The next decade will be different. Beyond the immediate health and economic impact, we may well realise that COVID-19 accelerated several megatrends for the better. We are used to comparing what we have today with what we had before – perhaps looking less critically at what the future could offer.

Last week, EY kicked off its annual event, this time in a weeklong virtual format, under the theme of Future Realised. The idea was to move away from the past and debate what Malta should do now, next and beyond in a post COVID-19 world. We did not do this alone but brought in various local experts, as well as senior leaders from organisations such as the World Bank, World Economic Forum and the United Nations.

Malta’s small size has its benefits

One benefit of being a small island in the context of European markets is that material success only requires relatively small numbers. The creation of a few thousand jobs in a specific sector can be transformational. We also have the advantage of being able to leverage relative legislative, fiscal and labour market agility versus major European nations.

The pandemic has seen many global companies seeking to strengthen operational resilience, now and in the long-term, by reshoring or nearshoring some operations closer to home. There may be immediate opportunities for Malta to service European banks, as it already does (to a smaller extent) in the asset management and insurance sectors. Indeed, we should challenge which role the country is best suited to undertake in the supply chain within all industries, not only financial services.

Should Malta pivot more aggressively towards tech?

EY’s Malta Attractiveness Survey, which captures the sentiments of existing FDI companies present in Malta, has shown that following decades of investment, Malta’s telecommunications infrastructure is now viewed as the country’s second most attractive parameter. While many industries across the globe are struggling, technology companies are thriving, with many embarking on extensive recruitment campaigns to support the huge upsurge in demand for their products and services. Could this be an indicator as to where Malta should focus more looking forward?

A flexible working future

COVID-19 has highlighted that the island may be more connected – digitally – than ever before. Global tech giants have announced that remote work will be a permanent fixture going forward and Germany is drafting a legal bill, making work from home a legal right. Remote working can reduce traffic and pollution, two big challenges for Malta. It also makes juggling the demands of being a working parent easier. More flexibility for mothers may also lead to better gender-equality in leadership positions.

Policymakers must think hard about the reasons investors are attracted to Malta. Photo: Matthew Mirabelli

The impact of the shift to remote working will go further.  The starting point for seeking out a job was previously location, but if this is no longer a constraint, the potential opportunities for Maltese residents with the right skillsets could grow exponentially.

Building a future proof talent pool

The World Economic Forum has just published its Future of Jobs 2020 report which maps the jobs and skills of the future. It highlights that 97 million new jobs are expected to be created over the next 5 years, while 85m could disappear. Demand for data analysts, AI, digital and IT specialists will increase. On the flipside, they expect demand to decrease most for clerks, administrative assistants, accountants and finance clerks, factory workers, customer service workers and mechanics due to the onset of technology and automation.

Malta, like several countries, has an abundance of workers in the latter category and severe skill shortages in the areas where demand is set to increase. We need to take decisive action today in this regard today to upskill our people or we risk being left behind. 

Value-adding activities beyond tax

Various speakers during EY’s Future Realised event referred to how any long-term strategy needs to consider key priorities that clearly emerge from the current crisis – health and education. Malta’s size could pave the way for the country to pilot new tech advances in these areas, drawing investment, supporting local talent and showcasing the country as a true champion of innovation in these sectors.

The country’s size means we need to focus, and tax cannot be our only trump card. Once again, investors responding to EY’s Malta Attractiveness Survey highlight that the country’s innovation capacity is perceived to be weak. Should this be the case after so much effort in the field of technology and digital sectors? As part of any economic strategy, we need to give more focus to moving up the value chain across the key sectors present on the island. If we are serious about this, national research funding cannot be an afterthought.

80% of the foreign companies responding to the survey expect to still be present on the island in ten years’ time. Our strategy, therefore, needs to consider what can be done to encourage them to move more value-generating activities to the country – research, product design and development amongst others. We also need to strengthen Malta’s start-up ecosystem and support local champions as they scale internationally.

Placing governance, sustainability and people at the forefront

This year, the stability and transparency of our political, legal and regulatory environment was ranked as Malta’s least attractive parameter. Our weaknesses are however not set in stone. If reputation and governance deficiencies are robustly addressed, the stability of our political, legal and regulatory environment can once again move up our attractiveness scoreboard.

Across the event, one message that strongly resonated is the need to move our measures of success away from purely financial metrics, such as GDP and profit, to one which places long-term value for a broader set of stakeholders (employees, customers, society and the environment) at the centre of what we do.

'The country’s size means we need to focus': EY managing partner Ronald Attard

This month, EY, the World Economic Forum, the other Big 4 firms and Bank of America launched a new reporting framework for environmental, social, and governance (ESGs) standards with 21 core metrics and 34 extended metrics, covering issues ranging from emissions to social factors such as pay and gender ratios and governance targets. The 130 large global companies that form part of the International Business Council are being encouraged to include these metrics in their 2021 accounts and many smaller companies across the globe are looking to do the same.

Integrating the environment with our economy

In EY’s Generate Survey, carried out amongst Malta’s youth, respondents said overdevelopment and the environment are Malta’s greatest challenges. Speakers made the point that probably it is our generation that got it wrong and that we should look towards Malta’s youth to learn how to get this right. There is clearly a financial and economic case to making Malta green beyond environmental aspirations – and the drive to carbon neutrality, for instance, is extremely exciting. 

COVID-19 has presented many challenges in the immediate term but it could help us rethink the future. We are excited with the input from our speakers, panellists and online viewers during our Future Realised week and will in the coming months be sharing several proposals.

Ronald Attard is EY Malta country managing partner; strategy and transactions regional managing partner for central, eastern, southeastern Europe and central Asia.