A recent warning from the Central Bank that labour shortages in Malta could prove to be a constraint for economic growth has seen top recruitment professionals nodding in agreement. “The mismatch between supply and demand has become acute in most sectors and across numerous roles,” says Josef Said, Managing Director at Konnekt, pointing to very high levels of economic activity and demand, and a severe lack of supply. “The recent Central Bank's statement that labour shortages will hinder economic growth is very real. From what we see, it is also a reason why investors choose other jurisdictions,” he continues, adding a caveat that in certain sectors, like IT, shortage is not limited to our shores.

While affirming that from an economic standpoint, it is good that the demand is bigger than the supply, Quad Consultancy’s Managing Director Mark J Galea, adds that the war for talent will inevitably push salaries up. “We just need to make sure that this is sustainable when the economy will eventually slow down.” Speaking of whether there are particular areas in which the gap is most noticeable, there appears to be a consensus that labour shortages abound across the board at operative level, in Mr Galea’s words, “from cleaners to IT developers; and from accountants to PAs.”

Joanne Bondin, Head of Recruitment and Selection at MISCO is in agreement, affirming that the shortage is evident in most sectors, both among blue collar occupations as well as white collar occupations. “It is also evident among the professional classes. It is easy to point towards the IT sector or the financial services sector. However, it is equally difficult to recruit technicians or persons to do manual work,” she says.

But what can be done to resolve the situation? According to Ms Bondin, “we need to start making some choices as a country as to which economic activity is sustainable and which is not.” Warning that Malta cannot continue to import foreign labour to meet its labour shortage, Ms Bondin argues that the island is too small to absorb another 20,000-30,000 persons – the infrastructure can’t sustain it. “We must, as a country, determine which economic activities we want to shed and which to keep. The public sector must also stop employing persons where they are not needed. We need to have more teachers and more nurses, but we certainly do not need to employ persons and pace them in elementary occupations. When the public sector employs persons unnecessarily, it is crowding out the private sector,” she maintains.

Meanwhile, according to Mr Said, the labour shortage issue is not only the experience of comparably small countries like Singapore or Hong Kong, but also of larger economies like the US and the UK. “Despite the recent wave of nationalism, economies cannot survive, let alone innovate, without foreign labour,” he says.

In his view, managing this issue is not a one-size-fits-all solution, but requires a more sectoral approach. “At a national level, the reform in education is a priority. This needs to address the gaps in supply and the quality of that supply. Education is a sector which has been very slow to renew itself. Snazzy gadgets in class cannot compensate for the lack of reform in the curriculum and pedagogy. In this respect, curriculum needs to do less with academic subjects and more with topics that encourage out-of-the-box and logical and critical thinking,” he explains.

“The current rewards framework for students at tertiary level needs an overhaul. It makes sense to pay students who want to pursue courses which are less in demand than others, as it distorts the market not to discriminate between highly in-demand skills and less in-demand skills,” Mr Said continues, maintaining that politicians need to put a clear emphasis to lead students to more technical and scientific courses. “Automation risks putting numerous people out of jobs and unless we are making national policy decisions to mitigate this now, we will find it difficult as a nation to upskill when this hits us,” he warns.

Finally, as Quad Consultancy’s Mr Galea concludes, “the beauty of people management is that there are many variables that influence tactics and results. Every vacancy has its own realities. What we need to ensure, though, is to fill every role with people who are competent to do that particular job.”

A full version of this article originally appeared in the May edition of The Business Observer.