Malta has continued to show its economic strength, as real GDP grew by 7.5% during the third quarter of 2018, making it the second fastest growing economy in Europe, after Romania. With a reduced endowment of natural resources, most of the growth on the island-nation has been driven by the service sectors. Malta’s impressive ability to create and sustain new economic growth – and the innovative legislation to support it – have played a huge role in this, whilst contributing to reducing unemployment. Case in point is the country’s dominance in crypto-currency and the gaming sector.
Malta was the first country in the world to adopt blockchain regulations, and earlier this year held the Malta Blockchain Summit, earning the island the nickname “Blockchain Island.” Since then, some of the world’s largest crypto exchanges; the likes of Binance, ZBX, and OKEx, have set up shop in Malta. It is also home to many paid online gaming and gambling giants; another key driver of economic growth.
Malta still remains one of the top destinations for migration investment, overall. Because the country has one of the EU’s most successful citizenship-by-investment programmes, including the Malta Individual Investor Programme Agency CBI programme. High-net-worth individuals, such as entrepreneurs, are funnelling direct investment from abroad, contributing greatly to Malta’s steady economic development and stability.
Both of these sectors have been attractive for foreign workers and investment migration, leading to a larger labour pool. This, in turn, has led to an increased demand for rental properties. Migration is a natural consequence of a fast-growing economy, and Malta is fast approaching EU averages. However, while filling a definite labour need, foreign workers have also dampened wage growth, particularly among the median income range.
While a boom in real estate looks good, the rising cost of living comes with its own problems, as it has been eroding Malta’s competitiveness, and has been especially hard on people with entry-level positions. During a meeting last month between gaming industry representative, Enrico Bradamante, and the government parliament secretary, Roderick Galdes, on rent reforms, Bradamante suggested that rent should be indexed to salaries rather than property prices. He also warned that if rent prices were not stabilised, gaming companies would soon seek to expand elsewhere.
“The salary index is what ultimately represents purchasing power, whereas the property index has speculation built into it”, Bradamante said.
However, most foreign workers do not become permanent residents. Temporary housing for foreign workers is one solution that would help minimise over-supply of housing if workers leave, and under-supply if more workers arrive. Such housing options could also be of use to those facing homelessness, as Malta has over 80,000 citizens in poverty in part because median and minimum wages have not increased alongside profits. The Maltese minimum wage is among the lowest in the EU.
Foreign investment in Malta comes from all over the world, but of the foreign workers present in Malta, most of whom are employed in the service sector, 78% are European, and in a distant second place, 14% are Asian. Of the European workers, Italians make up the largest share; most of them having come to Malta since 2011 due to the state of the Italian economy. And with the numerous construction and infrastructure projects currently underway, along with the fast-evolving industries like financial services and gaming, it is likely that the number of foreign workers in Malta will only increase.
Foreign workers are helping to support Malta’s current economic boom, but also will be needed for long-term economic growth. Foreign talent was instrumental in building up Malta’s financial services sector, as well as the online gaming sector – a trend that is repeating itself within the rise of Malta’s blockchain industry. Therefore, migration of talent to Malta will help keep the country competitive with other emerging industries as well.
Ultimately, it is in Malta’s best interest to make sure that property is not what causes workers to look elsewhere for employment. Maintaining a viable and affordable real-estate market will help ensure that Malta remains competitive, and preserve its attraction for foreign talent and investment. This will benefit Malta’s economic growth for years to come.