During 2022, the NSO published statistics related to skills mismatches, available on the website pertaining to The National Skills Survey.
One can be overqualified or underqualified for a particular job. These imbalances in qualifications create either underutilisation of existing skills or decreased productivity.
Skills mismatches can also occur in cases where there are no available human resources with skills needed in a particular economic sector.
These can create a labour market that is not functioning efficiently and, thus, the economy is less productive.
The NSO’s data focus on qualifications and the field of education as the main variables in relation to the job occupied by workers. This data is based on the labour force survey.
A vertical mismatch occurs if the worker’s level of education does not correspond to that needed by the job in question, whether this is because of overqualification or underqualification. Data for 2021 show that 35.1% of workers in Malta were overqualified for their jobs, while 19.3% were underqualified.
This means a vertical mismatch is evident for over half of the workforce. Women are more overqualified in their careers than men are.
In most cases, overqualification implies that a person has a tertiary level of education but is in a job that does not require this level.
When comparing Maltese with foreign workers, more Maltese are over qualified, while more foreigners are underqualified in their careers.
‘Manager’ is the occupation with the highest underqualification at 54.4%.
Interestingly, while, in 2012, the overqualification rate was 12.4%, this increased to 20.2% by 2021.
In 2020, overqualification rates varied from 3.9% in Luxembourg to 35.8% in Spain. In the case of Malta, one out of every five workers was overqualified, thus, likely underemployed or using the skill level but not getting paid for it.
A horizontal mismatch occurs when the field with the highest level of education jars with the current job which the person occupies. Since one is dealing with an element of specialisation, only those with a post-secondary level of education and upwards are considered. Figures for 2021 show that just over half of the workforce (52.4%) were in jobs related to their field of education. The remainder were facing a horizontal mismatch.
The matches were higher for younger people, with mismatches being larger for the older workers. There were no marked differences in gender, except for those over 55 years of age, where the horizontal mismatch was more significant for women.
An overall qualification mismatch combines vertical and horizontal mismatches. Data show that only 16.3% of the workforce has a complete match; their level and field of education are congruent with their current job.
Over one-third of the workforce (35.3%) are in total mismatch; that is, they are in a position which requires neither their level nor their field of expertise.
These are worrying figures for a small economy, which has seen notable economic growth but where labour productivity is lower than the EU27 average.
If one considers nominal labour productivity per hour worked (which eliminates any discrepancies between full-time and part-time employment and is measured in current prices) and with the index for EU27 at 2020=100, Malta’s figure stood at 76.9, well below the average. The real labour productivity per hour worked (which is adjusted for inflation) is higher but remains below the EU27 average.
Malta is not utilising the potential of its human resources
The result is that Malta is not utilising the potential of its human resources.
The reasons can be various: the economy may be producing jobs which do not need the level or field of education that the workforce has; the jobs being offered are at a lower level of education than workers have; people are being promoted to positions they have no skills for and, thus, are inefficient; the skills being requested are not available; people are willing to take jobs at a lower level than they are qualified in; and some workers may be exploited into providing the expertise they are not being paid for.
One thing is sure: the level of skills mismatches is unhealthy for the labour market and can have detrimental effects in the medium to long term.
The National Skills Survey, currently being analysed by the NSO, will provide us with the actual situation of our workforce.
However, the initial figures gleaned from The Labour Force Survey should already have us worrying about the labour market situation, which, in recent years, has seen drastic changes; it has continued to grow and increase in quantity but not necessarily in quality. The skills mismatches are too significant not to be disquieting.
We are moving towards a global economy that is fast-paced and geared to new technologies and we need to equip ourselves with the right skills for an ever-developing labour market. Malta deserves to utilise its human capital more efficiently.
The Human Capital Research Project, sponsored by the HSBC Foundation, is in its second year of research and analysis. The main aim is to develop strategies which will inform economic actors and educators as to the type of economy and skill-sets we need to focus on, in view of the changes expected where the future of work is concerned. The project is co-led by Rose Marie Azzopardi, a professor in economics focusing on the labour market, and Alexiei Dingli, a professor in artificial intelligence.