Rising costs weigh on SMEs: Higher wages and import prices drive price hikes

The main contributors to rising prices in SME businesses were increased employee wages (63 per cent), and higher costs of imported products (54 per cent), a recent study found.

The Malta Chamber of SMEs has published the findings of its annual Business Performance Survey for 2024 as part of the SME Barometer in collaboration with Misco Malta.

A press conference was addressed by SME Chamber President Paul Abela, Deputy President Philip Fenech, and COO Andrew Aquilina.

The survey, conducted online between 10th January and 22nd January, collected data from 364 unique businesses spanning multiple industries.

Key findings

Business performance and turnover: Compared to 2023, 42 per cent of respondents reported an increase in turnover in 2024, while 34 per cent experienced no change, and 24 per cent noted a decline. Key drivers of growth included improved marketing efforts (34 per cent), better sales strategies (30 per cent), and enhanced consumer confidence (20 per cent).

Profitability trends: Profitability levels remained steady, with 41 per cent of businesses reporting no change compared to the previous year. However, 33 per cent experienced reduced profitability, highlighting ongoing challenges in cost management and resource allocation.

Rising costs: The main contributors to rising prices were increased employee wages (63 per cent),
and higher costs of imported products (54 per cent).

Festive period sales: During the 2024 festive season, 24 per cent of businesses saw increased sales, while 46 per cent maintained the same turnover as in 2023. However, 30 per cent reported a decline in festive season sales.

Challenges facing SMEs: Businesses identified labour shortages, unfair competition, and increasing operational costs as top challenges. Delayed client payments also negatively impacted cash flow.

Mr Abela said that the survey highlights several systemic issues affecting businesses in Malta, such as overpopulation, transparency and labour shortages.

He highlighted that the SME Chamber is currently preparing feedback related to the Malta Labour Migration Policy. He also said that the challenges, including persistent employee wage and salary costs, along with rising costs of imported goods, have prompted calls for urgent government action to address issues of unfair competition and governance.

Mr Aquilina highlighted that another issue which resulted from this survey is related to the late payments and stated that this creates cash flow issues for SMEs, making it harder for businesses to meet their financial obligations and sustain operations