Skills shortage, fading regulatory edge affecting Malta’s attractiveness

Malta’s shortage of skilled and unskilled labour, and the fading edge of its regulatory framework, have been highlighted as key threats to the country’s attractiveness as an FDI jurisdiction.

Figures published in EY’s 2019 Attractiveness Survery for Malta indicate that, as the country’s economy expands, its ability to source workers with the appropriate talent is dropping, with only 27% of foreign investors saying they are able to recruit workers with the required skills.

Over four years, an 18% drop has been registered in the percentage of investors who said they were able to find workers with the needed talent.

EY Malta director Simon L Barberi said the survey showed that, while the personnel retention rate is high, at 73%, all sectors are encountering skills shortages.

The figures also reveal that 63% of survey respondents see the skills shortage as the biggest risk affecting their next investment decisions in Malta.

The survey’s results, announced on at an EY event on Friday, also show that the number of investors who believe Malta is keeping pace with regulatory changes in foreign jurisdictions has dropped by 10% from last year, to 73%. 

Moreover, only 37% of investors think Malta’s legislative framework offers an international competitive advantage, a starker drop of 19% over 2019.

Barberi said the reasons for the decline could be that other countries are catching up with Malta by introducing their own regulatory and legislative instrument in various ectors, and the projected “first country mover” advantage of the Maltese jurisdiction’s implementation of certain laws before others might not have yielded all the expected benefits.

The Maltese government has in recent years passed important laws in the sphere of emerging technologies, such as blockchain, but Barberi said that new legislation will have to come into affect in the medium term if the country is to maintain an advantage over others.

The island’s transport and logistics infrastructure were mentioned as an area requiring a lot more work, with the attractiveness of this factor falling by 13% of a three-year period.

Read also: Solving Malta’s skills shortage: ‘Women, education and foreign talent,’ says Muscat

77% see Malta as attractive FDI destination

Despite the challenges, 77% of current foreign investors rate Malta as an attractive destination for FDI, a result which is in line with that of the last three years.

The country’s corporate tax regime, the stability of its social climate and its telecommunications infrastructure were its top three most attractive aspects.

In terms of the areas Malta should focus more strongly on, the development of education and skills, the support for high-tech industry and innovation, and support for SMEs, where the ones investors mentioned most.