Malta Employers Budget Reaction

Budget 2027 puts short-term stability ahead of future productivity-led growth

Malta’s rapid economic growth has generated employment, increased incomes and supported public finances. However, the pressures on infrastructure, the labour market, the environment and the cost of living underline the need to reconsider not only how fast the economy grows, but also the type of growth Malta should pursue.

Malta Employers expected Budget 2027 to set out a clearer roadmap for economic transformation, with concrete measures to encourage productivity, innovation, investment in technology, skills development and higher-value economic activities. While the Budget addresses a number of immediate needs, it offers insufficient detail on how Malta will move towards a more sustainable and productive economic model, reduce its reliance on population growth and labour-intensive activity, and improve the quality of life of its residents.

Malta Employers noted that the Budget Speech sought to maintain short-term stability in prices, incomes, consumption and economic growth. However, the Association observed that less attention was given to the long-term priorities essential to sustaining the country’s economic transformation. In particular, greater emphasis is needed on investment in education and reskilling, digital technology and automation, as well as infrastructure, to support a more productive, innovative and sustainable economy.

The Association welcomes measures that support families, including tax reductions for parents, and recognises the short-term benefits of energy subsidies in cushioning the impact of international prices. However, these measures must form part of a broader strategy that addresses demographic challenges, strengthens energy security and ensures that public expenditure delivers lasting economic and social value.

It also welcomes the reduction in tax for SMEs with a turnover of less than €1million from 35% to 25%.

Malta Employers is particularly concerned by the lack of concrete detail on incentives for businesses to invest in digitalisation, automation and higher-value activities, as well as the absence of a clear direction on mass transport and economic diversification. At the same time, increases in fees affecting foreign workers and tourism require careful assessment of their implications for employers, competitiveness and prices. Investment in education must also deliver stronger outcomes to equip the workforce with the skills needed for Malta’s future economy.

The Association believes that economic policy must go beyond sustaining existing activity. Malta needs a clear, long-term strategy that raises productivity, encourages innovation, supports families and businesses, and ensures that economic growth translates into lasting improvements in competitiveness and quality of life.

Reaction in Detail

Demographic Challenges

Malta Employers has consistently advanced policies that address Malta’s demographic and socio-economic challenges and in this context, it welcomes the continued tax cuts for parents as announced. 

The Association appreciates the intentions of this measure with respect to rewarding families with children in view of Malta’s declining birth rate.  This, however, is a multi-faceted challenge that requires a national, cross-sectoral response.  Whilst welcome, fiscal measures of the kind announced in the budget speech must form part of a holistic plan which must also include awareness-building initiatives, incentives for flexible work arrangements and stronger childcare and parental support infrastructure to render family life more compatible with professional aspirations.

Fuel & Energy Subsidies

Malta Employers appreciates the cushioning of the international price of fuel on the local economy by providing stable prices but acknowledges that such neutralisation has an opportunity cost and a monetary price equivalent to €400 million which must be paid from tax revenue or deferred through borrowing.

The Association appreciates the short-term economic benefit of the subsidies in terms of their contribution to a more stable price level and export competitiveness but continues to insist that energy subsidies must not encourage wasteful energy consumption especially at a juncture when energy generation and distribution are struggling to meet peak demand.

“Super Bonus”

Similar considerations apply to the payment by government of the “Super Bonus” as announced in the Budget Speech. Once again, Malta Employers continues to maintain that public expenditure should be assessed by the value it creates.  Current expenditure that sustains short-term consumption without raising productivity should be better directed towards smart investment in technology, skills, digital infrastructure, energy security, industrial capacity, regulatory efficiency and export capability.

Third Country National Workers

Malta Employers denounces the announced increases fees for new applications for Single Permits for workers originating from third countries from which shall increase from €600 to €800 plus an additional €400 per new applicant as a contribution for the infrastructure.  

These fees and contributions shall eroding Malta’s attractiveness as a country to work in whilst making it even more difficult for local employers to recruit workers to serve the population in care homes, hospitals, supermarkets, catering, waste management and transport.

Furthermore, third-country nationals (TCNs) shall lose their eligibility for free public transport and free childcare.

Of particular concern is the new administrative monthly fee of €83 for holders of Category B and B1 driving licences and the announcement that foreign driving licences will be valid for only 12 months from entry into Malta and this period will not be renewed if the driver leaves the country and re-enters.  Whilst the Association has no issue with drivers requiring a Maltese licence, it must be ensured that Transport Malta is able to handle the demand flow for licences efficiently without backlogs that are currently experienced and which place business continuity at risk in a number of strategically important sectors such as waste-management and distribution.  

Transport

Malta Employers is disappointed with the lack of clarity on a decision about a mass transport system which is regarded as another missed opportunity given that there is an appetite for political consensus from the Opposition.  Of course, the Association understands the cost of this mammoth project but it encourages the authorities to view the investment in the context of the benefits it will bring on the environment, productivity and the quality of life of people who are frustrated with time lost in traffic in their daily lives.

Environment

The Association has taken note of various references to environmental issues in the budget speech and attempts to address them through various measures and projects announced.  Nevertheless, the Budget Speech did not seem to make any concrete direction to diversify the economy from excessive construction to other sectors.

Education

Malta Employers takes note of the consistent increase in public expenditure in Education.  Taken in isolation, this is positive.  However, the socio-economic interest of the country requires more tangible and commensurate results from such expenditure especially given Malta’s recently announced 2025 PISA results which revealed a significant decline in the educational performance of students in reading, mathematics and science, in which Malta scored below the OECD average on all counts.

Malta Employers therefore believes that this decline poses a risk to the country’s economic trajectory, as it affects the workforce’s ability to fill skilled roles in finance, iGaming, and technology sectors.  In this regard it expected the Budget Speech to announce tangible measures for the review of Malta’s Education system to support the economic transformation that the country requires.

Tourism

Malta Employers noted the substantial increases in Eco-Contribution on regular tourists from €1.50 to €8 per night and from a maximum charge of €22.50 to €64.00 per person per visit besides newly announced contribution on cruise passengers.  Whilst these announced charges may contribute to a re-dimensioning of the tourism industry as recommended by the Association in advance of the Budget, Malta Employers calls for caution in ensuring that the industry does not suffer a sudden and considerable loss of price attractiveness in the market with an impact in terms of arrivals, bed-nights and tourist spend over the forthcoming months.

ENDS

26 October 2026