Budget 2026: Government to subsidise pay rises for private sector employees
Workers will have two-thirds of their pay rise paid by the government, as long as they have spent four years with the same company
The government will be subsidising pay rises for private sector employees in a bid to help companies hold on to their skilled workers, Finance Minister Clyde Caruana announced on Monday.
Through this measure, the government will pay 65% of an employee’s pay rise for two years, up to a maximum of €780 each year.
These figures will rise in the case of Gozitan companies, with the government paying 80% of the pay rise, up to €960 each year.
Only workers who have spent at least four years with the same company will be eligible for this scheme.
In practice, this means that companies will be able to bump up loyal workers’ salaries and have the government cover two-thirds of the cost if they are based in Malta, or four-fifths if they are in Gozo.
The measure will be introduced as a mechanism within the Micro Invest scheme, a long-standing programme which supports startups and small and medium enterprises looking to invest in their business.
The scheme itself will also receive a boost, with the programme’s benefits rising from the current cap of €45,000 to €65,000 next year.
Gozitan companies will again receive additional support, with their cap rising to €80,000.
The measures hope to address companies’ struggle to find and retain skilled workers within a competitive job market.
A recent survey by the Chamber of SMEs found that almost half of all SMEs struggle with a shortage of workers, particularly in industries reliant on skilled labour.
The issue also emerged as a sticking point in a survey by EY Malta, which listed skill shortages as the greatest threat to foreign investment.