A recent Policy Note from the Central Bank of Malta titled “The Native Maltese Population: Projections and Implications on the Labour Supply” examines Malta’s changing demographic landscape and its crucial implications for the country’s labour market and future economic trajectory. The report highlights a significant transformation in Malta’s population structure, driven primarily by strong foreign migration, which stands in contrast to a declining and ageing native Maltese population.
In 2023, Malta’s total population reached 563,443 people. Of this total, 28.1% were of foreign nationality. This represents a substantial increase in the foreign population, particularly over the past decade, with annual net migration flows reaching around 20,000 people in recent years. The surge in foreign residents has had a profound impact on the country’s demographic structure.
A key finding is that most foreigners migrating to Malta are within the working age bracket (defined in this note as 15-74 years). In 2023, almost 90% of the 158,368 expatriates in Malta were aged between 15 and 74, constituting just over 31% of the total working age population. In contrast, the share of native Maltese in both the total and working age population has continued to decline.
The native Maltese population stood at 405,075 persons in 2023, showing only a modest increase of 2.3% since 2010. This slow growth, or even decline in relative terms, is attributed to factors such as low fertility rates and ageing due to falling mortality rates. The total fertility rate in Malta fell to 1.06 in 2023, well below the required replacement rate of 2.1 children per woman. While the fertility rate specifically among Maltese women was slightly higher at 1.16 in 2023, it also shows a declining trend and is the main driver behind the fall in the fertility rate. Meanwhile, mortality rates have generally declined over the past decade for both Maltese and foreigners, contributing to an ageing population.
The population structure in 2023 starkly illustrates these dynamics: foreigners are heavily concentrated in the younger working-age cohorts (especially 20-54), while the native Maltese population shows characteristics of an ageing population with a relatively low share of infants and children and a high share of older persons. The share of Maltese individuals aged over 50 in the Maltese working age population reached 42.3% in 2023, compared to 33.7% in 2000, indicating the extent of ageing within the native workforce.
The Policy Note projects a persistent decline and ageing of the native Maltese population based on expected trends in fertility, mortality, and migration. Under the baseline scenario, which assumes the native fertility rate increases somewhat in line with Eurostat’s assumptions but remains below the replacement rate, the native population is expected to fall from around 405,000 persons in 2023 to about 350,000 persons by 2050, a drop of around 14.0%. Scenarios where the native fertility rate does not increase predict an even steeper decline.
This decline directly impacts the native working age population. The share of native Maltese within the working age bracket (15-74) is projected to contract over time. By 2030, 73.4% of the native population is projected to be working age, but this is expected to fall to 70.8% by 2050 and 63.6% by 2075. Simultaneously, lower mortality rates mean a larger share of the native population will be aged 75 and over, projected to comprise 26.0% of the population in fifty years.
The shrinking native working age population has significant implications for Malta’s labour supply. The Policy Note uses a labour supply model that incorporates projections for both native and foreign populations, accounting for their different labour market participation rates.
Crucially, foreigners exhibit significantly higher labour market participation rates compared to Maltese natives. In 2024, the activity rate among foreigners aged 15-74 was 87.0%, while that for Maltese natives was 66.5%. Although both rates are expected to trend upwards, the gap remains substantial.
By feeding the projected population levels and participation rates into the model, the report projects the labour supply up to 2035. The total working age population is expected to continue increasing, reaching almost 510,000 persons by 2035, but this growth is primarily driven by a sustained increase in foreigners. The number of Maltese persons in the total working age population is expected to fall to about 280,000 persons by 2035. This implies that by 2035, the share of foreigners in the working age population is expected to climb to 45.9%, up from 30.4% in 2023.
Given the projected increase in foreign residents and their high participation rate, the labour supply is also expected to continue expanding, predominantly due to the increase in foreign workers. By 2035, the total labour supply is projected to reach approximately 406,000 people (this was just under 300K by end 2024). Of this, slightly more than half are projected to be of foreign nationality. The level of Maltese workers in the total labour supply is expected to broadly stabilise at around 200,000 persons by 2035, the projected decline in the native working age population being partly offset by increased native participation rates (particularly among women).
What does this Means for Malta’s Future Economy?
The most significant implication of these demographic and labour market trends is Malta’s continued and increasing reliance on foreign workers to sustain economic growth. As the native working age population shrinks and ages, and even with projected increases in native participation rates, growth in the overall labour supply will depend heavily on the influx and high activity rate of foreign nationals.This presents several considerations for the future Maltese economy.
Sustaining economic activity and growth will require a continuous inflow of foreign workers. This dependency has implications for social integration, infrastructure needs, and the sustainability of growth models. To moderate the demand for foreign workers and the associated population growth, policies could focus on increasing the participation rate of Maltese natives, bringing it closer to that of foreigners. This could involve measures to support women’s entry into the labour market even further, but mostly incentivising longer working lives for older Maltese individuals, perhaps supported by improvements in health and working environments or adjustments to the pension rules and systems.
A complementary strategy would be to enhance the productivity of the existing workforce and shift towards a more capital-intensive economy. Advances in technology, such as digitalisation and Artificial Intelligence, could lead to significant aggregate productivity growth, potentially reducing the need for steep increases in the labour supply to maintain economic expansion.
The persistent low fertility rate among Maltese women contributes to the long-term decline of the native population and future labour force challenges. Several countries have tried to raise fertility rates, with mixed success. France and Nordic countries like Sweden saw modest, sustained increases through long-term support: subsidized childcare, paid parental leave, and gender-equal policies. Hungary boosted rates short-term via generous financial incentives, though long-term effects remain uncertain. In contrast, high-spending nations like South Korea and Singapore saw little improvement, as cultural and economic pressures outweighed benefits. Overall, temporary gains are possible, but lasting impact requires consistent, broad-based policies that support families, gender equality, and work-life balance. No country has yet sustainably returned to replacement-level fertility in the modern era.
In conclusion, the Policy Note starkly illustrates that Malta’s demographic future points towards a continued decline and ageing of the native population. Consequently, sustaining growth in Malta’s labour supply and supporting the economy in the medium term will heavily rely on the contribution of foreign workers. This outlook underscores the need for strategic policy considerations, focusing not only on managing migration flows but also on potentially boosting native labour force participation, enhancing productivity through technology and capital. As outlined above exploring measures to address the low native fertility rate will likely have limited and short-lived success. The report serves as a crucial brief on the current demographic issues and their profound implications for Malta’s economic future.
