The global labour market is being reshaped by the combined pressures of escalating geopolitical conflict and rapid artificial intelligence adoption, Ivan Refalo, Malta Employers President, said.
This is creating a “dual shock” to jobs, skills and economic resilience. In this context, social partners have to join forces to design policies that harness the potential of AI, and human resource strategies must prioritise reskilling and preparation for emerging job profiles.
Addressing the 114th International Labour Conference, Refalo highlighted how the world of work cannot be isolated from the stark reality of global conflicts, which are now at their highest level since the Second World War, affecting around two billion people and displacing more than 122 million individuals in 2025.
“Geopolitical instability is no longer external to labour market dynamics, but is actively reshaping employment conditions, migration patterns and economic resilience across countries”, Mr Refalo said.
Alongside this, Refalo pointed to the accelerating impact of artificial intelligence, describing it as a structural shift with both disruptive and generative effects on employment, adding that “this transition is generating a complex process of job destruction and also of job creation.” Citing figures from the ILO Director-General’s report, he noted that “as much as 834 million jobs will be affected through AI, with 135 million of these in Europe and Central Asia”, with significant risks of transitional unemployment if labour markets fail to adapt quickly enough.
Turning to Malta’s domestic context, Refalo acknowledged the strong economic performance in recent years, but cautioned that the current growth model, driven largely by labour migration and volume-based sectors such as tourism, is approaching structural limits. He said employers are increasingly calling for a shift towards higher value-added sectors supported by productivity growth, noting that “conditions of employment can only be improved with enhanced productivity”, particularly as wage increases are often offset by rising housing and living costs.
He also reiterated the employers position that with Malta facing a low birth rate and an ageing workforce, retaining labour supply is crucial for sustaining economic growth.
“Elderly employees need to be incentivised to extend their working lives. We advocate holistic flexible work arrangements that maximize the existing talent pool-especially women and older workers-rather than relying solely on blanket measures like a shorter work week, before economic transformation occurs. He also argued that government should prioritise greater public sector efficiency and education reform to address skills gaps, rather than competing with the private sector for an increasingly scarce pool of workers.”
The Association delegation, which also included Director General Kevin J Borg and Advisor Joseph Farrugia, also included active engagement in discussions on social dialogue.
