National productivity reports

In the past days the 2024 National Productivity Board Annual Report was published. This report centres on Malta’s “twin transition”, which refers to the simultaneous advancement of digitalisation and sustainability as a strategic roadmap for sustainable productivity and resilience.

The report’s methodology heavily relies on data analysis and benchmarking, drawing from various national and international sources. The analysis includes both qualitative assessments and quantitative data, using indicators to track performance and compare Malta with other EU member states. The thematic focus on the twin transition is explored through a review of policy frameworks and an examination of the synergies and potential tensions between digitalisation and sustainability. The report also incorporates insights from recent EU-level strategic documents and reports on competitiveness and the single market.

The 2024 report emphasises that by embedding sustainability into economic and social systems and harnessing digital tools for efficiency, Malta can unlock new opportunities for innovation, competitiveness, and resilience. Achieving the twin transition’s goals requires a robust implementation strategy that prioritises adaptability, inclusivity, and stakeholder engagement, aligning national initiatives with EU frameworks to leverage funding and expertise.

The 2024 report puts forward ten strategic recommendations to guide Malta’s journey toward sustainable productivity. These recommendations are high-level and adaptable, focusing on three overarching priorities: strengthening governance, fostering innovation, and empowering critical economic sectors. These recommendations are:

• Strengthening Coordination and Policy Alignment: Enhance the capacity and coordination of existing government mechanisms to ensure cohesive and adaptive efforts in aligning green and digital priorities with EU frameworks.
• Modernising Infrastructure for Sustainability and Digitalisation: Focus on renewable energy systems, digital connectivity, and multi-modal transport solutions to reduce inefficiencies and enhance resilience.
• Building Workforce Capacity for Future Growth: Address skills mismatches and enhance technical expertise in areas like renewable energy and digital technologies through targeted training and curriculum integration.
• Empowering Small and Medium-Sized Enterprises (SMEs): Provide tailored support, knowledge-sharing platforms, and simplified access to financing to help SMEs adopt green and digital practices.
• .Fostering Innovation Ecosystems: Strengthen collaboration between academia, industry, and government to drive research, development, and the adoption of new technologies.
• Advancing Circular Economy Practices: Implement strategies to reduce waste and enhance resource efficiency by investing in infrastructure, providing incentives, and raising public awareness, aligned with the Circular Economy Malta (CE Malta) initiative.
• Promoting Sustainable Urban Mobility: Develop and implement integrated urban transport plans that prioritise public transport, active mobility, and reduced emissions. Reducing the number of cars on the road is identified as a central priority for ensuring sustainable mobility and achieving broader twin transition goals. To achieve this, the report recommends a comprehensive approach that integrates multi-modal transport systems, incentivises the use of public transit and active transport, and disincentivises private car usage.
• Enhancing Energy Efficiency and Renewable Energy Uptake: The ultimate aim is to reduce energy consumption and increasing the use of renewable energy sources. These are critical for achieving green transition goals and enhancing energy security. To achieve this the report recommends updating building codes to incorporate higher energy efficiency standards for new and renovated buildings, establishing incentive schemes, including grants and tax credits, to encourage the adoption of renewable energy systems in residential and commercial building and investing in public awareness campaigns to promote energy-saving behaviours and the benefits of renewable energy.
• Investing in Data Infrastructure and Cybersecurity: Develop robust data infrastructure and strengthen cybersecurity measures to support the digital transition and protect against risks.
• Creating a National Digital Twin Strategy: Adopt digital twin technology for optimising urban and infrastructure planning through real-time monitoring and predictive analytics.

I was involved in developing the previous year’s 2023 National Productivity Board Annual Report, which focused on assessing the relationship between wages and productivity in Malta.  Notwithstanding the different focus from the 2024 report, many of the conclusions and recommendations of the 2024 National Productivity Report build upon and align with several key themes and areas addressed in the 2023 report.

Both reports share the overarching goal of enhancing productivity in Malta as crucial for economic progress and improved living standards. The 2023 report focused on understanding the dynamics between wages and productivity to provide recommendations for improvement. The 2024 report sees the twin transition as the new catalyst for redefining Malta’s productivity landscape.

The 2023 report specifically recommended promoting widespread investment in Research and Development (R&D) and learning from past experiences to foster innovation. The analysis in 2022 (mentioned in the 2023 report) also focused on R&D and innovation as key drivers of productivity and competitiveness. The 2024 report continues this emphasis by recommending the fostering of industrial innovation and collaboration and highlighting the role of technology and innovation in achieving climate neutrality and reducing environmental degradation. It also recommends creating a national digital twin strategy, which inherently involves technological advancement and innovation.

The 2023 report analysed skills and educational attainment levels as determinants of future productivity and competitiveness, and included recommendations related to training and upskilling. The 2024 report explicitly addresses building workforce capacity for future growth, recognising the skills mismatch and the need for technical expertise in areas related to the twin transition. This aligns with the 2023 report’s acknowledgement that addressing labour shortages and enhancing workplace attractiveness are important.

Both the 2023 and 2024 reports culminate in policy recommendations aimed at addressing challenges and fostering economic improvement. The 2024 report’s recommendation on strengthening coordination and policy alignment echoes the underlying need in the 2023 report to create an environment conducive to productivity and wage growth. Similarly, the 2024 report’s focus on empowering SMEs for green and digital transformation can be seen as a continuation of the 2023 report’s aim to support businesses in improving their productivity.

In summary, the 2023 report had concluded on the importance of the underlying goals of enhancing productivity, promoting innovation and addressing skills gaps. These are consistent with the broader scope of the 2024 report, which frames the green and digital transitions as the primary drivers for achieving these ongoing objectives. The 2024 report can be seen as taking the need for productivity and competitiveness identified in the 2023 report and providing a new framework – the twin transition – through which to achieve these goals.

Silvan Mifsud is director at EMCS Advisory and also Vice President of The Malta Chamber