Rising inflation, increased costs and the shortage of employees exacerbated by a skills mismatch are the major concerns for small and medium businesses, according to the results of a new survey. 

The survey of 415 businesses, commissioned by the Chamber for Small and Medium Businesses, listed other concerns, such as issues with late payments affecting cash flow, unfair competition and an unlevel playing field as well as issues related to banking information and compliance.

Other concerns include excessive competition, traffic congestion, transport costs and excessive bank charges.

When asked about their major concerns related to Malta, the businesses cited the lack of good governance, the state of the environment, consumers’ purchasing power and the ease of doing business.

Businesses also highlighted the country’s deficit, the international situation and the attractiveness of Malta’s tourism sector.

Almost two-thirds of the businesses who responded to the Misco survey said they believed that Malta needed to rethink the direction it is heading in while the rest said they thought Malta was heading in the right direction.

Asked about the likelihood of investing in their businesses in the coming year, only 16 per cent said this was likely, with 29 per cent saying this was unlikely and the rest saying they were not sure about whether they should invest further.

More than half the respondents were in the retail, import, distribution and wholesale business. Others were in the manufacturing and construction sector, businesses providing professional services, tourism, food and beverage, wellness and transport.

'Daily struggle'

The survey showed that businesses were giving priority to quality in a volatile international situation that was leading to uncertainty, chamber chief executive officer Abigail Mamo said.

She said it also showed how inflation was impacting both the day-to-day running of their business as well as consumers’ spending power. She said this was a “daily struggle”, especially with rising prices from suppliers abroad.

The respondents also stressed that the government had an important role to play in shifting the economic trajectory.

Chamber president Paul Abela said the country needed to focus more on the niches of the economy that provided the most value.

Asked about the sectors which were most facing an employee shortage, Mamo said the shortage was felt across the board. There was a shortage of low-skilled workers and also professionals so the businesses have “no choice” but to rely on foreign employees.

The procedure to employ third-country nationals had improved drastically but there was a need to finetune the strategy, maybe improving sourcing, targeting certain countries rather than others because most of the foreigners coming to Malta to work then spend very little time in the country.

Misco director Lawrence Zammit pointed out that the cost of inflation to businesses was mentioned as a concern for business owners at a time when the cost of energy was subsidised, unlike the situation in other countries.

Asked about the cost-of-living adjustment mechanism, Abela said the mechanism was agreed upon by all social partners and has been in place since the 1990s “so that has to be honoured”.

He noted that COLA was a reflection of inflation and to change it, there must be unanimous agreement among social partners. He questioned whether it was time to revisit the basket of goods and services that are calculated in the mechanism.

Claims of price-gouging 'wrong'

Asked by Times of Malta whether businesses were exaggerating cost increases to push up their prices, especially at a time when transport costs were decreasing, Abela this was a “perception” that was “wrong”.

He explained that transport costs to Malta had only decreased from China because the Chinese government had intervened when prices skyrocketed.

Transportation costs from Europe remained on the high side but the biggest problem was the shortage of products on the market, creating an element of competition.

“Import costs are reflective of price increases," he said.

"There is a lot of parallel trading so there’s only so much that local businesses can increase,” he said

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