Increase in Gozo’s public sector employment would have negative impact on productivity – GRDA

Gozo’s reliance on public sector employment has long been a cornerstone of its labour market, but recent findings indicate that this may be coming at a cost to the island’s productivity and long-term economic potential.

As at the end of 2022, Gozo’s share of public sector employment was nine percentage points higher than mainland Malta. Despite efforts to balance the scales, the over-reliance on government jobs continues to fuel concerns that the public sector may be stifling private sector growth, particularly in industries that could drive innovation and increased productivity.

A study conducted by the Gozo Regional Development Authority (GRDA) revealed that adding 1,000 public sector jobs over a ten-year period would have a limited impact on Gozo’s economic growth, increasing GDP by just 4.9 per cent.

This is because while public sector jobs provide job security and stability, they do not contribute to higher productivity levels. In fact, the report suggests that productivity per worker could actually decline slightly as a result of this increase. In contrast, the same rise in private sector employment, particularly in industries such as finance, IT, or professional services, would lead to an 8.8 per cent increase in GDP and a 3.1 per cent boost in productivity per worker. This disparity underscores the importance of fostering private sector growth if Gozo is to enhance its long-term economic outlook.

The GRDA’s findings also highlight a strong cultural preference among Gozitans for public sector jobs.

The greater job security associated with these roles often leads individuals to favour waiting for a public sector job rather than seeking employment in the private sector. This mindset is evident in both the labour market and the education system, where many Gozitans tailor their qualifications towards public sector roles rather than the skills required for productive, growth-oriented private sector jobs.

The private sector is expanding, but slowly

While the public sector remains a dominant employer, Gozo’s private sector has experienced notable growth in recent years. Between 2013 and 2022, private sector employment in Gozo surged by 81 per cent, while public sector employment increased by a modest 7.5 per cent.

Despite this, public sector jobs still account for 25.5 per cent of total employment on the island, a figure that is disproportionately high compared to mainland Malta.

This preference for public sector roles, especially in industries like public administration, defence, education, health, and social work, raises questions about the future sustainability of Gozo’s labour market. If private sector growth continues to be overshadowed by public sector dominance, Gozo risks stagnating in terms of productivity and economic innovation.

Flexibility and female participation

One of the key attractions of public sector employment in Gozo is the flexibility it offers, particularly for women.

Public sector roles often come with reduced hours and better family-friendly policies, making them more appealing to those seeking a balance between work and personal responsibilities. As a result, the public sector in Gozo has a higher share of female workers in full-time roles compared to men. This is an important consideration for policymakers looking to improve labour force participation rates, especially among women.

Secondary employment and the search for stability

Another unique aspect of Gozo’s labour market is the prevalence of secondary part-time jobs. In Gozo, secondary part-time employment accounts for 19 per cent of total jobs, compared to just 11 per cent in Malta.

Many Gozitans seek additional sources of income outside their main employment, often through self-employment. The flexibility of public sector roles makes it easier for individuals to take on these secondary jobs, further reinforcing the appeal of government work.

A call for a more balanced approach

While the public sector will likely remain a key player in Gozo’s economy, the challenge lies in fostering a more balanced approach to employment. Encouraging private sector growth, particularly in high-productivity industries, will be essential to ensuring the island’s long-term economic success.

The GRDA’s findings serve as a wake-up call: without a concerted effort to stimulate private sector development, Gozo risks falling behind in terms of productivity and innovation, limiting its potential to thrive in an increasingly competitive global economy.