Employee shortage remains among Maltese businesses’ top concerns

43 per cent of Malta’s SMEs have stated that employee shortage is the most important issue they are facing, according to a study compiled by the Malta Chamber of SMEs and misco.

The SME Barometer® for Q1 2024, published on Thursday (today), included the replies of 414 businesses operating in Malta, surveyed between the 19th and 30th April 2024. The margin of error for the report was 4.9 per cent. The majority of respondents (51 per cent) were businesses that had one to nine employees, 32 per cent having 10-49, 14 per cent with more than 50, and three per cent having 249 employees or more.

At one point, SMEs were asked what the two most important issues that their business is currently facing are, with employee shortage coming out on top. This means that this issue has reclaimed top spot in issues that need to be addressed, having previously been overtaken by concerns related to increase in inflation. For the first quarter of 2024, the percentage of SMEs pointing towards increase in inflation as one of their primary concerns stood at 28 per cent.

Employee shortage was particularly a concern for medium-sized businesses (50-249 employees), with 62 per cent choosing this option.

Other top issues that were identified by SMEs include unfair competition (22 per cent), issues with late payments (17 per cent), lower client demand (15 per cent) and traffic congestion (15 per cent).

Businesses from all over the world, including Malta, have struggled with finding the right talent in recent years, with tight labour conditions being fuelled by skills shortages and rising wage demands.

In the presentation of the report, SME Chamber CEO Abigail Agius Mamo said that it is interesting that employee shortage has surpassed other issues by such a substantial margin.

“The other issues are also important, but employee shortage has gone up significantly and there seems to be substantial pressure when it comes to companies trying to find employees,” she remarked.

“Employee shortage was already a top concern, and it has only continued to increase. National priority has to be given to this issue, and there needs to be a strategy to tackle this situation more aggressively,” Ms Agius Mamo continued.

Additionally, SMEs were also questioned which are the two most important issues that Malta is facing and that they would like Government to do something about.

For this point, the SME Chamber and misco both clarified that the survey was compiled prior to the latest developments surrounding the Vitals magisterial inquiry, which has seen a number of politicians, businesses, and civil servants have charges filed against them due to links to a hospital privatisation deal that saw around €400 million in public funds being spent. The SME Chamber and misco stated that had the survey been done following these developments, there would surely have been different results. The SME Chamber, together with the Malta Employers’ Association (MEA) and the Malta Chamber of Commerce, Enterprise and Industry, released a separate statement on Wednesday as a reaction to the ongoing political situation.

While the Vitals inquiry was not addressed in the SME Barometer®, Ms Agius Mamo stated that the results still reflect the business sentiment at that point in time.

In fact, good governance was the top issue that SMEs felt that Government needs to address, with 33 per cent of respondents stating that this is the case. This issue signifies deep-rooted concerns regarding ineffective or inadequate governance structures and processes.

This was closely followed by overpopulation at 31 per cent and increase in inflation at 30 per cent. 26 per cent of respondents stated that Government needs to work on the level of competition present in Malta.

It was noted that certain issues, such as lack of good governance, overpopulation, and increase in inflation, have ranked top in terms of problems that need to be addressed in previous reports as well.

Additionally, 76 per cent of SMEs have stated that Malta is not heading in the right direction, with this representing an increase from the 72 per cent reported in the final quarter of 2023.

Ms Agius Mamo stated that the priority has to be the future of Malta, not just in terms of numbers, but also in terms of quality.

Lawrence Zammit, Founding Partner and Director at misco, said that businesses are not simply there for the “short-term profit.”

“The sustainability of a business is much more important. This type of data is important to look at, as it is a sign that there is something that needs to be changed,” he added.

The report also included a number of recommendations made by the SME Chamber and misco, one being that Government needs to work on improving the trust in the economy and in building a positive business sentiment in general.

Additionally, it was highlighted that there need to be increased efforts to “attract and retain quality foreign talent,” including by implementing measures which are competitive when compared to other EU member states. There also has to be a “serious national strategy to address human resource shortcomings.”