The Serious Issue Of Employee Supply Shortage In Malta

According to research done on Malta by the European Commission, this sunny Mediterranean island is facing a huge shortfall in lucrative skills, thanks to an increased rate of school leavers and many other issues besides. The situation has gotten so dire that a lot of employees that have reached retirement age are choosing to continue working in order to mitigate the labour shortage.

Employee

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You see, while Malta seems to be doing well economically, there’s still much room for improvement when it comes to natural resources, infrastructure and achieving a balanced property market. For example, the lack of traffic infrastructure alone is costing the country significantly when it comes to investment, as congested streets are not an attractive prospect for any investor.

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As a result, the Maltese government is being urged to take tentative steps to improve its skills shortage situation by closing the infrastructure gap, improving environmental sustainability and creating a conducive environment to the creation of a thriving business sector. According to the above-mentioned report, Malta is really struggling when it comes to these four factors and it’s affecting its ability to produce a skilled workforce.

Effects of Staff Shortage in Malta

The skills shortage in Malta plays a huge role in keeping businesses from expanding and thriving like they should, and this is despite the influx of expats into the country as well as the increased participation of women in the local workforce.

Thing is, staff shortage has a direct impact on how a business operates and its mostly private sector enterprises that are getting hit the most. Understaffed hotels and restaurants aren’t able to provide the level of service that they’re capable of, which in turn affects their reputation and ability to attract business.  There are also lots of unfilled positions in the IT sector and healthcare delivery, while a demand for drivers, supervisors and general workers increases daily.

On the other hand, an increase in expat workers has led to 30% of the Maltese labour force being composed of foreign employees, which is creating an increasingly multicultural and dynamic labour force. However, the amount of time it takes for ‘third country nationals’ to get their work permit applications processed can take as long as four months, which is costing Maltese companies as well.

The challenge of hiring foreign nationals doesn’t end there however, as the cost of renting property in Malta is so high that many third country nationals often leave after just after a few months of employment due to not being able to afford the accommodation.

You’ve also got a huge migration of highly skilled workers from the private sector to the public sector, which is largely due to the private sector’s inability to properly utilize these skills. In all fairness, the private sector is also notorious for a lack of permanent jobs, while the public sector offers long-term job security with all the benefits that employees want to achieve lasting financial security.

Employees may also be negatively affected by the added stress of having to take on extra responsibility and workload due to staff shortages, and the compounded stress associated with this can and does lead such employees to seek alternative employment.

Solutions

Aside from taking measures to attract expat workers, private sector companies are even willing to hire people with an inferior skill level than is required just to fill vacancies. However, the good thing about this arrangement is that it offers the employees an opportunity to learn on the job and gain valuable skills through on-the-job training.

Of course, this is a costly practice for any company, especially when you consider the amount of time it takes to train someone to reach the standard or level of proficiency required. Not only that, but employees have to repeat the process with each new employee that they hire, which only serves to compound the cost.

To avoid all of this, some companies are opting for good old fashioned poaching instead. But this practice comes with its own set of setbacks, such as unsustainable wage inflation which is imbalanced by a lack of improvement when it comes to productivity.

Conclusion

With all that said, Malta’s GDP has seen really positive growth in the last few years, while government debt has also decreased to below 60%, so finding these solutions to Malta’s employee supply shortage shouldn’t be much of a problem for a country of known problem-solvers.

The government will just have to look into the European Commission’s advice to improve the country’s infrastructure, environmental sustainability and property market.




About the Author

Ankur Shah
Ankur Shah is the founder of the Value Investing India Report, a leading independent, value oriented journal of the Indian financial markets. Ankur has more than eight years of equity research experience covering emerging markets, with a focus on India and South East Asia. He has worked as both a buy-side investment analyst for a global long/short equity hedge fund and a sell-side analyst for an emerging markets investment bank. Ankur is a graduate of Harvard Business School. You can learn more about his latest views on global markets at the Value Investing India Report. -- He can be emailed at AnkurShah47@gmail.com