A recently published discussion paper by the Gozo Regional Development Authority (GRDA), provides a long overdue opportunity for an in-depth analysis of employment and skills in Gozo.

The paper highlights a number of strengths and opportunities that Gozo could build upon to achieve the ambitions and targets set out by the GRDA’s Regional Development Strategy.

The study traces the distinctive features and dynamic developments of Gozo’s labour market, which in recent years successfully managed to absorb the rapid rise in the working age population, mostly driven by inflows of non-local workers. As a result, unemployment declined to record low.

Notwithstanding these favourable outcomes, the paper highlights a number of characteristics and structural weaknesses that warrant tailored policy interventions. For starters, half of Gozo’s companies consist of micro enterprises. This introduces an element of vulnerability among the business ecosystem especially in times of rapid economic changes.

It also has a number of implications for the Gozitan labour market. For example, upskilling and reskilling employees will suffer since typically micro enterprises face higher hurdles in terms of financial resources and lack time to train their workforce. 

Various indicators show that Gozo is underperforming relative to mainland Malta, including in terms of productivity and pay performance. Gozo also shows suboptimal job density, an indicator of skills demand, which measures the proportion of jobs to the resident working population in a region.

The relatively lower job density implies that Gozitans have a narrow range of job opportunities. In fact, 20 per cent of full-time employees commute to Malta for work purposes. Significantly, the highest sectoral ratio of commuter-to-resident workers is in financial services, ICT and professional services – sectors which pay the highest salaries but are under-represented on the island.

This suggests that the Gozitan economy has the potential to grow and benefit from its quality human resources.

The flip side is that demand for low-skilled occupations in Gozo remains strong compared to the mainland. A comparison of the occupational distribution of local employment relative to the national level confirms the strong presence of service, sales, clerical and elementary occupations in Gozo, which typically have low skills content.

Gozitans have a narrow range of job opportunities- Ivan Ebejer

The discussion paper includes a comparison exercise between the risk of automation of occupations based on the findings of an OECD study and the number of people employed in the corresponding job categories in Gozo.

The results suggest that roughly 33 per cent of the island’s current workforce could face a high risk from automation. More concerning, the proportion of employees vulnerable to changes in the future of work could almost double, if a slightly lower threshold of what constitutes high automation risk is assumed.

A more encouraging picture seems to emerge from certain aspects of the supply side of skills, specifically the educational attainment of Gozo’s future workforce i.e. those in post-secondary and tertiary education today.

Data shows that Gozitans in general score very well compared to their counterparts in mainland Malta. This is in line with previous studies which found that the risk of dropouts in Gozo is lower than in Malta.

Likewise, in 2020/21, the proportion of Gozitan upper secondary learners choosing VET courses with a work-based learning component was significantly higher than the national average. Still, a number of skills supply weaknesses require constant attention. The share of low-qualified Gozitan employees stands at 44.3 per cent which is significantly high compared to the mainland (36.6 per cent) and the EU average (21 per cent).

Furthermore, a projected shrinking in the number of persons of working age and an ageing population in the next decade or so, necessarily means that action is needed to boost labour productivity if a slippage in living standards is to be avoided.

Although challenges can be found both on the demand for and supply of skills, it appears that on balance, currently and especially in the near future, the tougher deficiencies are skewed towards the demand side of skills. The type of skills currently demanded leads to missed opportunities for Gozo.

Especially for the younger, more ambitious, higher qualified generation, the options are either to commute to Malta for better quality jobs or, in the extreme case, migrate.

The paper concludes that based on several indicators Gozo may be locked in a situation where demand for mostly low skills coexists with supply of mostly low skills, while enterprises may generate adequate profits. Such a situation leads to suboptimal economic performance for Gozo and a persistent unfavourable gap vis-à-vis mainland Malta.

To conclude, targeted action on employment and skills will help to move up the skills levels and more importantly attract higher value jobs opportunities to unlock Gozo’s full potential.

Identifying and mapping the actions to be undertaken by relevant stakeholders is the next step.

Ivan Ebejer is an economist and consultant. He is the lead author of GRDA’s discussion paper ‘Employment and Skills in Gozo’.