Salaries in financial services sector reached €353 million in 2016

Salaries paid out to persons employed in the financial services sector in Malta peaked at €353 million in 2016, an increase of over 56% when compared to 2010, a report commissioned by the Malta Financial Services Authority has found.

10,345 persons were employed in the sector last year, earning an average annual wage of €34,122.

The term ‘financial services’ as referred to in the report, which analysed the contribution of the sector on the Maltese economy, actually comprises three service industries: financial services (known as sub-sector K64 under the EU’s NACE classification system), insurance and pension funding (K65) and activities ancillary to financial services and insurance (K66).

It is sub-sector K64 which accounts for the largest proportion of all key descriptive statistics, hence reflecting its overall dominant position in relation to the sector as a whole. Most notably, this sub-sector accounts for 97% of the total imports and 96.3% of total exports.

As to the entire sector’s output, consisting of the products created or services rendered during the accounting period, 92% of the total 2016 output of the entire sector was attributable to the activities covered by financial services. Pension and insurance activities accounted for 4.5% of total output whilst the remaining 3.4% was attributable to auxiliary activities.

Between 2010 and 2016 the production of output from the financial services sector as a whole, increased from €5.04 billion to €5.95 billion, implying an overall increase of 18.0%.

The financial services sector also saw a significant increase in its gross value added, which captures the value generated by a sector and indicates the contribution of each individual producer, industry or sector towards the economy.

In 2016, the direct GVA attributable to the activities of the financial services sector amounted to €598 million, 6.9% of the country’s total GVA.

Although this represents a decline in the sector’s relative contribution from the 7.8% of GVA attributable to the sector for 2010, this is in large partly due to the exceptional growth in the generation of total GVA experienced by the Maltese economy over this period, which reached 50.1%. This was driven in large part by a sizeable expansion of a number of other key service sectors operating in the Maltese economy and other significant changes between 2010 and 2016, with certain drivers gaining greater significance over others.

Employees’ compensation, for example, rose significantly between 2010 and 2016 from a total of €226 million in 2010 to €353 million by 2016, implying a growth rate of 56.2%. This growth rate exceeded that observed for compensation of employees across the Maltese economy as a whole, which grew at a rate of 47% over the same period.

The MFSA report also highlights the importance of the supply of output from the financial services sector for the direct production process of other sectors in the local economy.

9% of the financial services sector’s domestic output (sales) is purchased from the creative arts and entertainment activities which include libraries, museums and other cultural activities as well as gambling and betting activities. This amount represents 40% of the total domestic purchases of the sector, which is in turn dominated by the activities of the gaming industry, hence reflecting the importance of the financial sector to other significant contributors in the Maltese economy.

Statistics:

• 10,435 employed within Malta’s financial services sector
• €353 million paid in salaries within the sector, up by 56.2% over 2010
• Sector’s production output reached €5.95 billion
• Gross value added attributable to the sector reached €598 million, 6.9% of the country’s total GVA