The Maltese economy finds itself at a vital juncture in its history as it seeks to remain afloat in the middle of a perfect storm brought about by the war in Ukraine coinciding with a post-pandemic recovery. This, in turn, resulted in prolonged supply-side challenges and consequent record levels of inflation.
Entrepreneurs are at the forefront of this scenario while facing additional challenges themselves in their bid to embrace the twin green and digital transitions which create the need for both a new mindset as well as ever-developing skill sets.
In this context, it is truly concerning to sift through a recent survey which finds that two-thirds of Malta’s companies are not in a position to find the “required specialised skills” in the local labour market. It is no surprise that, in recent years, a combination of demand and supply factors has led to a shortfall of skills in the local labour market.
This has afflicted Malta-based companies, posing serious risks to their business continuity and competitiveness position, forcing many to turn to third country nationals to address this issue at least in the short-term.
While some businesses have managed to plough through with similar recruitment alternatives, the lack of skills could have been behind business decisions not to invest further on our shores.
This is, of course, problematic in a nation that is seeking new avenues for higher value-added growth. The picture becomes even more worrying when 70 per cent of young people say they would rather live elsewhere.
Focus groups held by the Malta Employers’ Association this summer indicated that, contrary to the common misconception that employers seek to employ foreigners to shed costs, the overwhelming feedback showed they would opt for local employees if the right persons were available.
This is even more so for client-facing positions where customer experience is key, such as tourism, hospitality and retail.
Scarcity of staff is causing companies to refuse business, while also creating wage inflation, impacting competitiveness further at a time of record cost-of-living increases. In parallel, there are other unwelcome impacts of this dearth.
Scarcity of staff is causing companies to refuse business while also creating wage inflation- Joe Farrugia
Companies are applying lower filtering processes at recruitment stage, leading to a drop in standards. Indications are such that employers might be liable to turn a blind eye to below-standard performances or attitudes.
Pointing fingers to one cause for this skills gap is not possible. Malta’s economic diversification, which in itself is a positive consideration, means that demand for workers is varied and disproportionately large and competitive forces in the labour market are intense.
Secondly, over the course of time, several sectors, such as hospitality, maritime, manufacturing and transport, have tended to attract a negative perception around them, for different reasons.
Thirdly, despite repeated calls to the contrary by various stakeholders, the public sector continues to bloat itself further, attracting and employing people that private enterprise desperately needs.
All this provides a significant threat to the continuity, competitiveness and future of Maltese businesses. In such a scenario, the country needs a clear strategy with practical solutions where key stakeholders work together towards a common objective.
If the current situation is allowed to extend to the longer-term, the sustainability of the Maltese economy may be seriously at risk.
The country must therefore plan adequately ahead to ensure the required quantity and quality of skills to drive the transformation forward. The digitalisation challenge, with dramatic changes brought about by concepts such as artificial intelligence, automation and augmented reality, will accentuate the dimension of skills gap which the country must find itself adequately prepared to face.
It is for this reason that the Malta Employers’ Association has been engaging with the business community as well with an extensive group of stakeholders, including authorities and regulators, which in one way or another impact industry and enterprise.
This exercise has already delineated a significant set of short-term measures and longer-term recommendations that will be addressed with industry and political and socio-economic leaders in the SMEs National Forum 2022 to be held this month.
Closing such a significant skills gap will require a coordinated array of approaches, which bring to the fore the role of a multitude of stakeholders. Never has collaboration been so crucial.
A workforce that has the necessary skills demanded by industry provides the foundation to sustainable growth, leads to more innovation and improves companies’ competitiveness. It is our duty to ensure the necessary skills that will allow our nation to chart its path towards sustained growth.
Joe Farrugia is director-general of the Malta Employers’ Association.
As part of the European SME Week programme of events, the SMEs National Forum 2022, hosted by the MEA, will focus on ‘Ensuring the Skills for Future Competitiveness’. It will be held on Thursday, November 17. Further details and registration, which is free of charge, are available on the MEA website and social media networks.