BUDGET 2021: COVID wage supplement extended to March

Last Updated on Tuesday, 20 October, 2020 at 8:45 am by Andre Camilleri

  • €120 million from European funds to sustain jobs
  • VAT exempt threshold will rise from €20,000 to €30,000
  • Scheme to help small companies invest in innovation projects

The COVID wage supplement will continue until at least March 2021, possibly with a revision to the current system so as to enable the government to assist companies who are in greater difficulties than others.


Economic growth will remain the basis on which the government will strengthen pensions, reduce poverty, spend more on health and raise the standard of education.

The pandemic experience has led the government to give more attention to improve the quality of life. Private and public economic activity must be founded on good governance, more attention to the environment – with the aim of eliminating use of carbon by 2050 – and the need of innovation through an improved use of digital technology.

This is the only way a country which has no natural resources can remain competitive. To do this, the country must continue to invest in infrastructure, in the widest sense of the word. A sustainable economy must be built on a green and digital economy.

The first step will see that Maltese business and workers remain economically strong in these difficult times so that, when the pandemic is over, they will be prepared to return to not only where they left off but be in a position to face future challenges.

COVID supplement

The COVID wage supplement has saved 100,000 jobs, while more than 20,000 companies have been financially assisted. The government is continuously adapting to the situation and taking decisions according to the needs.

The supplement will be extended to March 2021. Now that the government has more information on how this measure is being implemented, it is in a position to modify it to assist sectors which need financial aid more than others. This measure will cost around €40 million every month.

These measures will be assisting businesses in the same way that other measures announced in the Economic Regeneration Plan have done. These include tax deferrals, moratorium on money owed to the government, bank loans and subsidy on interest, all of which will remain in force. Towards the end of March 2021, an evaluation will be carried out with the assistance of the social partners.

European funds

Malta will be obtaining more than €2.25 billion in European funds over the next seven years. The money will be invested in the environment, climate change, research, innovation, digital technology, education, security, social measures and agriculture and fisheries.

The government will be allocating €120 million from European funds to sustain jobs which were adversely hit by the pandemic. The government will also be drawing up a plan costing €220 million in grants to be made available in the environment and climate change sectors, and the digital economy.

In this sense, a digital strategy will be drawn up in cooperation with the Digital Economy Think Tank. Investment in cyber security will also increase. The government will also focus on new technology such as virtual reality, augmented reality, immersive technology, 3D printing, and quantum and high performance computing. Artificial Intelligence projects will continue next year in the education, health and transport sectors.

The government will seek to attract companies involved in esports and video game development, while offering students the possibility of developing their skills in the sector. It will continue to sustain sectors such as gaming and blockchain. Workers will be assisted to “upskill” or “reskill”. Malta will also be made more attractive to start-up companies.

VAT and online sales

To help small operators and the self-employed, the VAT exempt threshold will rise from €20,000 to €30,000. Businesses will be assisted to increase their online sales.

Companies that employ fewer than 50 workers will be encouraged to take up innovation projects. There will be a scheme to enable them to invest in new technology to improve their operations and efficiency, while reducing costs and finding new markets. The scheme will be open for one year and will cover up to 50% of the expenditure, at a maximum cost of €200,000 for each company. Collaboration with research institutions may increase the allocation by another €35,000.

Malta Enterprise will continue to help the private sector via innovative schemes and the extension of others which already exist. These schemes include Micro Invest, Business Development and Continuity Scheme; Research and Development 2020 Scheme, R&D Feasibility Scheme and the Business Star.

Companies will be urged to use technology like Internet of Things and initiatives will be taken to encourage consumers to buy Maltese products.

Consumer protection

Consumers will continue to be better protected via the enhancement of national laboratory facilities to test the quality of medicines. The government will work to ease the process via which consumers seek redress, while an e-Enforcement unit will be set up.

The government will attempt to see that the success achieved in the maritime industry will be repeated in the aviation sector. Laws have been amended to attract more operators. A Stakeholders Forum, which includes representatives from the aviation sector, will be launching an aviation policy.

Next year, the government will be giving grants to farmers and fishermen, equivalent to the amount paid in taxes on products sold at the pitkalija (open market) and fishery. The grants will be linked to an investment in projects that reduce waste and lead to systems that control the volume of products put on the market.

Farming and animal cemetery

The government will again seek to encourage young people take up a job in farming. The Anti-microbe Resistance Strategy will be implemented to improve bio-security on farms. Work on centres for agriculture, aquaculture and viticulture will continue. The pitkalija will be modernised.

Funds are being allocated for a scheme aimed to help pig breeders modernise their facilities and another scheme to help fishermen restore their traditional boats built before 2007. The metering process at boreholes will be upgraded so as to provide a better scrutiny on water consumption.

The facilities for small animals in quarantine will be improved, and work on an animal cemetery will start.

Work will continue on the building of five reservoirs in the south of Malta, which will produce tertiary level water. Other projects that will continue during 2021 will be the reverse osmosis plant in Gozo and the tunnel that will link the Pembroke plant to the reservoirs at Ta’ Qali.

The government will also carry on with its improvement of the water distribution system coupled with the generation of more water via reverse osmosis plants.

Water saving kits will be handed out to residents, while the national campaign on water conservation will continue in 2021. A plan leading to an overhaul of the drainage system will start next year too.

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