citizens’ wellbeing year after year,” Caruana said.

In the Q&A session at the conference, Caruana addressed concerns on wages, demographics and education.

He was asked about reducing the 40-hour work week, to which he said that time has value, and a work-life balance is needed.

Caruana said that some measures were introduced in certain sectors, but they have not penetrated the whole labour market, and it is something that needs to be pushed further.

Birth rate warning

Caruana also sounded the alarm on Malta’s declining birth rate, with statistics showing that more than 60% of Maltese families have only one child.

“If there is something unsustainable, it is this. The time will come when elections will no longer even be interesting, because the Maltese population will be too small,” he warned.

He stressed that while the effects may only be felt decades from now, action is needed immediately to address Malta’s declining birth rate. Caruana appealed to all politicians to start discussing this matter more openly.

Caruana also spoke about the low minimum wage in Malta, to which he said that the country is behind on the awareness of the importance of investment in education.

He said that Maltese students typically spend 13 years in education, compared with 18 years in Nordic countries.

“Why do the Dutch work the same hours we do yet earn more than double? Because they invested heavily in their skills and education. For Malta to remain sustainable, government does its part, but citizens must do theirs,” Caruana said.

He said that households with higher skills and incomes tend to have more children, adding that there is the need for continuous investment in education and training.

Caruana also noted a drastic decrease in foreign workers through the Labour Migration Policy, but also said that many Maltese are leaving the country, and do not return.

He said that each budget the government has prepared has aimed to balance short-term support with long-term sustainability.

Reflecting on the upcoming 2026 budget, he said it must consolidate past achievements while addressing the challenges that lie ahead.

“Every budget we have prepared has tried to help the country in both the short and long term. We still have challenges ahead, and the next budget must ensure that what we have achieved is preserved. What we want to do cannot happen if we ignore the reality outside our borders,” Caruana said.

The Minister warned that global and European realities are evolving rapidly, and failing to acknowledge these changes would be “like missing the elephant in the room.”

“The Europe we entered 20 years ago is not the Europe of today, nor will it be the Europe of tomorrow. Understanding these changes gives us a sense of urgency, and we are not strangers to it,” he added.

“We need a budget that addresses challenges in our country and ensures we are better equipped than the rest of Europe to tackle inflation, while also safeguarding the welfare of our people,” he said.

He cited Denmark as an example, where a socialist government has gradually reduced social aid in order to prioritise defence spending, highlighting the trade-offs governments elsewhere are making in response to global pressures.

Answering questions by The Malta Independent, Caruana said that the Cost-Of-Living-Adjustment (COLA) will be announced in the days closer to the Budget, and said that the exact Budget date will be announced by the Prime Minister during this weekend.

The post ‘Malta’s economy outpaces EU,’ Finance Minister says as pre-Budget 2026 consultation launched first appeared on The Malta Business Weekly.

He argued that with a growing and ageing population, sectors like healthcare and education will require more – not fewer – nurses, carers, and teachers. Downsizing, he insisted, would be counterproductive.

However, in an interview with this media house, Bugeja acknowledged the need for worker training, noting that the GWU anticipated future technological changes and began linking competence to pay scales years ago. Today, the union runs a dedicated branch focused on AI, digitalisation, and intercultural skills development.

Bugeja was also asked whether the summer half-day policy for public administration staff should be scrapped, given that most private sector workers work full days and rely on public services.

Bugeja said that as far as he knew, only 30% of public administration workers – not public sector workers, have summer half-days, accumulated through extra hours in winter. Others, like healthcare and passport office workers, work based on demand, Bugeja said.

“Flexibility and the art of compromise are the key,” he said.

Bugeja said that when supermarkets began opening on Sundays, existing workers were allowed to maintain previous schedules, while new hires adapted.

On traffic-reduction measures, Bugeja emphasised the “art of compromise.” He said GWU members involved in delivery services are already raising questions on the recently announced government measures to curb traffic, and that discussions with government and businesses are ongoing to define off-peak hours.

He said that he will not advocate for 2pm, for example, to be included as an “off-peak hour,” as in summer, health authorities advise the public not to go out in the sun between 11am and 2pm, for health and safety reasons.

“No one should be working in that heat. Public health must be considered,” he said, ruling out 2 pm as an acceptable delivery time.

He pointed to sectors like customs that already operate 24/7, saying that others can adapt with the right agreements.

Asked whether workers operating during off-peak hours will receive extra pay, Bugeja affirmed that this will be part of the negotiation process.

“If someone is working anti-social hours, the union will see to it that they get extra remuneration,” Bugeja said.

However, Bugeja said that the perspective that all government workers work with summer half-days is “absolutely false,” and said that he has no problem with summer half-days, and he will not be the one pushing for the system to change, saying that these workers are, “not taking anything from someone else.”

Collective transport for industrial areas

The traffic problem, Bugeja said, is everyone’s responsibility, because everyone is part of the problem.

“We complain about traffic, yet we will not ditch our cars. It is often our first investment, and we depend almost exclusively on it,” Bugeja said.

Bugeja said that the GWU has proposed collective transport for workers in remote industrial zones like Hal Far, which are not reachable by public transport.

A pilot project showed success, but companies with the capacity for vehicles remain limited, Bugeja said.

He said that workers asked for a reliable, affordable, and punctual service, and the goal is to extend the initiative to Bulebel, Mriehel, and Mosta, covering all industrial areas.

Reforming the MCESD

The GWU is part of the Malta Council for Economic and Social Development (MCESD). Some critics have said that the council lacks impact, but Bugeja disagreed.

“It is not a talking shop,” he said. Bugeja said that the MCESD was vital during discussions on the Covid-19 pandemic and the 2023 summer power cuts, for example.

He said that the MCESD meets nearly three times a month and influences policies, such as the Labour Migration Policy.

The council is now being reformed to become more relevant and better resourced, Bugeja said, adding that to make the MCESD more effective, there will be discussions on legislation to make the council more relevant for today’s realities.

He also said that social partners like unions and employers need more expert support to put forth researched proposals and adopt informed positions.

Bugeja spoke of the GWU’s longstanding push for a national vision, which led to the government adopting it into Malta’s 2050 Vision, a strategic plan which must be a shared vision, and encapsulates the nation’s aspirations.

Labour Migration Policy

Bugeja said the Labour Migration Policy, when implemented, will strike a balance between the need for foreign workers in various sectors and oversupply.

“Employers must first try to hire Maltese or EU workers. Only if unsuccessful should they turn to TCNs,” he said.

Bugeja said that, however, the mistake made was that everyone was bringing in many foreign workers, wherever they may be from, whether the sector needed it or not.

“It does not stop at just bringing in the worker. That worker needs a guaranteed adequate pay and decent conditions,” Bugeja said, otherwise, “we would be truly bringing in slaves.”

“We need foreign workers in various sectors, which also depend on foreign workers,” Bugeja said, adding that there are around 100,000 to 120,000 foreign workers in Malta.

He said that there are critical sectors, such as the health sector, which also need foreign workers. Bugeja said that the Maltese demographic in the country is decreasing, and so there are fewer people to work such jobs.

He also said that the Maltese also learn that they can aspire for better jobs than certain jobs that foreign workers end up taking up.

“Our mentality as a public is also that we teach our children to do better than us, that they have a guaranteed better future,” Bugeja said, adding that it is inevitable that the Maltese do not want to do the jobs foreign workers usually do.

He said that over-recruitment leads to deteriorating conditions, and some employers hold excessive power.

Previously, a TCN had just 10 days to find a new job if dismissed by their employer, or risk deportation. This was extended to 60 days through the Labour Migration Policy, where the GWU had pushed for an extension.

“Without that window, some turned to the black economy, where they are more exploited,” Bugeja said, adding that the extension also allows for a lower turnover of foreign workers, minimising those who are leaving only to bring another replacement.

He condemned exploitative employers who abuse foreign workers. “They are humans like us. I can never accept abuse,” Bugeja said.

Asked about the relevance of Workers’ Day, celebrated last Thursday, Bugeja said that this day is always relevant.

“We celebrate workers, not only for the advancements they made throughout the years, but for their past, present and future contributions, and the continuous work done today,” Bugeja said.

Bugeja concluded that Workers’ Day is a remembrance of what workers went through, and a commitment to keep moving and looking forward to the future.

Making the case case for mandatory union membership

Josef Bugeja said that only collective bargaining and mandatory union membership can stop the systemic abuse faced by both foreign and local workers.

The GWU’s proposal for mandatory union membership has raised concerns over freedom of association among several.

Bugeja said that the proposal allowed workers to choose any union of their liking and included an opt-out mechanism.

Bugeja said that the role of a trade union is defined as an organisation led by workers, for workers, and pushing forward workers’ aspirations. He said that collective bargaining is done solely by trade unions.

He spoke of widespread abuse at workplaces, and said that enforcement cannot keep up, and unionised workplaces have far better conditions.

Bugeja said that the EU’s Adequate Minimum Wage Directive calls for 80% of workers to be covered by collective bargaining, adding that the EU has recognised the importance of increased collective bargaining.

Especially in sectors like finance and insurance, where the gender pay gap is the largest of all sectors in the country, rising to 14%, he said

“In heavily unionised sectors, that gap doesn’t exist. Laws and obligations are respected,” Bugeja said.

He addressed the issue of “free riders” and said that even non-members of a union benefit from collective agreements, rightly so, as Bugeja said that the GWU negotiates collective agreements for all workers in that sector.

However, he questioned which organisation provides services for free, and said that the GWU wants everyone to contribute, either through membership or a payroll levy.

A new image for trade unions

Bugeja said that the perception that unions only appear or get involved during industrial actions must be changed.

He described ongoing consultations, including how US tariffs could impact Maltese workers.

Bugeja stressed that unionism today is collaborative, not confrontational, and that “given the exploitation we see, organising in a union is reasonable”.

He cited cases of long working hours, unpaid contributions, lack of safety gear, and even fabricated injury claims to avoid employer liability.

“Even Maltese workers suffer. This is why we want mandatory membership, with opt-out flexibility,” Bugeja said.

Bugeja said many TCN communities engage with the GWU and express their fear of retaliation from their employers.

“Some arrive with family debts tied to their travel. They are scared to speak up,” Bugeja said.

He dismissed fears that total anarchy would ensue, noting that when unions for disciplined forces were first introduced, conditions actually improved and nothing fell apart.

Bugeja said that union membership is growing and changing and nowadays, many Maltese workers of all genders and ages, European workers, also TCN workers, are members of a union.

He said that more women are joining the GWU than males, and 7,000 to 8,000 TCNs are also members and representatives.

The GWU even partnered with Italy’s largest union to support Italian workers in Malta, Bugeja said.

“Our members and representatives are a reflection of the existing workforce,” Bugeja said.

Bugeja said that workers’ aspirations are constantly evolving and differ between professions.

For professionals, flexibility and work-life balance are key concerns, particularly the expectation to always be available, Bugeja said.

Meanwhile, lower-income workers are focused on earning more, seeking better pay to match the cost of living and social mobility, he said.

Platform workers, who previously had no rights, have now been granted official worker status, though implementation remains a problem.

“One of the roles of unions is to ensure what’s in the law and collective agreements is implemented,” Bugeja said.

He said that out of 82 companies that employ such workers, 29 companies have been brought before the Courts for failing to follow regulations regarding platform workers.

Some employers have deducted fuel and safety gear costs from wages and cited rampant increase in abuse, especially on TCNs.

“That’s why we’re proposing mandatory union membership. It’s a form of self-policing to prevent abuse,” he added.

Bugeja also noted increased anxiety among workers in the gaming industry and said that ultimately, all workers aspire for a better tomorrow.

Foreign workers: progress and gaps

Asked about the new government regulations for hiring foreign workers, Bugeja said improvements were made, but more remains to be done.

“We couldn’t even say they were workers before. They lacked basic health and safety protections,” he said.

The new directive, set to come into force next year, officially recognises platform workers as employees, entitled to collective bargaining and employer responsibilities, Bugeja said.

However, some employers are circumventing the law, and while many of these workers were receiving their minimum wage, other costs, such as fuel or for protective gear, had been reduced from their wage, Bugeja said.

He said that the GWU consequently held discussions with the director at the Department for Industrial and Employment Relations (DIER) and pursued legal action to ensure rights are upheld.

“Some workers were promised €1,000 salaries, only to find they must work 12 hours daily, seven days a week. That is illegal and harmful to their health,” Bugeja said.

He criticised the need for constant enforcement: “We should not need enforcement if everyone obeys the law. Employers must be held to the same standards as workers,” he said.

The post GWU chief urges smarter approach to public sector and migration first appeared on The Malta Business Weekly.

He also announced that government has also revised this year’s projected deficit downward from 3.5% to 3.3%.

Caruana spoke at a press conference on Tuesday where he said that in the coming October, when  announcing the Budget for 2026, he will announce that next year, the 3% deficit goal will be “comfortably achieved,” meaning that the timeline for Malta to exit the excessive deficit procedure is closer than scheduled or anticipated.

He referred to National Statistics Office and Eurostat statistics which were published on the debt and deficit figures of each country, for the year 2024.

Caruana said that at the end of this month, government will present its plans to the European Commission with more updated figures which shed a positive light on how the government’s finances will develop this year.

The latest data shows that the national deficit for 2024 was 3.7%, improving by 0.8 percentage points over the budgeted 4.5%, the government said. It added that similarly, the debt-to-GDP ratio fell to 47.4%, significantly lower than the projected 55.3%, “marking a sharp 7.9 percentage point improvement.”

He continued that the new regulations announced last year required countries to make an effort to at least reduce the deficit by 0.5%.

“We exceeded that effort in a manner that the deficit was reduced by 0.8%,” Caruana said.

He added that the country’s debt is under control, and the country’s finances are “more than on track” which will see the deficit continue decreasing without government having to introduce new taxes or stop energy subsidies.

“This will lead us to leave the excessive deficit procedure earlier than we thought, without increasing any burdens for the Maltese and Gozitan public,” Caruana said.

He continued that despite government maintaining energy subsidies, and despite inflation, the country’s debt is decreasing, and “we are safeguarding the economy, not endangering sustainability of the country’s finances, and abiding by the regulations as agreed upon by all EU countries’ Finance Ministers.”

Caruana said that this gives peace of mind to credit rating agencies and investors, that the fiscal position of the country, and that of government, is a sustainable one.

Caruana said it is not only important to keep the debt below the 60% threshold, but government will fulfil an extra step, to keep it below 50%, so that it could have enough buffer to withstand any future shocks.

He said that the deficit of the country is also decreasing slowly, and today’s published figures show that the 4.5% projected deficit for 2024 was actually 3.7%.

The deficit for this year was projected to be at 4%, Caruana said, as he had announced in the last Budget, which was then revised to 3.5%.

Now, government will be revising this figure downwards to 3.3% deficit for this year. Caruana said this debunks any “stories” which said that the government’s income has been struggling.

“We would not have been so confident that we can reach a better and new target which leads us closer to the 3% otherwise. We have a new target, better than last year’s Budget,” Caruana said.

Government will continue to sustain energy prices, implement its electoral programme as well as grant the public a substantial tax cut, something other EU countries have not done, which shows the government’s “wise fiscal policy,” Caruana said.

He continued that the country is reaching results it had not anticipated it would reach before. Caruana said government is bearing the fruit of its income, without adding taxes and with a fast-growing economy.

As compared to the other EU countries’ debt, Caruana said that Malta remains at least 30 percentage points lower than the EU average. He said that the smallest country’s fiscal policy is allowing it to continue doing what it is doing, and putting Malta on a stronger position to face any future challenged.

“This shows the need for us to continue our wise fiscal policy to continue resulting in more economic growth for our country,” Caruana said.

He also said that between 2019 and 2024, Malta well exceeded the average level of quality of life in the EU, and is being kept at almost 10% more than other EU countries.

Caruana said that Malta’s quality of life exceeds the EU average, while the debt remains 30pp less. The deficit continues to decrease at a faster rate than expected, all the while government continues helping businesses and sustaining energy prices, he said.

The post Malta on track to exit excessive deficit procedure earlier than expected – Finance Minister first appeared on The Malta Business Weekly.

The European Parliament has published the Winter 2025 Eurobarometer, which introduced new questions reflecting today’s evolving challenges, including EU citizens’ views on the European Union’s role to protect against global challenges.

A total of 26,354 interviews were carried out across all EU member states, either in person or via video, between 9 January and 4 February. In Malta, 503 interviews were conducted, with people aged 15 and over. The data was weighted according to the size of the population of each country.

For the first time, the Eurobarometer asked specific questions about citizens’ expectations of the EU’s role to protect, and expectations were high EU-wide.

Half of respondents across the EU, along with 47% of Maltese respondents, said the role of the EU to protect European citizens against global crises and security risks has become more important over the past years.

However, a higher percentage believe that the EU’s role in this regard should increase – 66% at EU level said the role of the EU to protect citizens against global crises and security risks in the future should become more important, while 82% of Maltese respondents made the same statement.

The Maltese were among those with the highest expectations for the EU and the importance of its role to protect its citizens in the future, ranking seventh among all member states.

The Eurobarometer asked respondents to what extent they would agree or not with these statements: that EU member states should be more united to face current global challenges, and that the EU needs more means to face current global challenges.

98% of Maltese respondents totally or tend to agree that EU member states should be more united to face current global challenges, topping the charts, with 89% EU wide also agreeing.

Meanwhile, 76% at EU level agree that the EU needs more means to face current global challenges, while 91% of Maltese agree that the EU needs more means, the Winter Eurobarometer showed.

Asked which aspects the EU should focus on to reinforce its position in the world in the future, Maltese respondents (29%) prioritised EU values including democracy and the protection of human rights, education and research (29%), and climate action and emissions reductions (28%).

At EU level, however, 36% of respondents prioritised defence and security, followed by energy independence, resources and infrastructure (27%) and food security and agriculture, the survey showed.

The Eurobarometer asked more familiar questions on the key priorities, concerns and values of citizens.

Inflation, rising prices and the cost of living remain a top concern for both the EU and Malta, scoring 43% and 46% respectively. Respondents also want the European Parliament to address more support for public health in priority, with 35% of Maltese respondents and 25% of European respondents.

29% of Maltese respondents said that migration and asylum should be a priority for the European Parliament, which is a 21 percentage point decrease compared to the last Eurobarometer.

Albeit an 11-percentage point decrease as compared to the last survey, the Maltese still want the fight against poverty and social exclusion addressed (27%), with 31% saying so at EU level.

At the EU level, 33% of respondents believe their standard of living will decline over the next five years, compared to 22% of respondents in Malta who share this view. 51% of EU respondents and 42% of Maltese respondents expect that their standard of living will not change, the Eurobarometer showed.

The Eurobarometer also asked which values the EP should defend as a matter of priority, and peace was at the top of the list for both Malta and at EU level, 39% and 45% respectively.

There was also a significant increase in Maltese respondents who pointed to freedom of speech and thought (22%) as a value they would like the EP to defend compared to the last Eurobarometer, a 10-percentage point increase.

33% of Maltese respondents and 32% of European respondents also chose democracy as a value which should be defended, as well as the rule of law (27% Malta, 21% EU).

The Eurobarometer also asked about citizens’ perceptions of the EU, the European Parliament and EU membership.

Malta ranked eighth among member states in terms of those who responded that they have a positive image of the EU, which is a 4-percentage point increase than the last Eurobarometer, with 55%, while 36% are neutral.

Moreover, 50% view the European Union in a positive image, with 34% remaining neutral. 15% at EU level view the EU negatively, while only 9% of Maltese respondents have a negative image of the EU.

48% of Maltese respondents view the European Parliament institution in a positive image, with 40% remaining neutral. Meanwhile, 41% of EU respondents view the EP in a positive light, with 38% remaining neutral, the Eurobarometer showed.

Asked if respondents would like to see the European Parliament play a more or less important role, 70% of Maltese respondents said they want the EP to play a more important role, while 18% believe it should play a less important role.

Among EU member states, 62% would like to see the EP play a more important role, with 25% believing it should play a less important role, the Eurobarometer showed.

Respondents were asked if they believe the actions of the EU have an impact on their daily lives, to which 81% of Maltese respondents said “yes” and 18% replying in the negative.

At EU level, 72% believe that EU actions have an impact on their daily lives, while 27% do not believe so.

Asked if their country has benefited from being a member of the EU, 92% of Maltese believe that Malta has benefited from EU membership, ranking highest among all member states, with 6% believing that it has not.

74% at EU level believe their country has benefited from EU membership, while 22% say they have not benefited, the Eurobarometer showed.

As for reasons why, 50% of Maltese respondents pointed to the contribution the EU makes to Malta’s economic growth, among other reasons.

Another question the Eurobarometer asked was on citizens’ interest in EU affairs and engagement, which has steadily increased following electoral periods, with 41% of Maltese being particularly interested in the activities of Maltese MEPs in the EU Parliament, while 35% at EU level are interested in the activities of their country’s MEPs.

41% of Maltese respondents are also interested in what the European Parliament wants the EU long-term financial budget for the coming seven years to be spent on – fitting into the geopolitical context and the drive for more security and defence spending.

40% at EU level are also interested in what the European Parliament wants the EU budget to be spent on. 36% of Maltese respondents said they want to receive more information on what the EU has concretely done or changed in their city, region and country, while 41% at EU level prioritised this aspect.

As far as what type of media is mostly used to access news, 55% of Maltese respondents said they receive news from social media platforms, with 36% saying this at EU level, the majority being youths.

Following closely, 50% of Maltese respondents said they access news via online press and news platforms, with 41% at EU level, the Eurobarometer showed. 47% access their news on TV in Malta, while 72% EU-wide still follow the news on television.

The post Eurobarometer survey: 98% of Maltese believe EU member states should be more united to face current global challenges first appeared on The Malta Business Weekly.

During a site visit on Thursday, Environment Minister Miriam Dalli and Cilia went down to the reservoir, which was originally built in 1938.

With a capacity of 24,185m³, the Naxxar Reservoir will be demolished and renovated, with the works being split into two phases, Cilia said.

Cilia said that the first half of the reservoir has been demolished, and a wall has been built to separate the other half of the reservoir.

Once the first half is completed, it will start being filled with water and used as a reservoir, while the second half is being demolished and renovated.

The reservoir will be a medium-sized facility that supplies water to the localities of Naxxar, Mosta, St. Paul’s Bay, Għargħur, Madliena, Ibraġġ, San Ġwann, Birkirkara, and Iklin, while also set to support Mellieħa in the future.

The renovation works involve sealing leaks, replacing the roof and supporting columns, expanding the exit pipework, and installing solar panels with a capacity of 600kWp on the reservoir’s roof, Cilia said.

He said that the €3 million project is part of the National Investment Plan (NIP), which focuses on upgrading critical infrastructure, including the recently modernised Luqa and Naval Reservoirs.

Minister Dalli said that the initiative enhances accountability and transparency while also contributing to the transition toward a carbon-neutral economy.

“Ensuring the security and resilience of Malta’s water supply is a key priority. By modernising crucial infrastructure like the Naxxar Reservoir, we are laying the foundation for a more sustainable future,” she said, adding that the project is moving at a fast pace.

Dalli said that the WSC has sustainability at heart, and aims to be a net-zero facility, having also invested in green bonds.

Built in 1938, the Naxxar Reservoir’s renovation began on 22 January, 2025, and is expected to be completed by mid-March 2025.

Throughout this period, the reservoir will be temporarily decommissioned as a retaining wall is constructed to reinforce the network’s stability.

To maintain a continuous water supply, a contingency plan has been implemented, ensuring that central areas of the island receive water directly from production lines.

While some customers may experience reduced water pressure, measures are in place to uphold water quality. Once the upgrades are completed, the enhanced reservoir will resume operations, aiming to strengthen Malta’s water distribution network.

The post Naxxar reservoir will supply water to 9 localities after renovation works first appeared on The Malta Business Weekly.

The SME Chamber also urged government to ensure that policies tied with labour migration must reflect the country’s economic vision.

On Tuesday, the Chamber presented the Business Performance Survey for the year 2024, an online survey which compiled the unique submissions of 364 respondents, who are businesses operating in Malta.

President Paul Abela, Chief Operating Officer Andrew Aquilina and Deputy President Philip Fenech presented the findings of both the survey and the SME Barometer for Q4 of 2024.

The survey was conducted by the Chamber in the period of 10 January to 22 January of this year, and the margin of error was that of 5%.

Abela said that businesses’ largest concern remains employee shortages, and the SME Chamber is in discussions with Minister Byron Camilleri on the Labour Migration Policy, even suggesting some proposals.

The majority of businesses (52.7%) surveyed employ between one to nine employees (micro-businesses), followed by 28.2% of businesses who employ 10-49 employees. 15.8% of businesses employed over 50 employees, and 3.4% employ over 249 workers.

39% are in the retail, import, distribution and wholesale line of business, followed by 18% in the transport business, and 17% in the professional services and HR line of business, the survey showed.

When compared to the previous year (2023), businesses in 2024 said that their total turnover has generally remained the same (34%), while 42% said it has increased, and 24% said it decreased, Aquilina said.

In 2023, 26% of businesses said that their total turnover remained the same, while 46% had said that it increased. 28% of businesses in 2023 has said their turnover had declined, he said.

The main reasons businesses felt led to increase in sales in 2024 was increased brand presence/better marketing efforts (34%), followed by better sales strategies (30%), and the increase in price due to external factors (20%).

On the other hand, Aquilina said that the main reasons businesses felt led to the decrease of sales in 2024 was predominantly that the customer spending power has decreased (53%), followed by increased competition (48%) and inflation (26%). 23% of businesses also cited illicit trading and/or unfair competition.

On unfair competition, which remains in the top five business concerns, Abela said that the Malta-Sicily catamaran, for example, is not regulated enough, as people import Italian products without paying for the VAT, creating unfair competition for local importers.

2024 compared very similarly in terms of profitability with 2023, with the majority of businesses said that their profitability remained the same (41%). This was an increase from the previous year, where 34% said their profitability has remained the same.

Aquilina said that 31% of businesses were less profitable in 2024 compared to 2023 (40%). Meanwhile, the percentage of businesses who said their business was more profitable remained the same (26%).

The main causes for price increases remained employee wage and salary costs (63%), followed by the cost of products coming from abroad (54%). On this, Abela said that today’s situation has changed, and for a business to retain an employee, salaries are increased “automatically.”

Fenech also added that there has also been a large element of poaching between larger businesses and smaller, older ones.

During the festive period, respondents were asked how their business sales (turnover) fared when comparing the festive season to previous years.

Aquilina said that the majority, 46%, remained the same, while 30% of businesses said it has decreased, and 24% said it has increased.

The SME Barometer for Q4 of 2024 showed that the three most important issues businesses currently face remain employee shortages (44%), unfair competition (26%) and issues with late payments (23%), a concern which has recently cropped up more often among SMEs.

In fact, compared to the previous quarter of 2024 (Q3), the concern over delayed payments went up from 14% to 33%, the Barometer showed. It observed that delayed payments from clients or institutions negatively affect cash flow for businesses, particularly SMEs.

Abela pointed out that even government’s culture on late payments must stop, which increase issues of overtrading. Fenech commended the skills pass initiative to attract more quality workers but said that there is an element of delay to catch up with the demand.

The SME Barometer showed that the top three issues the country is facing, and that businesses want government to do something about is a lack of good governance (42%), followed by the level of corruption (40%) and overpopulation (27%), which has decreased from the previous quarter, but remains in the top three business concerns.

The SME Chamber observed that overpopulation, coupled with a lack of infrastructure to accommodate growth are impinging on citizens’ quality of life.

Aquilina said that the absolute majority of businesses still feel that the country is moving in the wrong direction, despite the decrease from the previous quarter (79% in Q3,2024, 72% in Q4).

Asked if they believe it is a good time to invest in the next 12 months, 27% responded with “no,” compared to the 31% in Q3.

The Barometer showed that the number of businesses who shifted their answer to “not sure,” has increased, with 61% in Q4 compared to 57% in Q3 of 2024.

Aquilina said that those who responded with “yes,” also increased, from 13% in Q3 to 17% in Q4, 2024.

Asked for their expectations for 2025, 57.1% of businesses expect that 2025 will be the same, while 23.9% said that 2025 will be better. 19% of respondents said that 2025 will actually be worse.

Respondents were asked to say which particular issues they would like the SME Chamber to address, with some citing that the excessive reliance on compliance increases costs.

Other issues businesses want addressed include labour shortages, attracting quality workers, good governance and less bureaucracy, public sector recruitment which is draining skilled employees, a lack of enforcement for non-compliance, and a need for the increase of support services to match the economy’s rapid growth.

Another issue is the accessibility to banking and bank charges, where Abela said that while the proposal of removing cash payments in the Labour Migration Policy is positive, government must find a solution for workers, especially foreign, to be able to open bank accounts.

Businesses also said that tax reduction for local businesses must be considered. Abela said that it is unacceptable for foreign companies to pay 5% tax, while Maltese companies have to pay 35%. “This is a large discrepancy, and we will continue advocating for it,” Abela said.

The SME Barometer made a number of observations, one of which was that the real cost of doing business in Malta is also increasing, with many respondents recording reasons of local nature as the main reason for price increase within their business.

The Chamber said that government needs to ensure that any decisions’ taken at political level do not lead to further inflation.

The SME Barometer recommended that government needs to seriously address issues of unfair competition, and strengthen transparency and anti-corruption measures to rebuild trust in public institutions.

The post Issues with late payments among top 3 challenges businesses are facing – SME Barometer for Q4 2024 first appeared on The Malta Business Weekly.