Almost two-thirds of small and medium companies have reported having had to raise prices because of employee wages, the Chamber of SMEs said on Tuesday, citing its 2024 Business Performance Survey.

It also reported that employee shortages are the main issue that companies are currently facing, with just under half of respondents (44 per cent) reporting this as a problem. 

More thank a quarter - 27 per cent of respondents - said that Malta has a problem with overpopulation, which was the third most significant issue that companies reported.

The majority of companies (63 per cent) also said that employee wages were the main issue behind price increases. Chamber President Paul Abela added that worker poaching had also contributed to an increase in wages.

The second most significant issue was unfair competition, with 26 per cent of companies reporting it as an issue. Abela said the matter stemmed from an unfair situation which saw foreign businesses paying an effective 5% tax whilst local entrepreneurs paid 35%.

“The time has come for this to be resolved,” he insisted.

Last September, Finance Minister Clyde Caruana shot down a suggestion to harmonise corporate tax at 15 per cent. He had said that it was in the country’s interest that the rates remain the same for now.

The Malta Chamber of SMEs press conference on Tuesday. Photo: Chamber of SMEs

Majority say the country is not moving in the right direction

The survey also found that around three-fourths of respondents believe that the country is moving in the wrong direction, citing lack of good governance and corruption as being the main issues.

In terms of profitability, the respondents said 2024 results were similar to 2023 despite a slight rise in turnover.

A quarter of companies said that business was more profitable than the previous year, which is the same figure that was reported the year before.

However, there was a 7 per cent increase in the number of businesses that reported that their profits remained the same, from 34 per cent in 2023 to 41 per cent in 2024.

The Chamber of SMEs published its 2024 Business Performance Survey on Tuesday. Photo: Chamber of SMEs

There has been a decrease in the number of companies saying that the year has been less profitable, from 40 per cent to 31 per cent. 

Around a third of respondents (34 per cent) said that their total turnover remained the same and around a fourth (24 per cent) said that it was down. 

Over half of respondents (53 per cent) said that there has been a decrease in sales as customer spending has decreased. Just under half  (48 per cent) said that the increase in competition has contributed to a decrease in sales.