Women, older people drive Maltese employment to record highs despite surge in foreign workers

The increase in Maltese workers over the past decade was the strongest ever recorded— equal in absolute terms to the previous three decades combined.

Nonetheless, foreign workers still accounted for around three-quarters of employment growth since 2013.

This emerges from a Central Bank of Malta report titled The Interplay Of Reforms And Foreign Labour Inflows In Driving Labour Supply Growth In Malta, prepared by Aaron G. Grech, chief officer of the Economics Division.

Without the unprecedented rise in domestic participation, driven mainly by Maltese women and older Maltese workers joining the workforce, the number of Maltese in employment would have been slightly below 160,000 by 2023—far below the actual 201,008. Even with this record domestic mobilisation, foreign labour remained essential to fill the majority of new jobs.

Maltese women drive labour growth

The report highlights the increase in Maltese women’s employment as one of the most transformative domestic labour market shifts of the decade.

Between 2013 and 2023, the number of Maltese women below pension age in employment rose by 25%, representing an absolute increase roughly twice that recorded among older workers.

This pushed the proportion of working-age Maltese women from 37% in 2013 to 40% in 2023, while the number of Maltese men below pension age grew by only 2% or around 2,000 workers. This growth was concentrated in two groups: Younger and older Maltese women, each responding to specific policy reforms.

The introduction of free childcare in April 2014 had a major impact on labour force participation among younger Maltese women. Attendance at childcare centres rose from 1,800 to 8,960 children over 10 years. The policy effectively ended the three-to-four-year career break that many Maltese women historically took after childbirth.

For cohorts born after 1986, the first fully covered by the scheme, employment barely dipped following the first child, while for some other cohorts the decline was minor and temporary. The Central Bank estimates this reform contributed 6,200 additional Maltese women to the employment market.

Older Maltese women benefited from pension reforms and top-up schemes, which provided incentives for retiring after 61. In 2012, women aged 55 to 59 had an employment rate of just 28%, about half of today’s level. Raising the statutory pension age reduced exits at retirement, with the drop at age 61 falling to only 10% for women compared with 37% for men. The 2017 top-up scheme further reduced exits, and for Maltese women born in 1960, the probability of leaving employment at 63 nearly halved compared with earlier cohorts.

Older Maltese workers an untapped domestic potential

Older Maltese workers, men and women, represent the country’s largest untapped domestic labour potential. If Malta achieved employment rates similar to Sweden for the same age group, the labour supply could expand by roughly 23,500 additional workers. A significant challenge for this group is skills mismatch, as nearly 60% of Maltese aged 50 to 74 have only lower-secondary education or less, limiting access to high-skill jobs.

Where Maltese workers went

The report highlights a structural shift in the labour market. Newly employed Maltese workers, including Maltese women, moved out of traditional sectors into higher-paying, knowledge-intensive fields. Between 2013 and 2023, Maltese employment increased by 15,087 in professional services and administrative support, 12,082 in public administration, education, and health, 4,168 in arts, entertainment, and other services, 3,229 in financial services, and 1,822 in information and communication. Public administration, education, and health were the only sectors where the increase in Maltese workers exceeded that of foreign workers.

Maltese workers in financial and professional services are also noted as being relatively younger than the overall Maltese workforce, while the youngest Maltese workforce is employed in the information and communication sector.

In contrast, traditional sectors such as manufacturing, construction, retail, transport, and accommodation and food services relied heavily on foreign labour.

In manufacturing, 3,448 fewer Maltese workers were employed while 7,322 foreign workers joined. In construction, 2,479 fewer Maltese workers were employed while 10,640 foreign workers joined. In retail, transport, accommodation, and food services, 2,751 fewer Maltese workers were employed while over 30,000 foreign workers were added. These figures show that Maltese workers, including Maltese women, preferred higher-skilled roles, while foreign labour filled lower-wage and physically demanding jobs.

The skills challenge

The report warns that Malta is approaching the limits of domestic labour-supply growth among younger Maltese workers. Future expansion will depend on upskilling older Maltese workers and improving educational attainment to meet demand in high-value sectors. Currently, Maltese adults spend less than half the time in training compared with peers in Germany or Sweden. Without greater investment in skills, Malta risks continued reliance on foreign labour to fill critical roles.