High rents major reason why half of foreign workers leave after a year

Half of foreign workers leave within a year of arriving in Malta, making it not worthwhile for employers to invest in their training, according to audit firm KPMG.

The short duration of foreign workers in Malta was described as “a notable issue” that is disrupting the employment dynamics, the audit firm said in its economic outlook released this month.

“This dynamic, risks impeding employer investment in their training, exacerbating labour shortages and compromising workforce quality,” KPMG said.

A quarter of foreign workers arrive for temporary employment and half leave within a year, creating a constant turnover that creates instability.

One of the major reasons for this turnover is high rental prices, according to Abigail Agius Mamo, CEO at the Chamber of Small and Medium Enterprises.

“A worker coming from outside the EU is mostly concerned with the amount of money left in hand to be able to send back home after rent is paid, so if the amount is not worthwhile they simply up and leave,” she said.

Chamber of SMEs CEO Abigail Agius Mamo (Photo: James Bianchi/MaltaToday)

Agius Mamo says low-skilled third country nationals are paid wages commensurate with their skills, which can never match the rental prices being requested.

She adds that a foreign worker who obtains an employment visa in Malta is actually obtaining a European work visa.

“Mobility is possible and there is nothing holding back someone from seeking employment opportunities in other member states if they secure a job,” Agius Mamo says.

She notes that rental accommodation prices abroad tend to vary depending on where the building is located. “Outside the city centre, prices tend to drop but in Malta, the variations are not that big thus foreign workers end up paying very high rents.”

This invariably impacts Maltese residents who live in rented accommodation and who have no alternative to turn to, she adds.

Agius Mamo says the introduction of the skills card could help mitigate the problem. “Its aim is to attract better quality TCN’s, which means they will also be paid better but more importantly, the plan is to extend work visas from one year to two or even three years if the workers improve their skills through training,” she says.

The government launched the skills card programme in January this year for TCN’s working in hospitality as part of a wider drive to curb on unnecessary employment of foreign workers.

“We are gradually moving towards a system that tries to retain foreign labour because the rapid turnover is not helpful,” Agius Mamo says. “Contrary to popular belief it is expensive and cumbersome for employers to bring over and train foreign workers, which is why retaining them in sectors and jobs where they are needed is important.”

Statistics obtained from the Labour Force Survey (LFS) shows that the employed work force totalled 301,441 in the third quarter of 2023. This represents an increase of 5.9% from the preceding year. The unemployment rate dropped to 2.5% from 2.9% in the preceding period.

The LFS reported that monthly basic salaries ranged from €3,008 for managerial roles to €1,193 for those in elementary occupations for the period July-September 2023.

Malta’s workforce has expanded rapidly since 2014, fuelled by economic growth and labour market policies that encouraged people to work. A substantial part of the expanded workforce was foreign labour. There are almost 100,000 foreigners living and working in Malta.

“The increasing presence of foreign workers in Malta, while essential for addressing local workforce gaps and driving economic growth, poses challenges,” the KPMG outlook said.