Employee shortages and cost pressures still main concern for Gozo business

Businesses in Gozo say they are suffering from employee shortages and cost pressures, recurring problems over the past two years which have been identified in a survey of 160 businesses by the Gozo Business Chamber and the Gozo Regional Development Authority.

But despite the numerous challenges businesses have faced in recent years, including the COVID-19 pandemic, inflation pressures, and the persistent difficulties related to the island’s geographical constraints, businesses in Gozo have shown remarkable resilience.

“Looking ahead, and despite current challenges, business activity in Gozo is generally expected to improve or remain relatively stable,” the Gozo Business Chamber said in a report surveying business sentiment.

“This however should not in any way reduce the continuous efforts towards adopting and implementing a regional focused strategic approach. Within this perspective, the efforts should remain relentless in addressing some of the inherent difficulties faced by the Gozitan economy, while adopting a strategic outlook which will translate in concrete actions which are implemented at a policy level.”

In September 2023, 80 businesses in Gozo were surveyed on business sentiment. Following this, another 80 businesses in Gozo were surveyed in March 2024.

Overall, business conditions of businesses operating in Gozo remained relatively stable throughout the 12-month period from April 2023 to March 2024. 60% of businesses interviewed in September 2023 and March 2024 expressed the view that their business conditions in the preceding six months remained the same.

In general, businesses operating in Gozo reported that two of the main concerns that they are currently facing relate to employee shortages and cost pressures, with these concerns being strongly reported in both September 2023 and March 2024. These concerns are in line with the main challenges currently being faced by businesses operating in Malta.

More than half of the businesses surveyed in September 2023 and March 2024 cited the lack of suitable employees as a major concern. This difficulty faced by businesses operating in Gozo to find adequate skilled staff reflects the robust labour market environment and the historically low unemployment rates.

Moreover, the majority of businesses outlined that their business was facing challenges related to cost pressures. These challenges largely reflect the post-pandemic increase in international prices which were further inflated by the war in Ukraine. However, it is noteworthy to highlight that in March 2024, fewer businesses identified cost pressures as a primary concern compared to six months prior. This indicates a relaxation of cost pressures over the period from September 2023 to March 2024.

In fact, 61% of surveyed firms in March 2024 anticipate an increase in the prices of products and services necessary for their operations over the upcoming six months. However, despite the expectation of increased input prices, being high in March 2024, this is less significant when compared to the expectations reported in September 2023.

Meanwhile, 35% of firms anticipate prices to remain unchanged, marking a six-percentage-point increase from the expectations reported in September 2023.

The majority of firms surveyed in March 2024 anticipate no change in the prices of the products and services they offer over the next six months. Specifically, 60% of businesses expect their output prices to remain stable. Meanwhile, 38% anticipate an increase in their prices, with only 3% expecting a decrease.

Over the past year, nearly 40% increased their workforce. More than half said they plan to expand their workforce within the next six months, particularly in the tourism, manufacturing, and professional services sectors

Nearly 60% of businesses also made investments in the past year. More than half plan to continue investing over the next six months, especially in wholesale and retail trade, construction, arts and entertainment, and accommodation and food services.

Only 45% of businesses acknowledged the potential impact of climate change on their operations, with half taking measures to enhance resilience. This contrasts with higher awareness levels observed in other EU firms.