COMMISSION STAFF WORKING DOCUMENT 2025 Country Report - Malta Accompanying the document Recommendation for a COUNCIL RECOMMENDATION on the economic, social, employment, structural and budgetary policies of Malta
Date: 2025-06-04
Institutions: European Commission, Reform and Investment Task Force
Subjects: Malta, budget policy, economic policy, economic recovery, economic reform, employment policy, renewable energy, research policy, social policy, stability pact

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 4.6.2025  SWD(2025) 218 final  COMMISSION STAFF WORKING DOCUMENT 2025 Country Report - Malta Accompanying the document Recommendation for a COUNCIL RECOMMENDATION  on the economic, social, employment, structural and budgetary policies of Malta {COM(2025) 218 final}  
 
 
 
 
ECONOMIC DEVELOPMENTS AND KEY POLICY 
CHALLENGES 

Economic growth maintains 
momentum 

and 

The  Maltese  economy  is  maintaining  its 
growth momentum on the back of strong 
export 
demand 
domestic 
performance.  Exports  grew  faster 
than 
imports  in  2024,  driven  by  tourism  and  other 
service  sectors  (recreational  services,  and 
professional,  IT  and  financial  services).  After 
GDP adjusted for inflation grew 6.0% in 2024, 
the  Maltese  economy 
is  set  to  continue 
expanding at 4.1% in 2025 and 4.0% in 2026 
(see  Graph  1.1).  With  regard  to  uncertainty  in 
international  trade  flows,  Malta’s  economy  is 
less  exposed  than  most  EU  countries  to 
external shocks in goods trade. 

Graph 1.1: Malta - Real GDP growth and 
contributions 

Source: European Commission, Eurostat 

at  3.1%  in  2025  and  at  2.8%  in  2026.  The 
unemployment rate was at 3.1% in 2024, and 
is  expected  to  remain  stable  towards  2026. 
However, high employment growth in low-paid 
sectors  is  set  to  keep  nominal  wage  growth 
per  employee  in  2024  and  over  the  forecast 
horizon  modest,  growing  at  a  pace  slightly 
above projected inflation. 

Inflation  is  falling,  following  the  global 
trend. Inflation moderated to average 2.4% in 
2024.  Energy  prices  are  expected  to  remain 
stable also in 2025 and 2026, as the Maltese 
authorities  confirmed  their  commitment  to 
keeping  their  energy  subsidy  measures  in 
place.  Inflation  is  forecast  at  2.2%  in  2025 
and 2.1% in 2026, with the main contributors 
to set to be food and services. 

The government deficit is set to decrease. 
In 2024, the general government deficit is set 
to fall to 3.7% of GDP, from 4.7% in 2023. In 
2025,  the  deficit 
is  forecast  to  further 
decrease to 3.2% of GDP. In particular, energy 
subsidies are expected to drop as a percentage 
of GDP as they remain unchanged in absolute 
terms.  In  2026  the  deficit  is  set  to  decline 
further to 2.8% of GDP. This mainly reflects a 
further  decrease  of  subsidies  as  well  as 
increase  of  revenues  as  a  share  of  GDP  also 
due  to  efforts  to  improve  tax  collection. 
Smaller  deficits  should  lead  the  debt  ratio 
stabilising by 2026, below 50% of GDP. 

The  net  expenditure  growth  is  going  to 
In  2024,  net 
significantly  decelerate. 
expenditure(1)  in  Malta  grew  by  13.9%  (see 

expenditure, 

(1)  Net expenditure is defined in Article 2(2) of Regulation 
(EU)  2024/1263  as  government  expenditure  net  of  (i) 
interest 
revenue 
(ii) 
measures, (iii) expenditure on programmes of the Union 
fully  matched  by  revenue  from  Union  funds,  (iv) 
national  expenditure  on  co-financing  of  programmes 
(v)  cyclical  elements  of 
funded  by 
unemployment  benefit  expenditure,  and  (vi)  one-off 
and other temporary measures. 

discretionary 

the  Union, 

Employment  is  expected  to  grow,  relying 
on  high  immigration  flows  given  the 
intense labour and skills shortages in the 
domestic  market.  Employment  growth 
an 
reached  5.1% 
employment  rate  of  83.0%.  Employment 
growth is set to slow down but remain strong 

in  2024, 

yielding 

2 

-10-6-226101417181920212223242526Net exportsInvestmentPriv. consumptionGov. consumptionInventoriesReal GDP (y-o-y%)forecastpps.  
 
   
 
Annex 1). This increase is mainly driven by an 
increase  of  current  expenditures  and  of  other 
capital  expenditures  related  to  the  national 
airline. In 2025, net expenditure is forecast by 
the  Commission  to  grow  by  0.8%,  which  is 
rate 
below 
recommended 
The 
cumulative  growth  rate  of  net  expenditure  in 
2024 and 2025 taken together is projected at 
14.9%,  which  is  above  the  maximum  rate 
recommended by the Council. 

the  maximum 
the 
by 

growth 
Council(2). 

Despite strong economic growth, 
challenges to competitiveness 
persist 

holding 

back  Malta’s 

Labour  shortages  and  skills  mismatches 
are 
future 
competitiveness.  The  calls  for  investing  in 
skills under the Commission’s Competitiveness 
Compass  initiative  are  particularly  relevant  to 
Malta,  where  shortages  of  skilled  labour  and 
skills  mismatches  are  holding  back  future 
growth,  competitiveness  and  the  digital  and 
green transitions (see Annex 12). To unlock its 
potential,  Malta  could  address  shortages  that 
are  particularly  acute  in  the  information  and 
communication  technology,  construction,  arts, 
entertainment and recreation sectors, parts of 
the  professional  services  sector  and  among 
health  and  long-term  care  professionals  and 
teachers.  In  Q1  2025,  68.5%  of  employers  in 
labour 
Malta’s  services  sector 
shortages  limiting  their  production  compared 
to  24.1%  in  the  EU.  In  addition,  adults’ 
participation  in  learning  is  still  considerably 
lower than the 2030 national target of 57.6%. 
Furthermore,  Malta  can  further  enhance  its 
labour  market  by  tapping  into  underutilised 
talent  pools,  particularly  by  further  reducing 
the  gender  employment  gap  and  enhancing 
the inclusion of persons with disabilities. 

reported 

& 

research 

innovation 
Malta’s 
performance  is  held  back  by  one  of  the 
lowest  levels  of  spending  in  this  area  in 
the  EU  and  by  a  lack  of  skilled  labour. 
Research & innovation spending accounted for 
only  0.64%  of  GDP  in  2023,  against  an  EU 
average of 2.24%. This was down from 2012, 
when  it  accounted  for  0.79%  of  GDP.  Malta’s 
underperformance in  research  & innovation is 
further  exacerbated  by  a  shortage  of  skilled 
workers  –  particularly  in  science,  technology, 
engineering and mathematics subjects. 

indicator 

Maltese  businesses  face  considerable 
administrative  pressure  and  regulatory 
burden.  The  OECD  economy-wide  Product 
Market  Regulation 
improved  for 
Malta  between  2018  and  2024  but  the 
country  is  the  second  weakest  performing  in 
the  EU  after  Luxembourg.  Malta  ranks  the 
lowest  in  the  EU  for  the  Product  Market 
Regulation  sub-components 
‘administrative 
and  regulatory  burden’  (for  businesses)  and 
‘barriers to trade and investment’ (3). Obtaining 
licences and dealing with permitting issues are 
particularly significant barriers. 

to 

initiatives 

length  of 

judicial  proceedings 
The 
remains  above  the  EU  average.  The 
duration of litigious civil and commercial cases 
at first instance in 2023 was still lengthy (454 
days), although down from 491 days in 2022. 
Malta  has  several 
tackle 
inefficiencies  in  the  justice  system.  These 
include  attracting  additional 
staff  and 
justice 
implementing 
strategy. While these initiatives are positive, it 
is  important  to  implement  them  at  a  good 
pace  and  in  full,  given  how  long  proceedings 
still  last  and  the  resulting  negative impact  on 
business  investment  and  potentially  on  the 
banking  sector.  Businesses  can  obtain  more 
legal  clarity  through  alternative  out-of-court 
dispute  settlement  options  such  as  mediation 
and arbitration. 

the  national  digital 

(2)  Council Recommendation with a view to bringing an end 

to the situation of an excessive deficit in Malta 
(C/2025/5036) and Council Recommendation of 21 
January 2025 endorsing the national medium-term 
fiscal-structural plan of Malta (OJ C, C/2025/649, 
10.2.2025, ELI: http://data.europa.eu/eli/C/2025/649/oj). 

(3)  OECD, PMR indicators. 

3 

 
 
 
Box 1: 

UN Sustainable Development Goals (SDGs) 

Malta  performs  well  (SDG  8)  or  is  improving  (SDGs  4  and  9)  on  SDGs  related  to 
productivity.  However,  it  still  needs  to  step  up  efforts  to  close  the  gap  with  the  EU 
average  on  quality  education  (SDG  4)  and  on  industry,  innovation  and  infrastructure 
(SDG 9). 

Skills  shortages  in  Malta  are  at  risk  of  getting  worse  due  to  worsening  education 
outcomes, a still high number of young people leaving school early and a very low share 
of  R&D  personnel.  This  further  hamper  economic  growth  and  competitiveness.  Out  of 
the  17  indicators,  9  SDGs  remain  below  the  EU  average.  Besides  SDGs  4  and  9 
highlighted  above,  the  affected  SDGs  relate  to  environmental  sustainability (SDGs  11, 
12, 13 and 15) and fairness (SDGs 2, 3, and 5) (see Annex 15). 

Long way ahead in the green 
transition 

Malta’s  uptake  of  renewables  remains 
low,  despite  installed  capacity  going  up 
4%  from  2022  to  2023.  Renewables 
covered 17% of Malta’s electricity mix in 2024 
(the EU figure for the same period was 47%). 
To date, renewable energy comes mainly from 
solar  energy in  the  form of  photovoltaics  and 
solar  water  heaters.  Malta’s  production  could 
potentially be enhanced by large-scale floating 
offshore  wind  and  solar  energy.  However, 
fossil  fuel  subsidies  are  distorting  prices.  This 
acts  as  a  disincentive  for  businesses  and 
residents  to  invest  further  in  renewables,  and 
holds 
and 
decarbonisation. 

efficiency 

energy 

back 

The  transport  sector 
is  the  biggest 
emitter  of  Effort  Sharing  Regulation 
emissions  in  Malta.  Malta  is  among  the  EU 
countries  with  the  lowest  proportion  of  cars 
and  vans  with  alternative  fuelled  engines 
(around 3% at the end of 2023, compared to 
6.17%  in  the  EU).  In  addition,  with  a  reported 
27 cars added to the vehicle fleet each day in 
2024,  traffic  congestion  remains  problematic. 
This  has  an  impact  on  the  quality  of  public 
transportation, the limited possibilities for safe 
alternative modes of transport and a negative 
impact  on  the  population’s  quality  of  life. 
Malta’s  recently  announced  policy  measures 
directed  towards  encouraging  a  shift  to 
alternative modes of transport than passenger 

cars  are  largely  reward-based  rather  than 
deterrence based. 

and 

and 

In  2023 

economic 

the  recycling 

infrastructure 

Rapid 
demographic 
developments exert very high pressure on 
natural 
Malta’s 
resources.  Malta  generates  a  very  large 
amount  of  municipal  waste  and  most  of  it 
remains landfilled. Municipal waste generation 
stood at 606 kg per capita in 2023, among the 
highest  in  the  EU  (EU  average:  513 kg  per 
capita). 
rate  for 
municipal waste was only 17%, well below the 
EU  average  of  48.1%.  Landfill  rates  are  high, 
with  taxes  and  fees  on  waste  disposal 
practically  absent.  Large  areas  of  Malta  are 
from 
water-stressed  due 
agriculture, tourism and energy. Water quality 
in  Malta  has  only  marginally  improved,  and 
concerns  remain  for  surface  and groundwater 
bodies.  Malta  remains  vulnerable  to  flash 
urban  floods,  water  scarcity  and  heatwaves, 
with  a  low  but  improving  climate  protection 
gap. 

to  demands 

Inequalities in social outcomes 

Poverty  indicators  are  below  the  EU 
average  in  general  but  remain  high  for 
specific  vulnerable  groups.  Gaps  in  the 
labour market contribute to the vulnerability of 
some  groups.  The  gender  employment  and 
pension gaps remain among the widest in the 
EU,  increasing  the  vulnerability  of  Maltese 
women.  Similarly,  the  disability  employment 
gap remains wide, particularly among women. 

4 

 
 
face 
Moreover,  non-EU  nationals  often 
challenging  working  conditions,  resulting  in  a 
high turnover  of  workers  (see  Annex  10).  This 
leads  to  higher  poverty  risks  for  non-EU 
nationals, low-skilled adults, people aged over 
65,  in  particular  for  women  and  persons  with 
disabilities.  This  may  slow  down  progress 
towards  Malta’s  2030  poverty 
reduction 
target,  which  is  to  reduce  the  at-risk-of-
poverty  or  social  exclusion  rate  by  3.1 pps 
compared  to  2019  (see  Annex  11).  Moreover, 
the  impact  of  monetary  social  benefits  on 
low,  while 
poverty  reduction 
income inequality is above the EU average and 
rising.  Despite  action  being  taken,  housing 
overcrowding,  access  and  affordability  are  of 
growing  concern,  with  rising  costs  affecting 
low-income  households.  Malta  has  one  of  the 
shortest durations of unemployment benefit in 
the  EU,  with  strict  eligibility  criteria.  The 
benefit  has  an  activation  component,  as  it 
links access to benefits with active job seeking 
and participation in employment services. 

is  relatively 

Taxation and sustainability of 
government finances challenges 
warrant attention 

Malta’s tax revenues remain low and are 
highly reliant on corporate income taxes, 
making  the  fiscal  position  sensitive  to 
economic  shocks.  In  2023,  tax  revenue 
measured  as  a  percentage  of  GDP  stood  at 
26.6%  of  GDP  (EU  average:  39%).  This  was 
due  mainly  to  Malta’s  low  reliance  on  labour 
taxation. The share of corporate income tax in 
total  tax  revenue  (16%  in  2021)  continues  to 
be  among  the  highest  in  the  EU.  Malta  does 
not  perform  so  well  on  property  and 
environmental  taxation:  there  is  no  recurrent 
tax  on  property  while  the  effective  carbon 
rate(4) 
the  EU  average. 
than 
Additionally, Malta continues to grapple with a 
significant  VAT  compliance  gap.  In  2022,  this 
gap  was  estimated  at  EUR 415  million,  or 

lower 

is 

25.9%  of  the  total  VAT  tax  liability,  far 
exceeding  the  EU  average  of  7%.  Indicators 
suggest challenges in tax collection efficiency, 
prompting 
introduce 
measures  to  improve  tax  administration  (see 
Annex  2).  Furthermore,  Malta’s  corporate  tax 
system  may  be  exploited  by  companies  for 
aggressive tax planning purposes. 

the  government 

to 

The  projected  future  growth  in  health, 
long-term  care  and  pension  expenditure 
may  put  a  strain  on  the  long-term  fiscal 
the  adequacy  of 
sustainability  and 
Malta’s  social  protection  system.  Age-
related  government  spending  is  expected  to 
increase  significantly  (see  Annex  1).  After  an 
initial  decline,  spending  on  public  pensions 
(currently  at  around  6%  of  GDP,  among  the 
lowest  in  the  EU)  is  projected  to  increase.  By 
2070 this is expected to reach 10.5% of GDP, 
one  of  the  highest  projected  increases  in  the 
EU.  The  pension  benefit  ratio  is  expected  to 
remain below the EU average (a gap of around 
4 pps) in the long term. Government spending 
on  healthcare,  which  in  2024  was  relatively 
low  at  5.1%  of  GDP,  is  projected  to  surge  to 
7.2% of GDP by 2070, close to the projections 
for  the  EU  average  (7.3%),  to  support  the 
adequacy of the system.  

While  Malta  reports  one  of  the  lowest 
levels of unmet needs for medical care in 
the EU, there are very high out-of-pocket 
payments(5)  and  a  significant  gap  between 
people  living  below  and  above  the  poverty 
(see  Annex  14).  Government 
threshold 
spending on long-term care is also expected to 
increase,  from  1.2%  of  GDP  in  2024  to  3.5% 
by  2070.  However,  the  potential  efficiency 
gains  of  home  care  remain  underutilised. 
Currently, home care accounts for only 8% of 
total  public  spending  on 
long-term  care 
(compared to 29% at EU level). At present, the 
Commission has not identified Malta as an EU 
country  with  any  macroeconomic  imbalances, 
so it is not set to undergo an in-depth review. 

(4)  The effective carbon rate is the sum of tradeable 

emission permits, carbon taxes and fuel excise taxes, all 
of which result in a price on greenhouse gas emissions. 

(5)  Household out-of-pocket payment’ means a direct 

payment for healthcare goods and services from the 
household primary income or savings, where the 
payment is made by the user at the time of the 
purchase of goods or the use of the services. 

5 

 
 
 
Box 2: 

Barriers to private and public investment. 

Malta’s  private  and  public  investment  situation  show  a  clear  need  for  improvement. 
There is need to address the existing challenges and barriers to investment, and to  promote a 
more favourable business environment, to support sustainable and inclusive growth. 

•  The  length  of  judicial  proceedings  adds  uncertainty  to  business  investments  in  Malta, 

hindering the development of a more dynamic business environment. 

•  Skills  shortages,  particularly 

in  knowledge-intensive  services  and  tourism 
activities.  Employee  shortages  are  a  concern  for  small  businesses,  and  the  shortage  of 
skilled staff is a major obstacle to long-term investments for Maltese businesses. 

•  Shortcomings  in  local  infrastructure  and  congestion  weigh  heavily  on  business 

activities and are seen as obstacles to investment. 

Malta’s  public  investments  are  characterised  by  low  levels  of  investment  in  research  and 
development  and  insufficient  public  support  for  business  innovation,  despite  some  progress  in 
introducing research & innovation schemes to stimulate private investment. Moreover, there are 
gaps in the management of public investment. 

•  The still evolving governance framework is yet to fully show its ability to drive forward 
the  research  and  innovation  agenda.  2024  saw  the  establishment  of  a  new  government 
agency, Science Malta (Xjenza Malta). However, in the future it will be important to assess the 
effects of this reform on the functioning of the Maltese research & innovation system. 

•  The management of public investment shows gaps over integrated long-term planning, 
standardised  procedures  for  project  assessment  and  selection,  and  multiannual  capital 
budgeting. 

On the implementation of the recovery and resilience plan, Malta is progressing well and should 
continue  to  ensure  a  timely  implementation  of  reforms  and  investments  that  will  help  the 
country  succeed  in  the  green  and  digital  transitions,  as  well  as  on  the  economic  and  social 
recovery from the pandemic. 

It remains important to accelerate the implementation of cohesion policy programmes. The mid-
term review offers opportunities to speed up progress and better address EU strategic priorities 
related to competitiveness, defence, housing, water resilience and the energy transition. 

Malta has not yet taken advantage of the opportunities provided by the Strategic Technologies 
for  Europe  Platform  (STEP)  under  Cohesion  Policy  to  reallocate  resources  towards  this  priority. 
However,  it  can  still  support  the  development  or  manufacturing  of  critical  technologies  in  the 
areas of digital and deep tech, clean and resource efficient technologies, and biotechnologies. 

Malta progressed on 
implementation of its recovery and 
resilience plan 

Malta’s  recovery  and  resilience  plan  amounts 
to EUR 328 million in grants, corresponding to 
1.6% of GDP. The plan’s measures are focused 
on  several  key  areas,  including  the  green 
transition  (waste,  energy,  transport),  digital 

transformation,  health,  education, 
socio-
economic  sustainability  and  strengthening 
Malta’s  institutional  framework.  So  far,  two 
payment 
requests  have  been  positively 
assessed, representing 39% of the milestones 
and  targets.  This  corresponds  to  50.7%  of 
grants  disbursed  (including  pre-financing).  A 
proposal  to  revise  the  plan  is  currently  being 
assessed,  as  is  the  payment  request  for  the 
third instalment. 

6 

 
 
 
INNOVATION, BUSINESS ENVIRONMENT AND 
PRODUCTIVITY 

Overcoming underinvestment in 
research & innovation and skills 
shortages to boost innovation and 
competitiveness 

for 

Overall  Malta  shows  a  good  trend  for 
productivity  growth.  Over  2020-2023, 
Malta’s  productivity  growth  was  among  the 
highest across EU countries. In fact, annualised 
growth  over  this  period  was  3.2%  for  labour 
productivity  and  3% 
factor 
productivity. In 2023, labour productivity grew 
by 1.3% and total factor productivity by 2.2%. 
Labour  productivity 
is  currently 
around  the  level  of  the  EU  median  and 
continues  to  converge  towards  the  EU-27 
aggregate.  However,  Malta  underperforms  on 
indicators related to innovation, human capital, 
and  technology  diffusion  (see  Annexes  3  and 
12). 

in  Malta 

total 

& 

innovation 

in  the  2024  European 

responsible 
innovation  activities, 

Malta  is  striving  to  unlock  its  innovation 
potential,  despite  persistent  challenges. 
Malta  maintained  its  ‘moderate  innovator’ 
Innovation 
status 
Scoreboard,  performing  at  88%  of  the  EU 
average.  In  July  2024,  Malta  revamped  its 
governance, 
research 
establishing  Science  Malta  (Xjenza  Malta),  a 
for  all 
government  agency 
research  & 
including 
policymaking,  implementation  and  financial 
programmes.  In  addition  to  its  2021-2027 
smart  specialisation  strategy,  in  March  2024 
Malta  adopted 
the  2023-2027  national 
research  and  innovation  strategic  plan.  The 
the  country’s 
plan  focuses  on  boosting 
innovation  capacity,  fostering 
international 
collaboration,  developing  skilled  talent,  and 
aligning  research  &  innovation  efforts  with 
national  economic  priorities.  Nevertheless, 

Malta continues to face obstacles in improving 
its innovation performance. 

Tackling  very  low  research  &  innovation 
remains  a  necessary  – 
investment 
although  not  a  sufficient  –  condition  for 
stimulating  innovation.  Malta’s  total  R&D 
intensity is the second lowest in the EU (0.64% 
of GDP in 2023 vs the EU average of 2.24%) 
and  has  been  declining  over  the  last  decade. 
This concerns both public and private research 
& innovation expenditure. Public investment in 
R&D  is  lower  than  10  years  ago  and  well 
below the EU average (0.27% of GDP in 2023; 
EU  average:  0.72%).  The picture  is  similar  for 
private  R&D 
lack  of 
investment  impacts  the  excellence  of  the 
public  research  system  and  the  results  of 
innovation  (for  instance,  Malta’s  patenting 
activity is below the EU average; see Annex 3). 

investment.  The 

in 

equity 

investment 

Innovative  companies  struggle  to  get 
financing.  In  March  2024,  the  government 
established  Malta  Venture  Capital,  which  will 
provide 
start-up 
companies focused on innovative technologies. 
Despite this, venture capital financing remains 
in  Malta  and  has  been 
underdeveloped 
declining over the last decade (0.004% of GDP 
in 2023, down from 0.028% in 2014 and well 
below  the  EU  average  of  0.078%;  see  Annex 
3). Funding is largely concentrated in the start-
up  phase,  while  the  scale-up  stages  are 
insufficiently 
(see  Annex  5). 
Traditional  banks  are  generally  hesitant  to 
support projects from start-ups and scale-ups, 
which  are  often  considered  high-risk  and  lack 
collateral.  To  some  extent,  public  financing 
steps in – for example, the Malta Development 
Bank  offers  financing  schemes  to  companies, 
primarily small and medium-sized enterprises. 
However,  public  actors  cannot  sufficiently 
compensate for the lack of private funding. 

financed 

Lack  of  skilled  human resources is a  key 
challenge  for  fostering  innovation  and 

7 

 
 
competitiveness. A shortage of employees is 
generally  reported  as  the  biggest  concern  by 
businesses,  particularly  small  and  medium-
sized  ones  (see  Annexes  4  and  10).  Having  a 
relatively  small  workforce,  Malta  experiences 
difficulties  in  nurturing  talent  in  high-skill 
fields.  The  share  of  tertiary  students  enrolled 
in  science, 
technology,  engineering  and 
mathematics  (STEM)  subjects  is  one  of  the 
lowest in the EU (see Annex 12). Similarly, the 
number  of  new  graduates  in  science  and 
engineering is critically low – three times lower 
than  the  EU  average.  Also,  the  share  of 
doctorate graduates in the STEM field remains 
very 
low,  at  only  0.2  per  thousand  of 
population  aged  25-34  in  2022,  against  0.7 
for  the  EU  as  a  whole.  This  translates  into  a 
low  number  of  researchers  employed  in  both 
the  public  and  private  sectors.  Malta  should 
consider 
(e.g. 
scholarships):  (i)  to  increase  the  number  of 
science  and  engineering  graduates  and  PhD 
holders;  and 
to  foster  public-private 
mobility  and  cooperation  in  the  research  & 
innovation field. 

expanding 

initiatives 

(ii) 

The business environment is 
affected by regulatory complexity 
and lengthy court proceedings 

Maltese 

businesses 

The administrative and regulatory burden 
on 
remains 
substantial.  While  the  OECD  economy-wide 
Product  Market  Regulation  indicator  improved 
for  Malta  between  2018  and  2024,  the 
country  is  the  second  weakest  performer  in 
the  EU  (6).  For  the  Product  Market  Regulation 
sub-components  ‘administrative  requirements 
for  businesses’  and  ‘barriers  to  trade  and 
In 
investment’  Malta 
particular,  obtaining  licences  and  dealing  with 
permitting  issues  is  a  significant  barrier  for 
businesses (see Annex 4). 

lowest. 

ranks 

the 

(6)  Malta’s Product Market Regulation indicator is 1.81, vs 
an EU average of 1.24 (a higher value signifies more 
restrictive regulations). 

The  length  of  court  proceedings  impacts 
Malta’s  business  environment.  The  2023 
and  2024  European  Semester  country  reports 
and rule of law reports for Malta highlight the 
need  to  further  reduce  the  length  of  judicial 
proceedings,  which  remain  above  the  EU 
average. At 454 days, the average duration of 
litigious  civil  and  commercial  cases  at  first 
instance in 2023 was markedly high, although 
down from 491 days in 2022. Businesses cite 
the  length  of  court  proceedings  as  a  major 
challenge  when  doing  business  in  Malta  (see 
Annex  6).  Malta  has  several  initiatives  under 
way  to  tackle  inefficiencies  in  the  justice 
system.  These 
the 
national digital justice strategy for 2022-2027 
(partly  funded  by the  Recovery  and  Resilience 
Facility), and hiring additional members of the 
judiciary and support staff (see Annex 6). 

implementing 

include 

Graph 2.1: Estimated time needed to resolve 
litigious civil and commercial cases at first 
instance in EU countries in 2013 and 2022 

Source: European Commission, EU Justice Scoreboard 

However, attaining sufficient skilled legal 
personnel  continues  to  be  a  significant 
efforts, 
challenge.  Despite 
including  under  the  resilience  and  recovery 
plan,  Malta’s  legal  system  finds  it  difficult  to 

recruitment 

8 

0200400600800ELITMTHRSIFRFIDKDEPTLVLUSKROEESEATHUCZLT20222013 
 
  
taxed.  Furthermore, 

until  Malta  enacts  and  enforces  the  new 
legislation 
imposing  withholding  taxes  (or 
equivalent  defensive  measures)  on  payments 
to  low-tax  or  zero-tax  jurisdictions,  there  is  a 
risk of these payments leaving the EU without 
the  Maltese 
being 
treatment 
non-domiciled 
resident 
companies  continues  to  provide  multinational 
firms  with  opportunities  for  double  non-
taxation(7).  The  implementation  of  the  EU’s 
Minimum Tax Directive, expected by the end of 
2029,  will  only  partially  solve  this  issue,  as  it 
large  multinational 
will  only  apply 
corporations (see Annex 2). 

of 

to 

(7)  A 

refers 

‘resident  non-domiciled  company’ 

to  a 
company incorporated in a given country but effectively 
managed  in  Malta.  Because  the  firm  is  incorporated 
abroad, Malta only taxes profits realised in or remitted 
to  Malta,  while  foreign  profits  that  are  not  remitted  to 
Malta  are  not  subject  to  tax  in  Malta.  This  leads  to  a 
situation of double non-taxation. 

retain skilled and specialised staff at all levels. 
Malta  also  has  a  low  number  of  judges  per 
capita – the third lowest in the EU (see Annex 
6).  Any  increase in  staff must be  matched  by 
increased  space  available,  both  in  terms  of 
court  chambers  and  office  space.  Work  is 
under  way  to  open  a  new  commercial  court 
and  family  court,  which  will  help  alleviate 
capacity issues and offer enhanced procedures 
and specialised judges. 

Malta’s  legal  system  can  benefit  from 
modernising  certain  work  practices  and 
providing  means  for  alternative  dispute 
settlement.  Optimising  alternative  dispute 
settlement, such as mediation and arbitration, 
legal  clarity  to  the 
would  provide  more 
business  community  and  alleviate  the  burden 
on  the  judiciary.  Malta  could  further  benefit 
from  putting  in  place  a  structured  framework 
for  public  consultations 
legislative 
process.  This  would  cover  all  stakeholders, 
including  civil  society  organisations,  and 
provide  the  necessary  checks  and  balances  in 
the system. 

in  the 

Aggressive tax planning risks are 
still present 

Some  features  of  Malta’s  corporate  tax 
system  help  to  attract  investment,  but 
also  present  risks  of  aggressive  tax 
planning.  Certain  indicators,  such  as  the 
persistently  high 
level  of  foreign  direct 
investment  compared  to  the  size  of  the 
Maltese  economy  (see  Annex  2),  suggest  that 
companies  are  exploiting  loopholes  in  Malta’s 
tax system to minimise or avoid tax liability. 

Malta  is  taking  important  steps  to  curb 
aggressive  tax  planning  practices.  Aside 
from implementing international and European 
agreed  initiatives,  Malta  is  also  tackling  the 
challenge  in  its  resilience  and  recovery  plan. 
Reforms  include  new  legislation  establishing 
transfer  pricing  rules  (effective  as  of  January 
2024).  Malta 
to 
introducing new legislation to address risks of 
aggressive 
from 
inbound  and  outbound  payments.  However, 

tax  planning  stemming 

further  committed 

is 

9 

 
 
DECARBONISATION, ENERGY AFFORDABILITY AND 
SUSTAINABILITY 

through 

large-scale 

panels,  dominates  the  country’s  renewable 
energy landscape, accounting for nearly all of 
Malta’s 237 MW renewable energy capacity in 
2024 (see Graph 3.1 and Annex 8). Malta has 
significant  potential  to  expand  its  renewable 
energy  mix 
floating 
offshore  wind  (9)  and  solar  projects.  In  2024, 
the government launched a national policy for 
the deployment of offshore renewable energy 
(10).  This  was  accompanied  by  a  preliminary 
market  consultation  to  assess  the  market’s 
interest  and  technology  readiness  of  floating 
solar  with  estimated  generation  capacity  of 
50 MW, 
preliminary 
qualification  questionnaire  for  a  floating 
windfarm  of  300  MW  and  aiming  at  a  total 
capacity (offshore solar and wind) of 350 MW 
by 2050 (11). Under its recovery and resilience 
plan,  Malta  will  also 
reform  permitting 
procedures  to  accelerate  the  deployment  of 
renewable  energy  and  mandate  solar  energy 
installations on certain new buildings. 

together  with 

a 

Phasing out fossil fuel subsidies 
and boosting renewables to reach 
climate goals 

for 

flexibility 

significant 

Malta  has  a 
level  of 
macroeconomically  relevant  fossil  fuel 
subsidies  without  a  planned  phase-out 
before 2030. These accounted for 1.6% of 
Malta’s  GDP  in  2023,  above  the  EU 
weighted  average  of  0.49%.  Scaling  down 
and phasing out these subsidies is in line with 
EU commitments and can contribute to giving 
its 
the  government  more 
spending  choices.  The  fiscal  burden  resulting 
from  such  subsidies  could  be  redirected 
towards  incentives  for  green  investments  to 
promote the uptake of renewables and energy 
efficiency  measures,  while  ensuring 
that 
vulnerable  households  are  still  supported. 
Fossil  fuel  subsidies  that  do  not  address 
energy  poverty  in  a  targeted  way,  do  not 
respond  to  genuine  energy  security  concerns, 
hinder  electrification  and  are  not  crucial  for 
industrial competitiveness could be considered 
include  the 
for  priority  phase-out.  These 
ongoing emergency support to energy provider 
Enemalta,  subsidies  to  petroleum  producers, 
and a reduction in excise duties on petrol and 
diesel (see also Annex 8). 

Malta’s  uptake  of  renewable  energy 
sources remains one of the lowest in the 
EU.  In  2023,  the  share  of  renewable  energy 
sources  in  gross  final  energy  consumed  in 
Malta  was  only  15%  (against  25%  in the  EU) 
(8).  In  turn,  the  share  of  RES  in  the  electricity 
mix was only 17% in 2024 (far below the EU 
share  of  47%)  (see  Graph  3.1  and  Annex  8). 
Solar  power,  primarily  from  photovoltaic 

(9)  The net-zero manufacturing industry landscape across 

the Member States. Annex 2, Country fiches - 
Publications Office of the EU. 

(10) https://energywateragency.gov.mt/national-policy-for-
the-deployment-of-offshore-renewable-energy-
launched-at-the-national-energy-conference/. 

(11https://www.etenders.gov.mt/epps/pmc/viewPmc.do?resou

(8)  Renewable energy statistics - Statistics Explained. 

rceId=10825857 

10 

 
 
 
 
Graph 3.1: Malta’s installed renewable 
capacity (left) and electricity generation mix 
(right) 

gas  emissions  in  the  household  and  service 
sectors  (see  Annex  8).  Malta’s  recovery  and 
resilience  plan  supports  the  energy  efficiency 
renovation of commercial and public buildings 
(including schools and hospital facilities). 

Addressing traffic congestion to 
improve quality of life and 
competitiveness 

Source: IRENA, Ember 

To  ensure  security  of  supply  and  further 
deployment  of  renewable  energy,  more 
investment  is  needed  in  grid  capacity.  In 
terms of new projects, cohesion funds support 
the  development  of  a  second  225 MW 
electricity  sub-sea  link  with  Italy  (Sicily).  This 
will contribute to long-term security of supply 
and  allow  for  the  integration  of  a  higher 
proportion  of  renewable  energy  sources  in 
Malta  (see  Annex  8).  Malta  is  also  planning  a 
new  hydrogen-ready  gas  interconnector  with 
Italy,  which  will  transmit  pure  hydrogen  from 
its  commissioning  date  (12).  In  addition,  using 
EU  funds,  Malta  is  investing  in  its  electricity 
distribution  network,  through  investments  in 
grid  and  distribution  services,  as  well  as  on 
battery 
the 
necessary  investments  to  strengthen  its  grid 
infrastructure  and  grid  flexibility  will  enable 
Malta  to  stabilise  its  grid  capacity,  provide 
room  for  more  renewables,  and 
increase 
security  of  supply  (particularly  when  demand 
for electricity peaks in summer). 

storage.  Further  promoting 

While  actions  are  in  place,  increased 
gains  on  energy  efficiency  are  needed.  In 
2023,  primary  energy  consumption  increased 
by  3.0%  and  final  energy  consumption  by 
3.2%  (see  Annex  8).  Malta  supports  energy 
efficiency  through  financial  instruments  in 
different  sectors.  However,  more  efforts  are 
needed  in  the  building  sector,  as  final  energy 
consumption  in  residential  buildings increased 
by  13.5%  between  2018  and  2022  and  no 
lasting  decrease  was  observed  in  greenhouse 

the 

two-year  period  following 

Despite  an  increase  in  public  transport 
users (13),  an  average  of  39  passenger 
cars  were  added  to  Malta’s  roads  daily 
the 
over 
extension  of  free  public  road  transport  to  all 
Maltese residents (14). This contributed to a 4% 
increase  in  licenced  passenger  cars  over  the 
same  period,  bringing  the  passenger  car  fleet 
up to 329 286 by 30 September 2024 (15) (see 
Graph 3.2).  In  addition  to increased  noise  and 
air  pollution,  the  large  number  of  cars  on 
Malta’s roads impacts the  population’s quality 
of life, leaving less room for open spaces and 
limiting  the  independence  of  more  vulnerable 
groups  such  as  children,  older  people,  and 
people  with  disabilities.  Congestion  also 
impacts  the  country’s  competitiveness.  For 
businesses,  severe  traffic  congestion  has  a 
direct  negative  impact  through  lost  time  and 
reduced  productivity  (16).  In  a  2024  survey  on 
Malta’s  attractiveness  to  foreign  investors, 
transport  and  logistics  feature  as  the  least 
foreign  direct 
for 
attractive  parameters 
investment in the country (17). 

(13)  NSO Malta | Transport Statistics 2023 - NSO Malta, 

which points to a 40% increase in road public transport 
commuters between 2021 and 2022, reflecting the 
extension of fare-free scheduled transport to all holders 
of the Tallinja (bus) card as of 1 October 2022. 

(14)  A total of 28 576 passenger cars were newly licenced 

over the period 1 October 2022 to 30 September 2024.  
(Table 2). 

(15)  NSO Malta | Motor Vehicles: Q4/2024 - NSO Malta 

(table 1). 

(12) The Melita Pipeline is a gas project on the 2023 

(16)  Final-Draghi-Report-for-MCESD-18122024-FINAL.pdf 

projects of common interest list under Article 24(1) and 
(2) of the TEN-E Regulation (EU). 

(17)  ey-malta-attractiveness-report-2024.pdf 

11 

 
 
 
 
Graph 3.2: Passenger cars in Malta - newly 
licenced vehicles and total fleet 

time,  improved  pavements  and  limitations  on 
car use in areas with a higher concentration of 
pedestrians  would  ensure people’s  safety  and 
life.  Cohesion  funds 
improved  quality  of 
urban 
sustainable  multimodal 
support 
mobility,  including  investments  in  pavements 
and  cycling  lanes,  though  more  systemic 
change is needed. 

transport 

The  transport  sector  remains  a  top 
polluter 
in  Malta,  with  swift  action 
required  to  decarbonise  it.  While  Malta 
achieved  a  total  net  emissions  reduction  of 
24% between 2005 and 2022(19), greenhouse 
gas  emissions  from  road  transport  increased 
by  32%  during  the  same  period,  against  a 
reduction  in  the  EU  of  5%  (see  Annex  7).  In 
Malta, 
represents  32%  of  all 
greenhouse  gas  emissions,  making  it  the 
second-largest  polluter  after 
the  energy 
to 
industries 
decarbonise  the  transport  sector  as  Malta 
remains  among  the  EU  countries  with  the 
lowest  proportion  of  cars  and  vans  with 
alternative  fuelled  engines  (around  3%  at  the 
end  of  2023,  compared  to  6.17%  in  the 
EU) (21).  Malta’s  recovery  and  resilience  plan 
supports the uptake of electric vehicles in the 
private  sector,  although  sufficient  electric 
charging  points  are  also  required.  Cohesion 
funds  will  support  the  instalment  of  1 080 
recharging points by 2029. 

(20).  Efforts  are  needed 

Improving municipal waste 
management and recycling 

Municipal  waste  generation  stood  at 
606 kg per capita in 2023, well above the 
EU  average  of  513 kg  per  capita.  Malta 
has recorded low rates of preparing municipal 
waste  for  recycling  in  recent  years  (17,1%  in 
2023;  estimated  EU  average:  48%).  Most 

(19)  EEA greenhouse gases — data viewer | European 

Environment Agency's home page. 

(20)  EEA greenhouse gases — data viewer | European 

Environment Agency's home page. 

(21)  European Union (EU27) | European Alternative Fuels 

Observatory. 

Source: National Statistics Office Malta 

licence 

in  place  to  address  traffic 
Policies 
congestion  have  been  predominately 
incentive-based  and  largely  ineffective. 
New  proposals  to  address  traffic  congestion, 
as  part  of  the  ‘Reshaping  Our  Mobility’  action 
plan (18)  still  favour  rewards  over  sanctions, 
with potential actions including cash injections 
to surrender one’s car driving licence or to opt 
in 
out/give  up  a  motor  vehicle 
exchange  for  driving  a  small  scooter.  In 
addition,  the  proposal  to  increase  the  number 
of  parking  spaces  will  further  encourage  car 
use, leading to increased congestion. Measures 
to tackle congestion by disincentivising the use 
of  private  cars  through,  for  instance  the 
transport  pricing  or  access 
revision  of 
restriction  schemes  are  not  foreseen.  While 
the government has invested heavily in recent 
years 
investments 
aimed at improving public road transportation 
and alternative modes of transport seem to be 
systematically  lacking.  The  ban  on  rentals  of 
e-scooters  from  March  2024  also  reduced 
alternative mobility options, though a recently 
proposed  measure 
the 
availability  of  designated  parking  spaces  for 
scooters  is  welcome.  Taking  measures  to 
reduce  the  number  of  cars  on  the  road  and 
implement dedicated bus lanes would improve 
the  quality  of  public  transport.  At  the  same 

infrastructure, 

providing 

road 

for 

in 

(18) Reshaping our Mobility > en/home. 

12 

  300000  305000  310000  315000  320000  325000  330000  335000  0  2000  4000  6000  8000  10000  12000  14000  16000  2021  2022  2023  2024Newly licensed passenger carsStock of licensed passenger cars (Q4, rhs.) 
  
 
 
adaptation  requirements,  additional  effort  is 
required  to  further  improve  its  adaptation 
frameworks, 
and 
implementation. 

planning 

policies, 

value  of 

Large  areas  of  Malta  are  water  stressed 
and  water  quality  has  only  marginally 
improved. Water stress is fuelled by demands 
from  agriculture,  tourism  and  energy  and  is 
exacerbated  by  the  country’s  geographical 
position  and  high  population  density.  Maltese 
water productivity, measuring water extraction 
from  natural  sources,  is  higher  than  in  other 
EU  countries  (see  Annex  9).  In  addition,  the 
reported  annual 
the  Water 
Exploitation  Index  (WEI+) increased  to  34%  in 
2022  from  26%  in  2021  (see  Annex  9).  This 
indicates that Malta is overusing its freshwater 
resources.  With  a  seasonal  WEI+  exceeding 
60%,  the  problem  is  particularly  worrying  in 
the  summertime  when  total  consumption 
surpasses  Malta’s 
freshwater 
resources.  Surface  water  faces  issues  with 
pollution,  while 
chemical  and  nutrient 
groundwater  concerns  relate  to  chemical 
pollution, saline intrusion and over-abstraction. 
Sound  water  management  and  better 
integration  of  water  objectives  with  other 
sectoral  policies, 
including  agriculture  and 
energy, is required. 

renewable 

degradation 

threatens 
Nature 
biodiversity  and  competitiveness.  Malta  is 
the  EU  country  with  the  highest  dependency 
on  ecosystem  services,  with  100%  of  the 
gross  value  added  of  sectors  like  agriculture, 
fisheries  and  construction  directly  reliant  on 
ecosystem services (see Annex 9). Next to the 
need  to  protect  nature,  habitats  and  species, 
this  dependency  underlines  the  importance  of 
ecosystem  services  to  the  Maltese  economy, 
reinforcing 
them. 
However,  excessive  construction  continues  to 
put  further  pressure  on  soil  quality  and  the 
degradation of nature and ecosystems. 

to  preserve 

the  need 

waste is landfilled: 73.7% in 2023, well above 
the  EU  average  of  22.5%.  In  addition,  Malta’s 
generation  of  packaging  waste 
increased 
between  2010  and  2022  (see  Annex  7).  This 
puts  Malta  on  course  to  miss:  (i)  the  2025 
target of preparing 55% of its municipal solid 
waste  for  re-use  and  recycling;  and  (ii)  the 
2025 target of recycling 65% of its packaging 
waste.  The  2021-2030  waste  management 
plan puts in place the required framework and 
measures  to  sustain  an  increase  in  waste 
recycling  rates  and  the  preparation  of  waste 
for  re-use (22).  Several  reforms  featured  in 
Malta’s recovery and resilience plan have been 
enacted. These include: regional reorganisation 
of waste collection, the entry into force of new 
rules on managing construction and demolition 
waste  and  the  establishment  of  a  buildings 
regulator. 

Climate risks are amplified for a 
small island state 

increasingly 

Climate  risks  directly  affect  Maltese 
society  and  the  country’s  economy.  Malta 
is 
to  heatwaves, 
exposed 
droughts,  floods  and  wildfires.  These  events 
not  only  threaten  human  lives,  with  84  heat-
per  100 000 
recorded 
related  deaths 
inhabitants  between  2018-2022  (see  Annex 
9), but also exacerbate inequalities due to the 
asymmetric effect on different socio-economic 
groups  and  regions.  The  economic  costs  of 
extreme weather and climate-related events in 
Malta are estimated at EUR 51 million for the 
period  1980  to  2023  (see  Annex  9).  In  its 
national  adaptation  strategy,  Malta  has 
identified  several  critical  sectors  requiring 
adaptation  measures.  These  sectors  include 
water  management, 
and 
transport,  land  use  and  buildings,  agriculture 
and  fisheries.  To  further  integrate  climate 
resilience 
in  critical  sectors,  Malta  has 
concluded a vulnerability risk assessment and 
is  now  developing  an  Adaptation  Plan.  While 
Malta’s  recovery  and  resilience  plan  supports 
the renovation of buildings in line with climate 

infrastructure 

(22)  European Union (EU27) | European Alternative Fuels 

Observatory. 

13 

 
 
SKILLS, QUALITY JOBS AND SOCIAL FAIRNESS 

gap  is  particularly  significant  for  women  at 
24.4 pps (vs EU 20.4 pps) against 22.0 pps for 
men.  Policy  initiatives,  with  support  from  EU 
funding  such  as  the  European  Social  Fund 
Plus, aim to get more persons with disabilities 
into the labour market but seem insufficient to 
tackle  the  challenges.  Strengthening  targeted 
active  labour  market  policies,  including  up- 
and  reskilling  and  reasonable  accommodation 
in the workplace, could help more persons with 
disabilities enter the labour market. 

social 

inclusion, 

People  from  non-EU  countries  often 
experience precarious working conditions, 
affecting 
while 
workplace  safety  risks  remain  a  broader 
challenge.  Non-EU  nationals  frequently  hold 
low-wage,  unstable  jobs,  often  lacking  safety 
protection  and  advancement  opportunities. 
This  vulnerability 
is  exacerbated  by  their 
reliance  on  employers  and  exclusion  from 
collective  bargaining.  Malta  faces  significant 
workplace  safety  challenges,  especially  for 
non-EU nationals, who are over-represented in 
hazardous sectors and face weak occupational 
safety and health standards.  

Malta  also  experiences  high  job  vacancy 
and  turnover  rates,  particularly  among 
foreign workers. These issues are exacerbated 
by  structural  barriers  to  social  dialogue,  such 
as  focus  on  information  sharing  rather  than 
active engagement and the low levels of union 
representation  for  non-EU  nationals 
(see 
Annex  6).  In  2024,  Malta  introduced  a  new 
agency  regulation (23)  and  a  skills  pass  for 
non-EU  nationals (24),  while  establishing  the 
Building and Construction Authority as part of 
its  recovery  and  resilience  plan.  The  medium-
term  fiscal-structural  plan  outlined  various 
training  and  support  measures  for  migrant 
workers.  A  new  labour  migration  policy  is 

(23)  Subsidiary Legislation 452.130. 

(24)  https://skillspass.org.mt/ 

Strengthening labour market 
inclusion of disadvantaged groups 

10) 

(see 

and  women 

Although  overall  male  and 
female 
employment  rates  are  high,  there  is  still 
room  for  improvement  to  reduce  the 
gender  employment  gap.  Malta  has  one  of 
the highest employment rates in the EU (83%, 
vs  EU  75.8%;  2024) 
the  Social 
Scoreboard  in  Annex  13).  Yet,  the  benefits  of 
employment  growth  are  not  shared  by  all 
population  groups.  Despite  improvements,  the 
gender  employment  gap  remains  among  the 
widest in the EU (13.4 pps vs EU 10 pps; 2024; 
see 
are 
Annex 
under-represented 
in  some  key  economic 
sectors.  Some  groups  are  more  vulnerable, 
including  migrant  women,  low-skilled  women, 
and  older  female  workers.  The  gender  gap 
tends  to  widen  with  age,  contributing  to  a 
significant  pension  gap.  Despite  progress  in 
enrolment  rates  and  the increase  of  childcare 
centres, gaps in early childhood education and 
care  (ECEC)  continue  to  make  it  harder  for 
carers,  often  women,  to  enter  the  labour 
market.  While  enrolment  for  the  youngest 
children is above the EU average, participation 
among  children  aged  three  to  the  start  of 
compulsory  education  remains  slightly  lower 
than  the  EU  average  (93.2%  vs  EU  94.6%; 
2023).  Children  at  risk  of  poverty  or  social 
exclusion are less likely to be enrolled, further 
deepening  inequalities.  Expanding  access  to 
ECEC  could  help  more  women  in  joining  and 
staying  in  the  workforce,  while  improving 
equal  opportunities  for  all  children  regardless 
of their socio-economic background. 

The  disability  employment  gap  also 
remains  wide,  despite  a  recent  decrease. 
Persons  with  disabilities  often  encounter 
limited  access  to  education,  training  and 
employment  (see  Annexes  10  and  12).  The 

14 

 
 
 
currently being developed. Malta would benefit 
from  having  a 
inspection 
larger 
workforce  and  a  stronger  framework  for 
collective bargaining. 

labour 

Ensuring quality education and 
training for all 

(iii)  a 

ineffective 

Malta  faces  persistently 
insufficient 
basic  skills,  which  point  to  systemic 
shortcomings  in  the  education  system. 
and  undermine  competitiveness.  In  Malta, 
every  third  15-year-old  lacks  basic  skills  in 
mathematics,  reading  and  science,  and  about 
half  of  eighth  graders  lack  digital  skills  (see 
Annex  12) (25).  The  potential  drivers  of  this 
problem  include:  (i)  a  high  rate  of  student 
absenteeism;  (ii)  a  stratified  school  system, 
with  disadvantaged  students  concentrated  in 
state  schools;  and 
lack  of,  or 
inadequately qualified, teaching staff; together 
with 
teaching  practices  and 
curricula that  insufficiently  cater  for  students’ 
different learning abilities (see Annex 12). The 
latter  issue  might  stem  from  weaknesses  in 
initial  teacher  education  and  a 
lack  of 
appropriate  needs-based  assessment  of 
teachers’  professional  development  support. 
Furthermore,  to  mitigate  teacher  shortages, 
substitute  teachers  with  a  different  or  lower 
qualification  are  being  used  to  replace  fully 
qualified  teachers.  The  2024-2030  national 
education  strategy  commits  to  a  revision  of 
the  National  Curriculum  Framework,  to  a 
mathematical 
to 
strengthening  literacy  skills  to  narrow  the 
learning  gap  in  the  early  years.  Under  the 
recovery  and 
resilience  plan,  Malta  has 
introduced  quality  inclusive  learning  spaces in 
colleges and middle schools for students with 
their 
significant  needs, 
integration 
education 
into  mainstream 
settings.  Quality  of  education  and  learning 
could improve if steps are taken to reduce the 
current stratification of the school system and 
to support educators by revising initial teacher 

thereby  aiding 

strategy  and 

literacy 

(25)  OECD Programme for International Student Assessment 
International  Computer  and 

(PISA);  2022,  and 
Information Literacy Study (ICILS); 2023. 

15 

education 
continuous professional development. 

programmes 

and 

offering 

in 

science, 

technology, 
Enrolment 
(STEM) 
engineering  and  mathematics 
remains  limited  despite  demand  on  the 
labour  market.  Malta’s  share  of  tertiary 
students  enrolled  in  STEM  subjects  is  one  of 
the lowest in the EU at 13.9%, with only 5.1% 
in information and communication technology. 
The share of women enrolling in an ICT subject 
is particularly low at 1.5%, and only 17.4% of 
students  enrolled  in  ICT  are  women.  The 
supply of ICT graduates falls short of demand 
on the jobs market. Structural barriers in early 
education 
limit  students’  opportunities  to 
pursue  STEM  studies  in  higher  education. 
Malta  is  planning  measures  to  ensure  that 
girls  have  greater  exposure  to  women  as 
positive  role  models.  It  also  has  plans  to 
promote  partnerships  with  industry  that  will 
help  bridge  the  existing  gender  gap. 
In 
addition,  the  current  scholarship  scheme  for 
students  in  STEM  fields  will  be  boosted  via  a 
stipend system and increased investments. 

it  still 

Competitiveness is hindered by enrolment 
gaps  in  adult  learning  and  vocational 
education and training (VET), and by skills 
mismatches. Despite improvements in recent 
years in the  rate of  early school  leaving from 
remains 
training, 
education  and 
somewhat above the EU average, contributing 
to  a  large  pool  of  low-skilled  adults.  Adult 
learning  has  improved  over  time  but  remains 
well below the national target of 57.6% set for 
2030.  Additionally,  participation  gaps  have 
widened, with highly educated adults engaging 
in  learning  at  much  higher  rates  than  their 
low-skilled  counterparts.  Enrolment  in  Malta’s 
VET  system  remains  low,  with  participation 
among  upper-secondary  students  well  below 
the EU average, also regarding STEM subjects 
(see  Graph  4.1  and  Annex  12).  Skills 
mismatches 
by 
in  Malta  are 
inefficiencies  and  disparities  in  the  education 
and lifelong learning system, which is not fully 
aligned  with  labour  market  demands.  The 
ability to match people to jobs continues to be 
held  back  by  mismatches  in  their  level  of 
qualification and fields of study. Consequently, 
labour  shortages  are  a  growing  concern  (see 
Annex  10).  The  job  vacancy  rate  has  risen  to 

driven 

 
 
one  of  the  highest  in  the  EU.  While  initiatives 
to  attract  foreign  workers  and 
improve 
workforce  skills  have  helped,  the  supply  of 
skilled  labour  still  falls  short  of  demand  (see 
Annex  12).  Under  its  recovery  and  resilience 
plan,  Malta  introduced  an  e-college  platform 
to improve guidance and training opportunities 
for all adults. 

Graph 4.1: Enrolment in vocational education 
and training (VET) in general and STEM 
subjects in Malta and the EU 

Source: Eurostat: [educ_uoe_enrs04], [educ_uoe_enrs10] 

Learning  could  be  made  more  accessible  by 
adopting  flexible  options  tailored  to  different 
needs, including those of low-skilled adults. 

Fostering equal opportunities 

Poverty  among  certain  groups  weakens 
social  cohesion,  despite  policy  action 
being taken. Those most impacted by higher 
poverty  risks  are  non-EU  nationals,  the  low-
educated,  persons  with  disabilities,  and  older 
adults,  particularly  women  (see  Annex  11). 
Child  poverty  is  increasing  and  now  exceeds 
low  parental 
the  EU  average,  driven  by 
education,  single-parent  households  and  non-
Maltese 
are 
intensified  by  rising  housing  costs.  In-work 
poverty also remains a concern. Tackling these 
challenges  is  essential  for  achieving  Malta’s 
2030  poverty  reduction  target.  In  2024,  the 
government  reformed  unemployment  benefits 
introduced  a  new  national  poverty 
and 
strategy;  a  social  plan  for  the  family  is  also 
under  way.  Prompt  implementation  with  clear 
monitoring would be advisable. 

citizenship. 

issues 

These 

cornerstone 

levels  of  education.  Malta 

Despite  promising  education  and  skills 
policy  actions,  tangible  results  have  yet 
to be observed.  In  2024,  Malta launched  its 
2024-2030 national education strategy, which 
is  a 
initiative  aimed  at 
transforming 
the  educational  and  skills 
landscape.  Alongside  this,  the  2025-2030 
digital  education  strategy  was  introduced  to 
improve  digital  skills.  Malta’s  medium-term 
fiscal-structural  plan  complements 
these 
strategies with comprehensive action spanning 
is  also 
all 
developing  a  new  national  skills  strategy 
through  a  project  supported  by  the  EU’s 
Technical  Support  Instrument  and  by  the 
National  Skills  Council.  These  new  policies 
would benefit from timely implementation. To 
better align education and training with labour 
market  needs  and  address  skills  mismatches 
and  labour  shortages,  Malta  would  benefit 
from 
programmes, 
strengthening  career  guidance  and  financial 
incentives  for  key  sectors,  expanding  adult 
learning 
and 
sectoral 
encouraging  business  to  invest  in  reskilling. 

improving 

retraining 

VET 

for 

Malta’s  social  benefits  system  shows 
room  for  improvement  in  relation  to 
effectiveness, accessibility and adequacy. 
The  impact  of  monetary  social  benefits  on 
poverty  is  among  the lowest  in  the  EU  and  is 
declining  further.  Recently  reformed,  at  a 
maximum of 156 days, the country has one of 
the  shortest  durations  for  unemployment 
benefit,  with  strict  eligibility  criteria.  The 
benefit  has  an  activation  component  linking 
access to benefits with active job seeking and 
participation in employment services. Targeted 
energy  benefits  are  too  small  to  be  effective 
in  lifting  people  out  of  poverty;  universal 
benefits  have  a  greater  impact  on  reducing 
poverty  but 
(see  also 
lack  sustainability 
Chapter  3).  (26)  Social  protection  spending  is 
relatively low and mostly allocated to old age 
and  health,  and  less  to  family,  disability, 
housing, and unemployment support. 

(26)  Evidence based on a study by the European 

Commission Joint Research Centre, using the EUROMOD 
model. 

16 

20.0%25.0%30.0%35.0%40.0%45.0%50.0%55.0%201520162017201820192020202120222023Malta VETEU VETMalta VET STEMEU VET STEM 
   
 
KEY FINDINGS 

To  boost  competitiveness,  sustainability  and 
social fairness, Malta would benefit from: 

making  better  use  of  the  potential  of 
offshore wind and solar energy; 

• 

• 

• 

• 

chapter; 

cohesion 

implementing the RRP, including the 
REPowerEU 
swiftly 
policy, 
implementing 
taking  advantage  of  the  opportunities 
under 
review  and 
making  optimal  use  of  EU 
InvestEU 
instruments, 
and 
improve 
STEP, 
competitiveness; 

the  mid-term 

including 

to 

fostering  research  and  innovation 
by encouraging both private and public 
investment in this field; 

fostering  access  to  alternative 
financing 
non-bank 
start-
ups/scale-ups 
innovating 
and 
companies; 

for 

improving 
business 
the 
environment  by  reducing  regulatory 
complexity 
courts 
proceedings; 

lengthy 

and 

•  providing  means  for  alternative 
business  dispute  settlement  and 
modernising  work  practices 
in  the 
justice system; 

• 

improving  fairness  in  corporate 
taxation  by  curbing  aggressive  tax 
planning risks; 

•  making 

further 

progress 

on 
decarbonising  by  phasing  out 
subsidies,  which 
fossil 
in,  among 
discourage 
others, 
energy 
efficiency; 

investments 

renewables 

fuel 

and 

•  promoting 

the 

renewable  energy, 

uptake 
of 
including  by 

17 

•  ensuring security of energy supply 
and promoting  efficiency  gains, by 
addressing grid capacity and flexibility 
and  boosting  energy  efficiency  in  the 
buildings sector; 

• 

• 

• 

• 

the 

reducing  traffic  congestion  and 
decarbonising 
transport 
sector, by disincentivising car use and 
ensuring  that  infrastructure  facilitates 
the  use  of  public  and  alternative 
modes  of  transport,  while  further 
promoting  the  use  of  electric  and 
alternative fuel vehicles; 

municipal 

increasing 
waste 
recycling  and  the  preparation  of 
waste for reuse; 

improving  water  quality  and 
management,  including  by  ensuring 
sustainable use of fresh resources and 
tackling pollution of surface water and 
groundwater; 

tackling  skills  shortages  and 
mismatches  by  strengthening  the 
quality, 
labour 
inclusiveness  and 
market  relevance  of  education  and 
training;  

•  ensuring  equal 

labour  market 
participation,  particularly  for  women 
and for persons with disabilities; 

• 

improving  working  conditions,  by 
enhancing  work  safety  measures, 
labour inspection capacities, and social 
dialogue; 

•  strengthening 

and 
effective  social  protection  for 

adequate 

 
 
vulnerable  groups,  by  addressing 
inefficiencies  and  reinforcing  social 
benefits. 

18 

 
ANNEXES 

 
 
 
 
LIST OF ANNEXES 

Fiscal 

A1.  Fiscal surveillance and debt sustainability 

A2.  Taxation 

Productivity 

A3. 

Innovation to business 

A4.  Making business easier 

A5.  Capital markets, financial stability and access to finance 

A6.  Effective institutional framework 

Sustainability 

A7.  Clean industry and climate mitigation 

A8.  Affordable energy transition 

A9.  Climate adaptation, preparedness and environment 

Fairness 

A10.  Labour market 

A11.  Social policies 

A12.  Education and skills 

A13.  Social Scoreboard 

A14.  Health and health systems 

Horizontal 

A15.  Sustainable development goals 

A16.  CSR progress and EU funds implementation 

A17.  Competitive regions 

LIST OF TABLES 

General government balance and debt 
Net expenditure growth 
Net expenditure (outturn and forecast), annual and cumulated deviations vis-à-vis the recommendation 
Defence expenditure 

A1.1. 
A1.2. 
A1.3. 
A1.4. 
A1.5.  Macroeconomic developments and forecasts 
A1.6. 
A1.7. 
A1.8. 
A1.9. 

General government budgetary position 
Debt developments 
RRF Grants 
Projected change in age-related expenditure in 2024-2040 and 2024-2070 

21 

23 

23 

29 

32 

32 

36 

42 

48 

53 

53 

59 

64 

69 

69 

74 

78 

82 

83 

86 

86 

89 

96 

24 
24 
25 
25 
25 
26 
26 
27 
27 

 
 
 
Financial indicators 

A1.10.  Fiscal Governance Database Indicators 
A2.1. 
Taxation indicators 
A3.1. 
Key innovation indicators 
A4.1.  Making Business Easier: indicators. 
A5.1. 
A6.1.  Malta. Selected indicators on administrative burden reduction and simplification 
A6.2. 
Digital Decade targets monitored through the Digital Economy and Society Index 
A7.1. 
Key clean industry and climate mitigation indicators: Malta 
A8.1. 
Key Energy Indicators 
A9.1. 
Key indicators for progress on climate adaptation, preparedness and environment 
A13.1.  Social Scoreboard for Malta 
A14.1.  Key health indicators 
A16.1.  Selected EU funds with adopted allocations - summary data (million EUR) 
A16.2.  Summary table on 2019-2024 CSRs 
A17.1.  Selection of indicators at regional level (NUTS 3) in Malta 

LIST OF GRAPHS 

Tax revenue shares in 2023 
Tax wedge for single and second earners, % of total labour costs, 2024 
Foreign direct investment (FDI) flows, % of GDP, 2023 
Public expenditure on R&D as a percentage of GDP 
Business expenditure on R&D as a percentage of GDP 

A2.1. 
A2.2. 
A2.3. 
A3.1. 
A3.2. 
A4.1.  Making Business Easier: selected indicators 
A5.1. 
Net savings-investment balance 
A5.2. 
International investment position 
A5.3. 
Capital markets and financial intermediaries 
A5.4. 
Composition of NFC liabilities as a % of GDP 
A5.5. 
Composition of household financial assets per capita and as a % of GDP 
A6.1. 
Trust in justice, regional / local authorities and in government 
A6.2. 
Indicators of Regulatory Policy and Governance (iREG) 
A7.1. 
GHG emission intensity of manu-facturing and energy-intensive sectors, 2022 
A7.2. 
Greenhouse gas emissions in the effort sharing sectors, 2005 and 2023 
A7.3.  Municipal waste treatment 
A8.1. 
A8.2.  Monthly average day-ahead wholesale electricity prices and European benchmark natural gas prices (Dutch TTF) 
A8.3.  Malta's installed renewable capacity (left) and electricity generation mix (right) 
A9.1. 
A10.1.  Gender and disability employment gaps in the EU and Malta (pps) 
A10.2.  Foreign workers in Malta (thousands, 20-64) 
A11.1.  At-risk-of-poverty or social exclusion (AROPE) rate, age groups 
A11.2. 
A12.1.  Underachievement rate in mathematics, reading and science by students' socio-economic background in Malta, PISA 2022 

Direct dependency(1) on ecosystem services(2) of the gross value added generated by economic sector in 2022 

Retail energy price components for household and non-household consumers, 2024 

Impact of social transfers (other than pensions) on poverty reduction (%) 

(%) 

A12.2.  Participation in education and training (during the past 12 months), by educational attainment level for 2016 and 2022 
A14.1.  Life expectancy at birth, years 
A14.2.  Treatable mortality 
A15.1.  Progress towards the SDGs in Malta 
A16.1.  Distribution of RRF funding in Malta by policy field 
A16.2.  Distribution of cohesion policy funding across policy objectives in Malta 
A17.1.  Average annual GDP growth (2014-2023) vs GDP per head (2023) 

22 

28 
29 
35 
41 
47 
49 
50 
58 
63 
68 
82 
84 
91 
93 
96 

29 
29 
31 
32 
33 
37 
42 
43 
43 
45 
46 
48 
48 
54 
55 
56 
59 
59 
60 
66 
69 
71 
74 
75 

78 
81 
83 
83 
86 
90 
90 
96 

 
 
 
 
 
FISCAL 
ANNEX 1: FISCAL SURVEILLANCE AND DEBT SUSTAINABILITY 

This  Annex  contains  a  series  of  tables  relevant  for  the  assessment  of  the  fiscal  situation  in  Malta, 
including  how  Malta  is  responding  to  Council  recommendations  issued  under  the  reformed  Economic 
Governance Framework. 

The  reformed  framework,  which  entered  into  force  on  30  April  2024(27),  aims  to  strengthen  debt 
sustainability  and  promote  sustainable  and  inclusive  growth  through  growth-enhancing  reforms  and 
priority investments. The medium-term fiscal-structural plans (hereinafter, MTPs or plans) constitute the 
cornerstone  of  the  framework,  setting  the  budgetary  commitment  of  Member  States  over  the  medium 
term. The latter is defined in terms of net expenditure growth, which is the single operational indicator for 
fiscal surveillance.  

Malta submitted its plan on 20 September 2024. The plan covers the period until 2028, presenting a fiscal 
adjustment  over  four  years.  On  21  January  2025,  the  Council  adopted  the  Recommendation  endorsing 
Malta’s plan. On 21 January 2025 the Council also adopted a Recommendation under Article 126(7) TFEU 
to  correct  the  excessive  deficit  in  Malta(28).  The  corrective  net  expenditure  path  recommended  by  the 
Council under the excessive deficit procedure is consistent with the path set out in the plan.  

The assessment of the implementation of the  Council Recommendations to correct the excessive deficit 
and  endorsing  the  Malta’s  plan  is  carried  out  on  the  basis  of  outturn  data  from  Eurostat  and  the 
Commission’s Spring 2025 Forecast and taking into account the Annual Progress Report (APR), that Malta 
submitted on 30 April 2025. Furthermore, in the context of the Commission Communication of 19 March 
2025(29), on accommodating defence expenditure within the Stability and Growth Pact, the Annex reports 
the projected increase in defence expenditure based on the Commission Spring 2025 Forecast.  

The Annex is organised as follows. First, developments in  government deficit and debt are presented 
based  on  the  figures  reported  in  Table  A1.1.  Then,  the  assessment  of  the  implementation  of  the 
Council Recommendation to correct the excessive deficit and of the Council Recommendation  
endorsing  the  plan  follows,  based  on  the  relevant  figures  presented  in  Tables  A1.2  to  A1.8,  including 
data on defence expenditure.  

The Annex also provides information on the cost of ageing and the national fiscal framework. Fiscal 
sustainability risks are discussed in the Debt Sustainability Monitor 2024(30). 

Developments in government deficit and debt  

Malta’s  government  deficit  amounted  to  3.7%  of  GDP  in  2024.  Based  on  the  Commission  Spring  2025 
Forecast, it is projected to decrease to 3.2% of GDP in 2025 and 2.8% of GDP in 2026. The government 
debt-to-GDP ratio amounted to 47.4% at the end of 2024 and, according to the Commission, is projected 
to increase marginally to 47.6% end-2025.  

(27)  Regulation (EU) 2024/1263 of the European Parliament and of the Council (EU) on the effective coordination of economic policies 
and on multilateral budgetary surveillance, together with the amended Regulation (EC) No 1467/97 on the implementation of the 
excessive deficit procedure, and the amended Council Directive 2011/85/EU on the budgetary frameworks of Member States are the 
core elements of the reformed EU economic governance framework. 

(28) Council Recommendation with a view to bringing an end to the situation of an excessive deficit in Malta, C/2025/5036. 

(29)  Communication  from  the  Commission  accommodating  increased  defence  expenditure  within  the  Stability  and  Growth  Pact of  19 

March 2025, C(2025) 2000 final. 

(30)  Commission (2025) ‘Debt Sustainability Monitor 2024,’ European Economy-Institutional Papers 306. 

23 

 
 
 
 
Table A1.1:  General government balance and debt 

Source: Commission Spring 2025 Forecast (COM), Annual Progress Report (APR) 

Developments in net expenditure  

The  net  expenditure(31)  growth  of  Malta  in  2025  is  forecast  by  the  Commission(32)  to  be  below  the 
recommended  maximum.  Considering  2024  and  2025  together,  the  cumulative  growth  rate  of  net 
expenditure is projected to be above the recommended maximum cumulative growth rate, corresponding 
to a deviation of 0.2% of GDP.  

The cumulative deviation in 2024 and 2025 is below the 0.6% of GDP threshold. 

Table A1.2:  Net expenditure growth 

* The cumulative growth rates are calculated by reference to the base year of 2023. 
Source: Council Recommendation to correct the excessive deficit in Malta (Rec.), Annual Progress Report (APR) and Commission's 
calculation based on Commission Spring 2025 Forecast (COM).. 

General  government  defence  expenditure  in  Malta  amounted  to  0.5%  of  GDP  in  2021,  0.5%  of  GDP  in 
2022 and 0.4% of GDP in 2023(33). According to the Commission 2025 Spring Forecast,  expenditure on 
defence is projected at 0.4% of GDP in 2024 and 0.4% of GDP in 2025. 

(31)  Net expenditure is defined in Article 2(2) of Regulation (EU) 2024/1263 as government expenditure net of (i) interest expenditure, 
(ii) discretionary revenue measures, (iii) expenditure on programmes of the Union fully matched by revenue from Union funds,  (iv) 
national  expenditure  on  co-financing  of  programmes  funded  by  the  Union,  (v)  cyclical  elements  of  unemployment  benefit 
expenditure, and (vi) one-off and other temporary measures.  

(32)  Commission Spring 2025 Forecast, European Economy-Institutional paper 318, May 2025. 

(33) Eurostat, government expenditure by classification of functions of government (COFOG).  

24 

2024OutturnAPRCOMAPRCOM1General government balance% GDP-3.7-3.3-3.2n.a.-2.82General government gross debt% GDP47.448.447.6n.a.47.3#Variables20252026Rec.APRCOMRec.APRCOM2024n.a.14.3%13.9%n.a.n.a.n.a.20256.0%-0.1%0.8%13.8%14.2%14.9%20265.8%n.a.5.3%20.4%n.a.20.9%AnnualCumulativeGrowth rates 
 
                           
 
 
                           
 
 
 
 
Table A1.3:  Net expenditure (outturn and forecast), annual and cumulated deviations vis-à-vis the 
recommendation 

* The growth rate for 2024 is not a recommendation but serves to anchor the base, as the latest year with outturn data when 
setting the net expenditure path is year 2023.  
Source: Commission Spring 2025 Forecast and Commission's calculation 

Table A1.4:  Defence expenditure 

Source: Eurostat (COFOG), Commission Spring 2025 Forecast and Commission's calculation 

Table A1.5:  Macroeconomic developments and forecasts 

Source: Commission Spring 2025 Forecast (COM), Annual Progress Report (APR) 

25 

2023202420252026OutturnOutturnCOMCOM1Total expenditurebn NAC7.58.68.79.22Interest expenditurebn NAC0.20.30.30.33Cyclical unemployment expenditurebn NAC0.00.00.00.04Expenditure funded by transfers from the EUbn NAC0.20.10.30.35National co-financing of EU programmesbn NAC0.10.00.10.16One-off expenditure (levels, excl. EU funded)bn NAC0.00.00.00.07=1-2-3-4-5-6Net nationally financed primary expenditure (before discretionary revenue measures, DRM)bn NAC7.18.28.18.58Change in net nationally financed primary expenditure (before DRM)bn NAC1.1-0.10.49DRM (excl. one-off revenue, incremental impact)bn NAC0.1-0.20.010=8-9Change in net nationally financed primary expenditure (after DRM) bn NAC1.00.10.411Outturn / forecast net expenditure growth*% change13.9%0.8%5.3%12Recommended net expenditure growth% change7.4%6.0%5.8%13=(11-12) x 7Annual deviationbn NAC0.5-0.40.014 (cumulated from 13)Cumulated deviationbn NAC0.50.00.015=13/17Annual balance% GDP2.1-1.8-0.216=14/17Cumulated balance% GDP2.10.20.017p.m. Nominal GDP  bn NAC20.522.524.025.5#Variables2021202220232024202520261Total defence expenditure% GDP0.50.50.40.40.40.42of which: gross fixed capital formation% GDP0.10.10.10.10.10.12024OutturnAPRCOMAPRCOM1=7+8+9Real GDP% change6.04.04.1n.a.4.02Private consumption% change5.74.74.0n.a.3.93Government consumption expenditure% change7.36.54.7n.a.4.24Gross fixed capital formation% change2.42.52.5n.a.2.15Exports of goods and services% change5.33.43.5n.a.2.96Imports of goods and services% change4.73.63.1n.a.2.4Contributions to real GDP growth 7- Final domestic demandpps4.43.73.1n.a.2.98- Change in inventoriespps0.00.00.0n.a.0.09- Net exportspps1.60.31.0n.a.1.110Output gap% pot GDP-0.1-0.5-0.5n.a.-1.011Employment % change5.14.03.1n.a.2.812Unemployment rate%3.13.03.1n.a.3.113Labour productivity% change0.80.01.0n.a.1.214HICP % change2.42.32.2n.a.2.115GDP deflator% change3.22.62.5n.a.2.216Compensation of employees per head% change5.95.04.1n.a.3.517Net lending/borrowing vis-à-vis the rest of the world% GDP5.0n.a.4.7n.a.4.420252026#Variables 
 
 
 
 
 
   
 
 
 
                           
 
 
Table A1.6:  General government budgetary position 

Source: Commission Spring 2025 Forecast (COM), Annual Progress Report (APR) 

Table A1.7:  Debt developments 

* End of period.  
** The 'snow-ball' effect captures the impact of interest expenditure on accumulated general government debt, as well as the 
impact of real GDP growth and inflation on the general government debt-to-GDP ratio (through the denominator). The stock-flow 
adjustment includes differences in cash and accrual accounting (including leads and lags in Recovery and Resilience Facility grant 
disbursements), accumulation of financial assets, and valuation and other residual effects. 
Source: Commission Spring 2025 Forecast and Commission's calculation (COM), Annual Progress Report (APR) 

26 

2024OutturnAPRCOMAPRCOM1=2+3+4+5Revenue34.633.033.1n.a.33.2of which:2- Taxes on production and imports9.49.29.3n.a.9.33- Current taxes on income, wealth, etc.15.113.913.4n.a.13.74- Social contributions5.25.25.2n.a.5.25- Other (residual)5.04.75.2n.a.4.98=9+16Expenditure 38.336.236.3n.a.36.0of which:9- Primary expenditure37.134.935.0n.a.34.7of which:10- Compensation of employees 9.99.99.9n.a.9.911- Intermediate consumption7.68.17.7n.a.7.712- Social payments8.18.17.9n.a.7.913- Subsidies2.52.32.1n.a.1.814- Gross fixed capital formation3.33.83.8n.a.3.915- Other5.82.73.6n.a.3.616- Interest expenditure1.21.31.3n.a.1.318=1-8General government balance-3.7-3.3-3.2n.a.-2.819=1-9Primary balance-2.5-2.0-1.9n.a.-1.520Cyclically adjusted balance-3.6n.a.-3.0n.a.-2.321One-offs0.00.00.0n.a.0.022=20-21Structural balance-3.6-3.1-3.0n.a.-2.323=22+16Structural primary balance-2.4-1.8-1.7n.a.-1.0#Variables (% GDP)202520262024OutturnAPRCOMAPRCOM1Gross debt ratio* (% of GDP)47.448.447.6n.a.47.32=3+4+8Change in the ratio (pps. of GDP)-0.51.00.2n.a.-0.3Contributions**3Primary balance2.52.01.9n.a.1.54≈5+6+7'Snow-ball' effect-2.9-2.8-1.7n.a.-1.5of which:5- Interest expenditure1.21.31.3n.a.1.36- Real growth effect-2.6-2.6-1.8n.a.-1.87- Inflation effect-1.5-1.5-1.2n.a.-1.08'Stock-flow' adjustment0.0-0.7-0.1n.a.-0.320252026#Variables 
 
                           
 
 
 
 
 
 
 
 
 
 
Cost of ageing  

Total  age-related  spending  in  Malta  is  projected  to  rise  from  about  17%  of  GDP  in  2024  to 
about 26% in 2070 (see Table A1.8). The overall increase, the second largest of all Member States, is 
driven  by  the  projected  rise  in  pension  spending  in  the  long  term  as  well  considerable  increases  for 
healthcare and long-term care expenditure.   While 0.9 pps lower in 2040 compared to 2024, the pension 
expenditure-to-GDP ratio would be 4.4 pps higher by 2070. This is the second highest projected increase 
in pension spending of all EU Member States for 2024-2070.  

Public healthcare expenditure is projected at 5.1% of GDP in 2024 (below the EU average of 
6.6%)  and is  expected to  increase by 0.4 pps by  2040  and  by a further  1.8 pps  by  2070 (34). 
Public expenditure on long-term care is projected at 1.2% of GDP in 2024 (below the EU average of 1.7%) 
and  is  expected  to  increase  by  0.4  pps  of  GDP  by  2040  and  by  a  further  1.8  pps  of  GDP  by  2070 (35). 
These expenditure increases, due to an ageing population, pose a risk to fiscal sustainability in the long 
term. 

Table A1.9:  Projected change in age-related expenditure in 2024-2040 and 2024-2070 

Source: 2024 Ageing Report (EC/EPC). 

(34)  Key performance characteristics, recent reforms and investments of the Maltese healthcare system are discussed in Annex 14 

‘Health and health systems’. 

(35)  The adequacy and quality of the Maltese long-term care system are covered in Annex 11 ‘Social policies’. 

27 

MT16.7-0.90.40.4-0.5-0.516.1MTEU24.30.50.30.4-0.30.925.2EUMT16.74.42.12.20.18.925.6MTEU24.30.20.60.8-0.41.325.6EUage-related expenditure 2024 (% GDP)change in 2024-2040 (pps GDP) due to:age-related expenditure 2040 (%GDP)pensionshealthcarelong-term careeducationtotalage-related expenditure 2024 (% GDP)change in 2024-2070 (pps GDP) due to:age-related expenditure 2070 (%GDP)pensionshealthcarelong-term careeducationtotal 
 
 
 
   
 
 
National fiscal framework 

Malta’s Independent Fiscal Institution, the Malta Fiscal Advisory Council (MFAC), would benefit 
from  strengthened  independence.  Its  members  are  appointed  by  the  Minister  of  Finance,  with 
relatively lenient formal criteria. While MFAC has freedom to communicate at any time and runs a well-
structured website, the Chair’s role does not encompass external communication.  

The  management  of  public  investment  could  be  improved  across  the  investment  cycle. 
Currently,  integrated  visions  outlining  long-term  country  objectives  only  cover  selected  sectors  or  policy 
areas, such as the environment and decarbonisation. There is no clear monitoring process to ensure that 
these long-term objectives and subsequent action plans or sectoral strategies are aligned and that these 
objectives  are  achieved.  Moreover,  there  is  no  widespread  use  of  standardised  assessment  or  selection 
methodologies  for  projects,  although  external  quality  reviews  are  carried  out  on  ad-hoc  basis.    The 
management  of  public  investment  could  be  improved  across  the  investment  cycle.  Currently,  integrated 
visions  outlining  long-term  country  objectives  only  cover  selected  sectors  or  policy  areas,  such  as  the 
environment  and  decarbonisation.  There  is  no  clear  monitoring  process  to  ensure  that  these  long-term 
objectives and subsequent action plans (e.g. the green public procurement national action plan for 2022- 
2027)  or  sectoral  strategies  are  aligned  and  that  these  objectives  are  achieved.  Moreover,  there  is  no 
widespread  use  of  standardised  assessment  or  selection  methodologies  for  projects,  although  external 
quality reviews are carried out on ad-hoc basis. 

Table A1.10:  Fiscal Governance Database Indicators 

The Country Fiscal Rule Strength Index (C-FRSI) shows the strength of national fiscal rules aggregated at the country level based 
on i) the legal base, ii) how binding the rule is, iii) monitoring bodies, iv) correction mechanisms, and v) resilience to shocks. The 
Medium-Term Budgetary Framework Index (MTBFI) shows the strength of the national MTBF based on i) coverage of the 
targets/ceilings included in the national medium-term fiscal plans; ii) connectedness between these targets/ceilings and the 
annual budgets; iii) involvement of the national parliament in the preparation of the plans; iv) involvement of independent fiscal 
institutions in their preparation; and v) their level of detail. A higher score is associated with higher rule and MTBF strength. 
Source: Fiscal Governace Database 

28 

2023MaltaEU AverageCountry Fiscal Rule Strength Index (C-FRSI)13.6014.52Medium-Term Budgetary Framework Index (MTBFI)0.720.73 
 
   
 
 
ANNEX 2: TAXATION 

This  annex  provides  an 
indicator-based 
overview  of  Malta’s  tax  system.  It  includes 
information on: (i) the tax mix; (ii) competitiveness 
and  fairness  aspects  of  the  tax  system;  (iii)  tax 
collection and compliance;  and (iv) aggressive tax 
planning. 

in  2023 

the  Maltese 

Malta’s  tax  revenues  as  a  percentage  of  its 
GDP  are below  the  EU average, with  greater 
reliance  on  corporate  taxes.  As  shown  in 
Table A2.1, 
tax  base 
measured  as  a  percentage  of  GDP  was  26.6%, 
significantly  below  the  EU  average  (39.0%).  Much 
of this difference can be attributed to Malta’s low 
reliance  on  labour  taxation,  which  constituted 
11.0%  of  its  GDP  in  2023,  compared  with  20.0% 
across  the  EU.  In  contrast,  corporate  taxation,  at 
4.2%  of  GDP,  was  1  pp.  higher  than  the  EU 
average  and  represented  almost  16%  of  Malta’s 
total  tax  revenues.  Revenues  from  consumption 
taxes as a percentage of GDP  were relatively low 
in  Malta  (8.9%  vs  10.5%  across  the  EU).  Also,  in 
recent  years,  Malta  experienced  a  significant 
decline in the share of environmental taxes, which 
dropped to 1.5% of GDP in 2023, down from 2.8% 
in 2010 (with an EU average of 2.0% in 2023 and 
2.5%  in  2010).  The  effective  carbon  rate is  lower 
than  the  EU  average,  suggesting  that  there  may 
be  potential  to  increase  the  role  of  taxation  in 
strengthening environmental sustainability. 

Graph A2.1: Tax revenue shares in 2023 

Source: Taxation Trends Data, DG TAXUD 

Some  features  of  Malta’s  corporate  tax 
system  help  to  attract  investment  but  also 
present  risks  of  aggressive  tax  planning.  In 
2023,  the  forward-looking  effective  average  tax 
rate  in  Malta  was  25.1%  (compared  with  around 
19%  for  the  EU  average).  This  represents  a 
significant decrease of 10 pps since 2010, one of 
the  largest  among  EU  Member  States.  However, 

29 

Malta  operates  a  full  imputation  system  that 
allows  shareholders  to  receive  refunds  of  part  of 
the  tax  paid  by  the  company,  to  prevent  double 
taxation.  In  practice,  the  design  of  Malta’s  refund 
system  allows  most  non-resident  shareholders  to 
claim a refund of 6/7 of the corporate tax paid in 
Malta,  reducing  the  effective  tax  rate  from  35% 
(the statutory corporate income tax rate) to 5%. In 
light  of  the  implementation  of  the  EU  Minimum 
Tax  Directive, discussions on  a  possible  reform  of 
the  Maltese  corporate  tax  system  are  underway. 
The combined  features of Malta’s tax system can 
result  in  double  non-taxation  for  certain  income, 
creating  risks  of  aggressive  tax  planning  (see 
below). In addition, Malta is one of the EU Member 
States with notional interest deduction (NID) rules 
in place, which align the tax treatment of the cost 
of equity with the cost of debt. 

Graph A2.2: Tax wedge for single and second 
earners, % of total labour costs, 2024 

The tax wedge for second earners assumes a first earner at 
100% of the average wage and no children. For the full 
methodology, see OECD, 2016, Taxing Wages 2014-2015. 
Source: European Commission 

The labour tax wedge in Malta is lower than 
the  EU  average  across  all  income  levels (36). 
The labour tax system is less progressive in Malta 
than  in  the  EU  average.  As  shown  in  Graph A2.2, 
the  labour  tax  wedge  in  Malta  in  2023  was 
significantly lower than the EU average for single 
people at various income levels. Second earners at 
67%  of  the  average  wage,  whose  spouses  earn 
the  average  wage,  also  face  a  tax  wedge  that  is 
below  the  EU  average.  At  167%  of  the  average 
income,  the  tax  wedge  is  lower  than  for  those 

(36)  The  tax  wedge  is  defined  as  the  sum  of  personal  income 
social-security 
taxes  and  employee  and  employer 
contributions  net  of  family  allowances,  expressed  as  a 
percentage of total labour costs (the sum of the gross wage 
and social-security contributions paid by the employer). 

51.226.921.941.333.425.3Tax revenue shares in 2023, Malta (outer ring) and EU (inner ring)Taxes on labourTaxes on consumptionTaxes on capital24.429.031.529.134.22025303540455050100150Tax wedge, % of total labour costsEarnings as % of the average wageSingle earner - MTSingle earner - EU averageSecond earner -  MTSecond earner -  EU average 
 
   
  
 
 
Table A2.1:  Taxation indicators 

(1) Forward-looking effective tax rate (KPMG).  
(2) A higher value indicates a stronger redistributive impact of taxation. 
(*) EU-27 simple average. 
(**) Forecast value for 2023. For more details on the VAT gap, see European Commission, Directorate-General for Taxation and 
Customs Union, VAT gap in the EU - 2024 report, https://data.europa.eu/doi/10.2778/2 476 549 
For more data on tax revenues as well as the methodology applied, see the Data on Taxation webpage, 
https://ec.europa.eu/taxation_customs/taxation-1/economic-analysis-taxation/data-taxation_en. 
Source: European Commission, OECD 

earning an average wage, which suggests that the 
lead  to  regressive 
Maltese  tax  system  may 
taxation.  In  2025,  the  tax  burden  of  taxpayers 
subject  to  personal  income  taxation  was  lowered 
by the adoption of widened tax bands. 

The  redistributive  impact  of  the  tax  and 
benefit system is limited compared to the EU 
average. Given the relatively low level of taxation 
and  the  modest  progressivity  of  Malta’s  tax 
structure,  the  contribution  of  Malta’s  tax  and 
benefit  system  to  ensuring  income  redistribution 
and  inequality  reduction  is  lower  than  the  EU 
average.  In  2023,  the  tax  and  benefit  system 
reduced  the  Gini  coefficient  by  5.5 points  on 
average,  while  the  EU  average  reduction  was 
7.7 points in the same year. In addition, Malta has 
no  net  wealth tax  or  similar  taxes  on  capital,  and 
no  inheritance,  estate  or  gift  taxes  (although 
stamp  duty  may  be  payable  on  inheritance  of 
certain  chargeable  assets).  Malta  has 
two 
preferential tax regimes to attract personal income 
taxpayers, 
certain 
characteristics  and  foreign  pensioners.  These 

targeting  workers  with 

regimes  include  some  harmful  features  in  terms 
of tax competition (37). 

Malta  continues  to  suffer  from  a  large  VAT 
compliance  gap.  For  2022,  the  VAT  compliance 
gap  was  estimated  at  EUR 415  million,  or  25.9% 
of  the  VAT  total  tax  liability,  well  above  the  EU 
average of 7%. Only one other Member State had 
a 
the 
larger  compliance  gap.  Furthermore, 
compliance gap, unlike what has been the case for 
the  EU  as  a  whole,  has  not  shown  a  clear 
downward  trend  in  recent  years  but  increased  by 
0.4  percentage  points  compared  with  2021.  The 
current  level,  despite  declines  in  2020  and  2021, 
remains above the 2018 mark (23.4%). 

In 
the 
terms  of  collection  efficiency, 
available  indicators  point  to  some  problems. 
As  of  the  last  available  date,  2023,  the  stock  of 
gross  outstanding  revenue  arrears  at  year-end 
reached  just  over  EUR 7 billion,  or  more  than  5% 
of GDP, with a notable increase of EUR 429 million 
over  the  previous  year.  This  amount,  which 
includes  all  revenue  arrears  and  not  just  tax 

(37)  For additional detail, see https://www.taxobservatory.eu/ 

www-site/uploads/2021/11/EU-Tax-Observatory-Report-3-
Tax-Competition-November-2021-3.pdf. 

30 

MTMedian (EU-27)2010202120222023202420102021202220232024Tax structureTotal taxes (including compulsory actual social contributions) (% of GDP)30.727.527.726.637.840.239.739.0Taxes on labour (% of GDP)9.811.011.311.019.820.520.120.0of which, social security contributions (SSC, % of GDP)5.44.94.94.712.913.012.712.7Taxes on consumption (% of GDP)11.99.09.48.910.911.210.910.5of which, value added taxes (VAT, % of GDP)7.06.06.56.16.87.37.47.1Taxes on capital (% of GDP)9.07.47.06.77.18.58.78.5Personal income taxes (PIT, % of GDP)5.77.27.57.38.69.69.49.3Corporate income taxes (CIT, % of GDP)5.54.74.54.22.22.93.23.2Total property taxes (% of GDP)1.00.80.80.81.92.22.11.9Recurrent taxes on immovable property (% of GDP)0.00.00.00.01.11.11.00.9Environmental taxes (% of GDP)2.81.71.61.52.52.42.12.0Effective carbon rate in EUR per tonne of CO2 equivalentsNANANA75.9NA86.0NA84.8Tax wedge at 50% of average wage (single person) (*)18.921.722.623.024.433.931.831.531.531.8Tax wedge at 100% of average wage (single person) (*)26.430.831.531.731.540.939.939.940.240.3Corporate income tax - effective average tax rates (1) (*)35.128.126.225.121.319.319.118.9Difference in Gini coefficient before and after taxes and cash social transfers (pensions excluded from social transfers) (2) (*)7.26.26.35.58.68.27.97.7Outstanding tax arrears: total year-end tax debt (including debt considered not collectable) / total revenue (in %) (*)140.0131.335.532.6VAT gap (% of VAT total tax liability, VTTL) (**)25.525.928.66.67.0MaltaEU-27Progressivity & fairnessTax administration & complianceBy tax baseSome tax types 
 
 
   
 
Graph A2.3: Foreign direct investment (FDI) flows, 
% of GDP, 2023 

arrears,  has  continued  to  increase  significantly  in 
the  years  since  2019,  and  the  vast  majority  of 
revenue  arrears  (5.9 billion)  are  considered  not 
collectable.  However,  the  amount  of  arrears 
actually  collected  has  also  increased  in  absolute 
terms,  from  330 million  to  438 million  over  the 
same  period.  Nevertheless,  as  a  percentage  of 
GDP, the amount of collected arrears decreased in 
2023. A large portion of the gross arrears balance, 
EUR 4.8  billion  (of  which  92%  are  deemed  not 
collectable), is attributed to the VAT (38). 

The  government  has  announced  a  series  of 
measures  aimed  at  increasing  the  efficiency 
of  tax  collection.  The  Malta  Tax  and  Customs 
Administration  adopted  a  2023-2025  strategy  to 
streamline  and  modernise  tax  administration.  An 
important  objective  of  the  plan  was  to  complete 
the integration of previously separate departments 
(e.g. customs). The plan also focused on creating a 
taxpayers’  office  and  developing  a 
large 
compliance  risk  management  framework.  The 
vision  behind  the  strategy  was  to 
improve 
relations  with  taxpayers  also  by  providing  more 
of 
(for 
services 
440 thousand taxpayers, more than 360 thousand 
no  longer  need  to  file  a  return).  The  strategy  is 
showing  signs  of  success:  thanks  to  nudging  and 
enforcement  measures,  filing  rates  for  individual 
taxpayers 
increased  from  60%  to  90%  for 
assessment year 2022 (39). 

example, 

upfront 

out 

Aggressive  tax  planning  has  been  identified 
by  the  Commission  as  a  key  issue  in  Malta. 
Previous  data  releases  suggested  that  companies 
were  using  Malta’s  tax  system  for  aggressive  tax 
planning. However, at the moment of drafting the 
present document, most of the relevant indicators 
produced  by  Malta’s  National  Statistics  Office 
(such  as  interest  and  dividend  flows  and  foreign 
direct investment  (FDI)  stock  held  through  special 
purpose  entities)  have  been 
classified  as 
confidential  and  are  therefore  not  available.  Still, 
available  data  on  FDI  flows  as  a  share  of  GDP 
show  exceptionally  high  FDI  inflows  and  outflows 
compared  with  the  EU  average,  as  shown  in 
Graph A2.3. 

Source: UNCTAD, https://unctadstat.unctad.org/datacentre/ 

Malta  has  committed  to  making  further 
progress  in  the  fight  against  aggressive  tax 
planning. Malta has taken important steps to curb 
aggressive tax planning practices. In particular, as 
part  of  the  implementation  of  the  RRP,  Maltese 
legislation  has  recently  been  amended  to  ensure 
that  transfer  pricing  reflects  the  arm’s  length 
principle.  However,  Malta  currently  has  no 
withholding  tax  on  outbound  interest,  royalty  and 
dividend  payments.  The 
introduction  of  new 
legislation in this area is a commitment under the 
RRP.  Furthermore,  the  treatment  of  resident  non-
domiciled  companies  may  result  in  double  non-
taxation  between  Malta  and  most  countries  with 
which  Malta  has  bilateral  tax  treaties.  The 
implementation  of  the  EU  Global  Minimum  Tax 
Directive,  expected  by  the  end  of  2029 (40),  will 
only  partially  resolve  this  issue,  as  it  will  only 
apply to large multinational enterprises. 

(38)  See National Audit Office, December 2024 Report, available 

at PublicAccountsDec2024.pdf. 

(39)  See MTCA Annual Report 2023, passim. 

(40)  The EU Global  Minimum Tax Directive, published in 2022 to 
incorporate the OECD’s Pillar Two rules, allows a delay in the 
adoption of certain provisions until 31 December 2029. 

31 

-75-50-250255075100MTEECYSEBGBEPLHRHULVPTLTCZELESDKROSIFRATDEITSKFIIENLLUFDI inward flowsFDI outward flows 
 
  
 
 
 
 
PRODUCTIVITY 
ANNEX 3: INNOVATION TO BUSINESS  

Malta’s  innovation  potential  is  hindered  by 
very  low  levels  of  R&D  investments  in  both 
the  public  and  the  private  sector,  affecting 
competitiveness.  Total  R&D  intensity  is  the 
second lowest in the EU (at 0.64% of GDP in 2023, 
vs  the  EU  average  of  2.24%)  and  has  been  on  a 
declining  trend  over the  last  decade.  According to 
the  European  Innovation  Scoreboard,  Malta  is  a 
‘moderate innovator’, performing at 88% of the EU 
average  in  2024 (41).  While  this  is  above  the 
its 
moderate 
performance is increasing at a slower rate than in 
the  EU  as  a  whole.  In  addition  to  very  low  R&D 
investments,  innovation  remains  hampered  by  a 
lack of human resources for R&I and limited public 
support  for  business  innovation.  Science-industry 
linkages  remain  limited,  despite  recent  measures 
to foster inter-sectoral collaboration. 

innovator 

(84.8%), 

average 

Science for an innovative ecosystem  

scientific 

excellence. 

Very  low  levels  of  public  investment  in  R&D 
continue  to  be  a  major  challenge  for  Malta, 
Public 
affecting 
investment  in  R&D  as  a  percentage  of  GDP 
increased  in  the  past  year,  but  is  currently  lower 
than it was 10 years ago (0.27% of GDP in 2023, 
vs  the  EU  average  of  0.72%).  This  impacts  the 
excellence  of  the  public  research  system.  Malta’s 
scientific output, as measured by the share of the 
country’s scientific publications, as a percentage of 
its  total  publication,  among  the  top  10%  most-
cited  worldwide,  remains  below  the  EU  average. 
The  number  of  researchers  per  thousand  active 
population  employed  by  the  public  sector  is  also 
quite  modest  (2.2  in  2022,  compared  to  the  EU 
average  of  4.2).  Malta’s  research  system  has  a 
good  level  of  internationalisation,  which  is  key 
given  its  geographical  specificities.  This  can  be 
seen  from  the  share  of  foreign  doctoral  students, 
which  has  significantly  increased  in  recent  years, 
and the proportion of international co-publications 
(69.4%  of  the  total  number  of  publications  in 

(41)  2024 European Innovation Scoreboard, country profile: Malta. 

The EIS provides a comparative analysis of innovation 
performance in EU countries, including the relative strengths 
and weaknesses of their national innovation systems (also 
compared to the EU average). 

. 

32 

2023,  which  is  higher  than  the  EU  average  of 
55.9%). 

Graph A3.1: Public expenditure on R&D as a 
percentage of GDP 

Source: Eurostat 

The need for a stronger governance to drive 
forward  the  R&I  agenda,  as  pointed  out  in 
the recommendations of the PSF peer review 
undertaken  in  2019 (42),  is  acknowledged  by 
the  Maltese  authorities.  In  July  2024,  Science 
Malta (Xjenza Malta) was officially launched as the 
successor  entity  to  the  Malta  Council  for  Science 
and Technology. The aim of the newly-established 
government  agency  is  to bring  together,  under  its 
responsibility, all activities related to research and 
including  policy  development  and 
innovation, 
national, 
implementation,  management 
European  and  international  financial  programmes 
and  space-related  initiatives,  thus  creating  a 
stronger  institutional  actor.  While  this  is  a  major 
step in the right direction, going forward it will be 
important to  assess  the  effects  of  this  reform  on 
the functioning of the Maltese R&I system. 

of 

Business innovation  

Malta has a dynamic business ecosystem, but 
innovation  activities  are 
limited  and 
companies  do  not invest  sufficiently in  R&D. 
The  country  has  a  lively  start-up  ecosystem, 
encouraged  by 
incubators  and 
the  multiple 
accelerators  providing  start-ups  with  mentorship, 

(42)  2019 peer review of the Maltese R&I system: 

https://ec.europa.eu/research-and-
innovation/en/statistics/policy-support-facility/peer-review-
maltese-research-and-innovation-system. 

0.10.20.30.40.50.60.70.8201220172020202120222023MaltaEU 
 
 
 
       
 
 
funding,  and  office  space (43).  The  start-up  sector 
is  supported  by  different  government  initiatives, 
including  ‘Start  in  Malta’,  which  aims  to  make 
Malta  the  birthplace  of  start-up  success  stories. 
Despite the dynamism of the business ecosystem, 
private  investment  in  R&D  (0.37%  in  2023) 
remains far below the EU average (1.49%). Malta 
performs modestly in the area of intellectual asset 
generation.  While  trademark  applications  were 
more  than  twice  the  EU  average  in  2024 (44), 
patenting  activity  (the  number  of  patents  filed 
under the Patent Cooperation Treaty) is below the 
EU  average,  despite  some  improvement  in  recent 
years. According to the European Investment Bank 
(EIB)  investment  survey (45),  only  3  in  10  Maltese 
firms 
introduced  new 
products,  processes  or  services  as  part  of  their 
investment  activities 
in  2022.  A  promising 
exception is the ICT sector. It is larger than the EU 
average (10.26% vs 5.5% in gross value added in 
2021), and its R&D business expenditure accounts 
for  38.19%  of  total  R&D  expenditure (46).  This 
sector  therefore  has  potential  to  drive  additional 
innovation activities in Malta. 

(30%)  developed  or 

Graph A3.2: Business expenditure on R&D as a 
percentage of GDP 

Source: Eurostat 

only 

some 

Public  support  for  business  R&D  remains 
limited,  with 
small-scale 
initiatives  in  place.  Total  public  support  for 
business R&D has been decreasing over the years, 
from  0.04%  of  GDP  in  2010  to  0.010%  in  2022. 
Direct  support  (i.e.  through  grants)  stood  at 
0.010% in 2022, against the EU average of 0.1%. 

to  promote  EU 

Small  and  targeted  actions  are  in  place  to  help 
business accessing funds, including European ones. 
For  example,  a  cooperation  agreement  was 
recently  set  up  between  the  two  government 
entities,  Servizzi  Ewropej  f’Malta  (SEM),  a  public 
funding 
agency  entrusted 
opportunities, and Business First, the Government’s 
main point of contact for the business community 
and  for  aspiring  entrepreneurs.  As  part  of  this 
cooperation,  SEM  officials  will  provide  Business 
First employees with training on European funding 
opportunities  for  businesses (47).  Going  forward, 
expanding  and  diversifying  support  schemes  for 
business innovation will be key. 

to 

of 

the 

have 

taken 

advanced 

adoption 

it 
Malta  enterprises  perform  well  when 
digital 
comes 
technologies. The country performs above the EU 
average in terms of basic digital intensity for SMEs 
(81.28% vs 72.91%) and the share of enterprises 
digital 
up 
that 
technologies. In  artificial  intelligence  and  cloud 
technology,  respectively,  Malta  boasts  rates  of 
17.30%  and  58.19%,  vs  13.48%  and  38.86%  in 
the  EU,  whereas  in  data  analytics  the  country  is 
close  to  the  EU  average  (35.59%  vs  33.17%). To 
support  the  further  adoption  and  development  of 
digital 
technologies,  Malta  has  allocated  a 
significant  part  of its  recovery  and  resilience plan 
to digitalisation. One of the main measures it has 
adopted  to  reach  the  cloud  target  is  the  ‘SME 
digitalisation  scheme’,  which  seeks  to  support 
digitalisation  investment  initiatives  by  SMEs  in 
several economic sectors. The scheme is expected 
to  contribute  directly  to  the  uptake  of  cloud 
computing  and  other  related  technologies.  It  is 
crucial  that  businesses  step  up  the  adoption  of 
cloud  computing,  which  supports  the  deployment 
of other technologies, such as artificial intelligence 
and  edge  nodes,  both  associated  with  a  Digital 
Decade target (48). 

Malta  has made  efforts  to  foster  academia-
remains  a 
business  cooperation,  which 
challenge  despite  encouraging  first  results. 
co-
The 

share  of  public-private 

scientific 

(43)  2024 European Innovation Scoreboard, country profile: Malta. 

(47)  SEM - Ftehim ta’ koperazzjoni bejn Servizzi Ewropej f’Malta 

(SEM) u Business First Ltd. 

(44)  2024 European Innovation Scoreboard, country profile: Malta. 

(48)  The Digital Decade policy programme sets out a pathway for 

(45)  EIB Investment Survey - Malta. 

(46)  Eurostat, ICT sector size and R&D in ICT sector, all data from 

2021. 

the EU’s digital transformation, including concrete 
commitments from Member States to jointly achieve 
objectives (e.g. competitiveness, resilience, sovereignty) and 
digital targets by 2030. 

33 

0.10.61.11.6201220172020202120222023MaltaEU 
     
 
 
Innovation, 

publications has been steadily increasing in recent 
years,  reaching  8.4%  of  the  total  number  of 
publications,  above  the  EU  average  of  7.7%. 
However,  while  it  has  been  slightly  improving, 
public  R&D 
financed  by  businesses  as  a 
percentage of GDP remains quite low. This may be 
a  sign  that  businesses  are  reluctant  to  engage  in 
contractual  research  with  public  labs.  Malta  has 
taken  the  first  steps  towards  setting  up  a  public-
private  post-doctoral  fellowship  scheme (49).  This 
scheme is promoted by the Ministry for Education, 
Sport,  Youth,  Research  and 
in 
collaboration with the University of Malta and the 
Malta  Chamber  of  Commerce,  Enterprise  and 
Industry.  The  scheme  will give  PhD  graduates  the 
opportunity  to  join  local  businesses  to  conduct 
integration  with 
fostering 
research, 
businesses  and  strengthening  science-business 
linkages.  However,  the  scheme  remains  limited  (a 
new  call  was  published  in  2024,  following  the 
launch  in  2022).  It  is  too  early  to  assess  its 
effectiveness, but if the scheme gives good results 
it  could  be  beneficial  to  expand  it  to  achieve  a 
greater  impact.  Moreover,  the  University  of  Malta 
tries  to  promote  technology  transfers  by  hosting 
the  Centre  for  Entrepreneurship  and  Business 
Incubation, 
strengthen 
entrepreneurship.  The  centre  also  houses  the 
TAKEOFF  incubator,  created  to  assist  start-up 
firms (50).  Furthermore, 
the  Malta  Enterprise 
Agency 
and 
assistance 
consultancy  services 
to  Maltese  businesses 
interested in collaborating with universities. 

financial 

provides 

thereby 

which 

seeks 

to 

Financing innovation  

Innovative  companies  experience  difficulties 
in  accessing  finance.  Venture  capital  financing 
remains  underdeveloped  and  has  been  declining 
over  the  last  decade  (0.004%  of  GDP  in  2023, 
down from 0.028% in 2014 and well below the EU 
average of 0.078%). Moreover, most resources are 
devoted to the start-up stage, while seed and later 
stages  are  not  well  enough  funded.  (For  more 
details on these topics, see Annex 4). 

(49)  Applications reopen for the Post-Doctoral Fellowship Scheme 

- Newspoint - University of Malta. 

(50)  View of Technology Transfer Offices for Better Management 
of The University-Industry Collaboration: Comparison of 
Slovenia, Italy, And Malta. 

Innovative talent 

The  lack  of  human  resources  remains  a  key 
challenge, for both the private and the public 
sector.  Shortage  of  staff  is  often  reported  to  be 
one  of  the  major  obstacles  for  businesses,  SMEs 
especially.  The  number  of  new  graduates  in 
science  and  engineering  per  thousand  population 
aged 25-34 remains critically low, at 5.8 in 2022, 
which  is  well  below  the  EU  average  of  17.6  (see 
also Annex 12). This also explains the low number 
of researchers employed in both the public and the 
private  sector.  Such  shortages  constrain  Malta’s 
and 
ambitions 
and 
sustainability 
competitiveness.  Malta  has  requested  technical 
support  instrument  (TSI)  support  to  tackle  this 
challenge. This ongoing TSI project aims to provide 
technical  support  in  the  area  of  skills  policy,  with 
the  objective  of  developing  a  national  skills 
strategy (51)  using  the  maritime  sector  as  a  pilot. 
Through  this  project,  Malta  will  receive  an 
assessment of its skills systems based on EU good 
practice,  along  with  concrete  recommendations 
implementable in the short to medium term. 

productivity 
innovation 

strengthen 
foster 

and 

to 

Strategy 

2024–2030 

Entrepreneurship education is embedded at certain 
levels  of  the  Maltese  school  system;  however,  it 
lacks  a  comprehensive  strategy  and  adequate 
monitoring  and  evaluation  systems  of  students’ 
competencies.  Entrepreneurship  education  is  a 
transversal  skill  which  is  compulsory  in  Maltese 
schools, and it is promoted in higher education for 
instance  through 
incubators.  Malta’s  National 
addresses 
Education 
entrepreneurship  competences  in  its  Growth  and 
Empowerment 
identifies 
transversal  skills—such  as  creativity,  innovation, 
critical  thinking,  and  entrepreneurial  mindset—as 
essential  for  learner  development  in  a  fast-
changing  world.  The  Strategy  also  commits  to 
structured  and  efficient 
setting  up  more 
monitoring  and  evaluation  systems.  Furthermore, 
entrepreneurship education is part of the National 
Research  and  Innovation  Strategic  Plan  2023-27 
which  expresses  the  need  to  promote  innovation 
culture  among  youth.  While  these  developments 
are  promising,  Malta 
the 
effectiveness of the programmes, and it does not 

lacks  data  on 

pillar. 

pillar 

This 

(51)  Developing a skills strategy for Malta and its maritime sector 

- European Commission. 

34 

 
 
 
Table A3.1:  Key innovation indicators 

(1) EU average for the last available year or the year with the highest number of country data. 
Source: Eurostat, DG JRC, OECD, Science-Metrix (Scopus database), Invest Europe, European Innovation Scoreboard 

have a comprehensive strategy to further develop 
these entrepreneurship competences.(52)    

(52)  See Annex 4. 

35 

R&D intensity (gross domestic expenditure on R&D as % of GDP)0.790.530.60.60.580.64:2.243.45Public expenditure on R&D as % of GDP0.340.180.220.220.220.27:0.720.64Scientific publications of the country within the top 10% most cited publications worldwide as % of total publications of the country 4.24.98.48:::9.612.3Researchers (FTEs) employed by public sector (Gov+HEI) per thousand active population1.51.71.82.22.22.2:4.2:International co-publications as % of total number of publications50.656.458.36464.169.4:55.939.3Business enterprise expenditure on R&D (BERD) as % of GDP0.460.340.380.390.360.37:1.492.7Business enterprise expenditure on R&D (BERD) performed by SMEs as % of GDP0.380.30.340.290.29::0.40.3Researchers employed by business per thousand active population2.32.5222.21.9:5.7:Patent applications filed under the Patent Cooperation Treaty per billion GDP (in PPS €)0.51.31.81.61::2.8:Employment share of high-growth enterprises measured in employment (%)14.75:19.36::::12.51:SMEs with at least a basic level of digital intensity% SMEs (EU Digital Decade target by 2030: 90%)::::77.89:81.2872.91:Data analytics adoption% enterprises (EU Digital Decade target by 2030: 75%):::::35.59:33.17:Cloud adoption% enterprises (EU Digital Decade target by 2030: 75%):::47.48:58.19:38.86:Artificial intelligence adoption% enterprises (EU Digital Decade target by 2030: 75%):::10.16:13.1717.313.48:Public-private scientific co-publications as % of total number of publications5.35.86.37.47.88.4:7.78.9Public expenditure on R&D financed by business enterprise (national) as % of GDP0.0040.0010.0040.0030.006::0.050.02Total public sector support for BERD as % of GDP0.0870.0410.0100.0100.010::0.2040.251R&D tax incentives: foregone revenues as % of GDP0.0570.0240000:0.1020.141BERD financed by the public sector (national and abroad) as % of GDP0.030.0170.0100.0100.010::0.1000.110Venture capital (market statistics) as % of GDP, total (calculated as a 3-year moving average)0.02200.0060.0060.0050.004:0.078:Seed stage funding share (% of total venture capital)0073.6000:7.3:Start-up stage funding share (% of total venture capital)100026.4100100100:44:Later stage funding share (% of total venture capital)000000:48.7:New graduates in science and engineering per thousand population aged 25-3410.97.85.45.35.8::17.6:Graduates in the field of computing per thousand population aged 25-344.353.343.4::3.6:2023EU average (1)USA2024Headline indicatorScience and innovative ecosystemsR&D investment & researchers employed in businessesPublic support for business innovationInnovation outputsDigitalisation of businessesAcademia-business collaborationFinancing innovationInnovative talent20222021Malta201220172020 
 
 
     
 
ANNEX 4: MAKING BUSINESS EASIER 

Despite flourishing economic growth, Maltese 
improved 
businesses  would  profit  from 
business  environment  conditions.  Malta 
is 
improving  its  connectivity  infrastructure  in  line 
with  the  EU’s  Digital  Decade  targets.  However, 
regulatory restrictions in professional services and 
administrative  burdens  impact  business  activities. 
Additionally,  firms  encounter  investment  barriers 
due to skill shortages and uncertainty. 

Economic framework conditions 

Staff  availability  and  uncertainty  about  the 
future  weigh  on  business  activity  and 
investments.  According  to  the  EIB  Investment 
Survey (53),  the  primary  obstacles  to  long-term 
investments  for  Maltese  businesses  are  the 
availability  of  skilled  staff  (90%)  (see  Annex  10), 
and uncertainty about the future (82%). Employee 
shortages  are  specifically  a  concern  for  small 
businesses (54). In services, which have a share of 
83%  and  86%  in  employment  and  production 
(GVA) respectively, labour shortages are highest in 
tourism-related  services,  such  as  entertainment 
activities 
tour  operators/travel 
agencies  (54%),  but  also  in  knowledge  intensive 
services  such  as  computer  programming  (41%) 
and  services 
financial  activities 
(69%) (55).  Businesses  remain  hesitant  to  invest 
because of uncertainty, with only 14% planning to 
expand  their  business  in  the  next  12  months (56). 
According to the European Commission’s economic 
uncertainty 
the 
services sector uncertainty is increasing. 

(EUI)  especially 

(over  95%), 

indicator 

related 

to 

in 

Foreign  investors  still  consider  Malta  as  an 
attractive  investment  destination,  although 
shortages  of  skilled  staff,  infrastructure 
problems and political transparency concerns 
have  an 
investors  planning. 
According  to  a  survey  of  managers (57),  54%  of 

impact  on 

(53)  European  Investment  Bank,  EIB  investment  Survey  2024, 
based on interviews carried out between April and July 2024. 

(54)  SME chamber, SME barometer, different vintages (2023-

2024). 

(55)  EC, ECFIN Business and Consumer Survey, 2024. 

(56)  SME chamber, SME barometer, different vintages (2023-

2024). 

(57)  EY Attractiveness Survey Malta, 20 years on, 2024. 

investors  consider  Malta 

foreign 
to  be  an 
attractive  location  (59%  in  2023)  and  38%  of 
respondents  have  expansion  plans  for 
their 
businesses.  However,  workforce 
skills  and 
availability  as  well  as  the  political  and  regulatory 
environment  are  seen  as  challenges,  especially  in 
the service sector. Financial services and insurance 
activities  represent  the  highest  share  of  foreign 
investments  (over  95%  of  new  projects  in  2023). 
As these sectors require highly skilled staff, quality 
living  conditions  are  needed  to  attract  European 
and  foreign  nationals,  yet  51%  of  respondents 
considered the increase of housing and living costs 
(due also to the growing population) as a barrier to 
Additionally, 
international 
attracting 
the  stability  and 
respondents 
reported 
legal  and 
transparency  of  Malta’s  political, 
regulatory 
weakened 
significantly.  In  2015,  it  was  rated  positively  by 
85%  of  participating  firms,  but  by  2021,  it  had 
dropped  to  17%,  making  it  the  lowest  rated 
attractiveness  parameter. By  2024, it  had  slightly 
improved  to  29%,  but  only  ranked  among  the 
bottom  three  attracting  factors  for  investors  in 
Malta. 

environment 

talent. 

that 

had 

Access  to  finance  and  late  payments  from 
business-to-business  risk  disrupting  firms’ 
cash  flows.  The  availability  of  finance  is  an 
obstacle  to  investment  for  55%  of  Maltese  firms 
(above the EU average of 45%) (see Annex 5) (58). 
late  payments  from  business-to-
Additionally, 
business  represent  an  ongoing  issue  for  about 
23% of SMEs (59). Comparing the issue with other 
EU Member States, for 63% (against  46% for the 
EU average) of respondents to the Safe Survey in 
Malta, late payments from private entities pose a 
regular  or  occasional  issue.  Late  payments  from 
public  entities  are 
regularly  or  occasionally 
problematic  for  22%  of  those  surveyed  (against 
17% for the EU average) (60). 

Overpopulation and infrastructure issues are 
impacting business activities and investment 
to  a  greater  extent  than  in  the  rest  of  the 
infrastructure  and 
EU.  Shortcomings 

local 

in 

(58)  European  Investment  Bank,  EIB  investment  survey  2024, 
based on interviews carried out between April and July 2024. 

(59)  SME chamber, SME barometer, different vintages (2023-

2024). 

(60)  European  Commission  and  European  Central  Bank,  2023 
SAFE  survey.  Survey  conducted  between  September  and 
October 2024. 

36 

 
 
 
 
 
traffic  congestion  have  a  major 
impact  on 
business  activities.  A  significant  majority  of 
businesses  in  Malta  (72%  vs  the  EU  average  of 
45%)  see  transport  infrastructure  as  an  obstacle 
to  investment.  This  share is  one  of  the highest  in 
Europe, tied with Greece (61). The rapidly increasing 
population and reliance on private cars for mobility 
lead to recurrent traffic congestion, which requires 
political  action  such  as  urban  planning  initiatives, 
investment  in  sustainable  transport  infrastructure 
and  enforceable  measures.  In  its  recovery  and 
resilience  plan,  Malta  aims  to 
improve  the 
sustainability of transport through measures such 
as  providing  free  public  transport  and  increasing 
the number of electric private vehicles. 

Graph A4.1: Making Business Easier: selected 
indicators 

fixed  broadband 

at  69.6%,  slightly  above  the  EU  average  of  64%. 
The  share  of  fast  fixed  broadband  take-up  is 
increasing but remains limited. In 2023, the share 
of 
subscriptions  ensuring 
connectivity speeds equal to or above 1 Gbps was 
11.7%  (up  from  6.8%  in 2022  and  slightly  below 
the  EU  average  of  18.5%).  In  terms  of  mobile 
connectivity, 
achieved 
nationwide by one of the three operators in 2022, 
while the other two mobile operators reached that 
threshold  towards  the  end  of  2023,  in  line  with 
spectrum  assignment  conditions.  However,  5G 
coverage  in  the  3.4-3.8  GHz  bands  remains 
limited, i.e. 24.7% versus 50.6% at the EU level. 

coverage  was 

5G 

or 

infrastructure 

service  unavailability, 
denial-of-service 

resilience  of 
On  digital 
is 
in  Malta 
cybersecurity  among  firms 
decreasing  while  businesses 
in 
invest 
preventive  security  measures.  The  percentage 
of  enterprises  experiencing  ICT  security  incidents 
such  as 
to 
leading 
ransomware 
attacks, 
increased in Malta, from 3.4% in 2022 to 5.2% in 
2024.  It  remains  above  the  EU  average  (3.4%) 
relatively  poor  security  measures. 
reflecting 
However,  around  94%  of  enterprises  have 
implemented  some  form  of  ICT  security  measure 
(EU  average  of  92.8%)  and  62.5%  of  Maltese 
in  raising 
enterprises  have  actively  engaged 
employee  awareness  of  ICT  security  obligations, 
which  is  higher  than  the  EU  average  of  59.97%. 
Overall,  Malta’s  progress  in  digital  infrastructure 
and  connectivity  demonstrates  its commitment  to 
meeting the EU’s Digital Decade objectives, though 
continued  efforts  are  necessary  to  ensure  both 
inclusivity and resilience. 

Share of (1) enterprises, (2) average intra-EU exports and 
imports in GDP, (3) firms, (4) SMEs. 
Sources: (1) EIB IS, (2) Eurostat, (3) ECFIN BCS, (4) SAFE 
survey. 

in 
Malta  has  made  significant  strides 
infrastructure, 
digital 
enhancing 
particularly in connectivity. FTTP(62) coverage is 

its 

(61)  European Investment Bank, EIB investment Survey 2024, 

based on interviews carried out between April and July 2024. 

(62)  FTTP stands for ‘Fibre to the Premises’ and describes the 

Regulatory and administrative 
barriers 

Malta  advances  in  providing  public  services 
for  businesses  online,  however,  Maltese 
businesses  face  administrative  pressure  and 
regulatory  burden.  The  OECD  economy-wide 
indicator 
Product  Market  Regulation 
improved  for  Malta  between  2018  (1.98)  and 
2024  (1.81)  but  together  with  Luxembourg  the 
country  is  one  of  the  weakest  performing  EU 

(PMR)(63) 

network infrastructure consisting of weatherproof fibre optic 
cable. 

(63)  OECD PMR, https://www.oecd.org/en/topics/product-market-

regulation.html, cut-off date for Malta: 01.01.2024. 

37 

63.122.39.264.016.947.916.61041.624.5010203040506070from private entitiesfrom public entitiesMaterial shortages as afactor limiting productionEU Trade IntegrationRegulation as a majorobstacle to investment(4) Late payments(3) Shortages(2) SingleMarket(1) RegulatoryburdenShare (%)EU27MT 
     
 
 
countries (64).  It  ranks  lowest  for  the  PMR  sub-
components ‘administrative and regulatory burden’ 
‘barriers  to  trade  and 
(for  businesses)  and 
investment’.  Obtaining 
licences  and  permits 
represent a major barrier for businesses according 
to  the  survey.  In  order  to  simplify  obtaining 
licenses,  Malta’s  government  streamlined  the 
current  requirement  and  introduced  a  one-stop-
shop  for  starting  a  business.  Additionally,  the 
Maltese  authorities  are  currently  establishing  a 
Business Portal, which will integrate the ‘once-only 
principle’.  

programmes 

The  number  of  business  registrations  in 
Malta  is  on  a  decreasing  trend  in  the  past 
three  years  and  although  there  are  several 
promoting 
initiatives  and 
entrepreneurship  and  entrepreneurial  skills, 
a national strategy is so far missing. In 2024, 
business  registrations  declined  further  with  a 
decrease  of  up  to  20%  recorded  since  2021.  The 
most affected sectors are services sectors such as 
wholesale  and  retail  trade,  transportation  and 
storage. A range of initiatives have been set up to 
promote  entrepreneurship  by  the  University  of 
Malta and the Ministry for the Economy, Enterprise 
and 
courses, 
programmes,  and  funding  for  education  projects. 
Informal and non-formal education initiatives such 
as  ‘Take  Off’  by  the  Centre  for  Entrepreneurship 
and Business Incubation or the Skills Development 
Scheme  by  Malta  Enterprise,  also  foster  a  culture 
of  entrepreneurship.  Despite  these  initiatives,  a 
comprehensive and systemic approach appears to 
be  lacking,  with  some  initiatives  seeming  to  be 
ad hoc  or  dependent  on  individual  school  or 
college initiatives, rather than being mainstreamed 
or widely integrated into the education system(65). 

Strategic 

including 

Projects, 

Changes  in  the  insolvency  framework  in 
Malta  were  implemented,  further  progress 
needs  to  be  monitored.  According  to  the 
OECD (66),  Malta  scored  low  in  different  areas  of 
its  insolvency  regulations,  in  different  areas:  the 
treatment  of  failed  entrepreneurs,  prevention  and 
streamlining,  as  well  as 
tools. 
Changes  in  the  Malta’s  legislation  in  2022  were 
aimed at improving long-standing shortcomings in 

restructuring 

and 

revising 

insolvency 

the  Maltese 
restructuring 
the  bankruptcy 
procedures.  Besides 
procedure,  an  early  warning  mechanism  was 
introduced,  and 
role  of  an 
‘insolvency  practitioner’  was  defined.  Since  these 
changes  only  entered  into  force  in  2024,  any 
potential effects needs to be monitored. 

the  supporting 

Tax  compliance  costs  are  below  the  EU 
average (See Annex 2). Malta ranks as one of the 
countries with the lowest compliance costs in both 
absolute  terms  and  as  a  share  of  tax  revenue, 
while it is close to the median when using share of 
turnover.  For  Maltese  SMEs,  the  total  cost  of  tax 
compliance  across  direct  and  indirect  taxes  stood 
at 1.6% of turnover on average in 2019, below the 
EU  aggregate  mean  of  1.9%  (67).  This  analysis 
might  be  impacted  by  the  size  of  the  country. 
Specific  incentives  for  micro-firms  might  also 
affect  the  overall  tax  compliance  costs.  At  the 
same  time,  the  complexity  of  taxation  and 
reporting requirements weigh on firms’ compliance 
costs. The tax system and tax incentives in general 
are  still  attracting  business  to  Malta  but  to  a 
decreasing extent (68). 

Single market 

Malta  is  relatively  well  integrated  in  the 
Single Market, especially in trade in services. 
Malta’s  trade  integration  in  services  amounts  to 
50.8% of GDP in 2024, well above the EU average 
of  15%,  while  goods 
trade  activities  are 
structurally relatively low. However, manufacturing 
is  Malta’s  largest  export  sector.  Tourism-related 
services  represented  43%  of  services  exports  in 
2023,  followed  by  ‘other  business  services’  such 
as administrative and support services (23%)  and 
transportation 
island  has  strong 
economic  ties  in  trade  and  investments  to  Italy 
and Germany, but also to the United Kingdom and 
Asian countries such as Japan. (69) 

(17%).  The 

Administrative  barriers  to  trade  have  been 
lowered  in  recent  years,  but  there  is  scope 
for improvements.  According to the OECD  trade 

(64)  The EU average PMR is at an index value of 1.24. 

(67)  Tax  compliance  costs  for  SME,  European  Commission, 

(65)  See Annex Innovation to Business. 

(66)  OECD,  Enhancing 

insolvency 

frameworks 

to  support 

1/2022, p. 38. 

(68)  EY Attractiveness Survey Malta, 20 years on, 2024. 

economic renewal, 8/12/2022. 

(69)  Eurostat. 

38 

 
 
 
facilitation  indicator,  Malta's  performance  has 
improved with the score falling from 1.23 in 2019 
to  0.93  in  2023,  still  above  the  EU  average  of 
0.69 (70). A closer look at the indicator components 
shows  that  simplification  of  formal  procedures 
information  would 
and  providing  transparent 
improve the efficiency of border activities. 

Exclusive  rights  for  these  professions  are  still  in 
the  development  of 
place,  which  hinders 
innovative services. 

Public procurement 

to 

single 

is  performing  well 
enacting 

Malta 
in  fully  and 
market 
accurately 
legislation,  as  reflected  in  different  single 
market  enforcement 
indicators,  although 
there  is  scope  for  improving  transposition 
resolving  SOLVIT(71)  cases. 
delays  and 
and 
According 
Single  Market 
the 
Competitiveness  Scoreboard (72),  Malta 
ranks 
among  the  top-performing  Member  States  in 
terms  of  timely  transposition  of  directives  (0.5% 
vs  0.8%,  EU  average)  and  conformity  of 
transposition with a rate of 0.6% compared to the 
0.9% EU average. Malta has the shortest delays in 
transposition  (4  months  vs  11.9  months,  EU 
average)  of  any  Member  State,  which  is  a  huge 
improvement  on  last  year  (when  it  ranked  24th 
out  of  27  Member  States).  Within  the  SOLVIT 
system  for  resolving  EU  rights  for  business  and 
individuals, Malta solved 77.8% of SOLVIT cases it 
handled  as  lead  centre  in  2024  (EU  average, 
84.9%). 

to 

the 

According 

Several  professional  services  are  more 
strictly  regulated  than  in  the  other  EU 
countries. 
European 
Commission (73)  and  the  OECD (74),  regulatory 
barriers remain higher in Malta than in comparable 
countries  for  lawyers  and  accountants.  Those 
barriers  are  mostly  related  to  market  entry  and 
conduct 
changes 
concerning  architects  and  engineering,  businesses 
still  report  the  lack  of  staff  as  one  factor  which 
limits  their  business  activities  (50%  in  2024) (75). 

regulation.  Despite 

legal 

(70)  See  OECD  Product  Market  Regulation  indicators.  Low  level 
indicators: Barriers to trade- facilitation and tariff barriers. 

(71)  SOLVIT  is  a  service  to  help  businesses  and  citizens  in  the 
event of an EU Member State other than their own breaching 
EU law. 

(72)  Single Market Scoreboard. 

(73)  EC, 

Communication 

reform 
recommendations  for  regulation  in  professional  services, 
COM(2021) 385. 9/7/2021. 

updating 

the 

on 

there 

is  still 

in  public 
Despite  considerable  progress 
procurement, 
for 
room 
improvement.  Malta  completed  successfully  the 
transition  to  the  new  eForms  system.  The  rate  of 
negotiated procedures without publication stood at 
5%  in  2024,  which  is  below  the  EU  average  of 
about  7%.  However,  a  significant  proportion  of 
contracts  (33%)  were  unsuccessful(76).  Dividing 
tenders into  lots  would  help  SMEs in  particular  to 
participate in tender procedures. 

The  use  of  socially  responsible  public 
procurement  (SRPP)  in  Malta  is  still  very 
limited  and  in  its  very  early  stages.  Despite 
the opportunities provided by the legal framework, 
some  provisions,  such  as  the  possibility  of 
reserving contracts for specific economic operators 
in  the  social  field,  have  never  been  used.  There 
remains  limited  awareness  and  understanding  of 
SRPP  and  its  potential  to  achieve  social  goals. 
Prioritising  national  strategies,  targeted  guidance, 
collaboration,  and 
the  development  of  pilot 
projects will be essential. 

Businesses  raise  concerns  about  public 
procurement  procedures.  In  a  national  survey, 
unfair  competition  was  mentioned  by  23%  of 
respondents as the second most common concern 
businesses  face.  Businesses  also  raised  concerns 
about  good  governance  issues  and  corruption (77). 
Transparency  measures  could  be  implemented  to 
improve Malta’s public procurement infrastructure. 
Although  the  OECD  PMR  sub-indicator  on  public 
procurement (78) indicate that tender procedures in 
Malta are favourable to competition in legal terms, 
the  PMR  indicator  value  did  not  actually  change 
between 2019 and 2023. 

(76)  No tenders or requests to participate were received or all 

were rejected; or other reasons of not successful contracting. 

(74)  OECD, Product Market Regulation (PMR) indicators: How does 

(77)  SME barometer, Q3 2024. 

Bulgaria compare? OECD, 2024. 

(75)  EC, Business and Consumer Survey. 

(78)  See  OECD  Product  Market  Regulation  indicators.  Low  level 
indicators: Barriers to trade facilitation and tariff barriers. 

39 

 
 
 
Public  procurement  is  not  used  enough  to 
encourage innovation. To date, Malta has yet to 
put  a  specific  focus  on  innovation  procurement. 
Current legislation allows public procurement to be 
used  for  innovation  and  optional  training  on  the 
subject  is  offered  occasionally  to  business  and 
public  procurement  officials.  However,  as  long  as 
policy  guidance  and  strategic  planning  are  not  in 
place,  public  entities  will  be  reluctant  to  make 
advances in the public procurement of innovation. 

Malta  encourages  sustainable  procurement, 
but despite an integrated approach, the price 
criteria  still remains  critical  in public tender 
procedures.  The  Maltese  authorities  have  made 
progress  with  the  green  public  procurement 
national  plan  as  well  as  the  2050  sustainable 
development 
contains 
sections  on  green  procurement.  However,  several 
challenges persist,  including  limited  staff  capacity 
and  the  risk  aversion  of  public  procurement 
agents,  who  are  deterred  by  concerns  over 
potentially  higher  prices  and  the  uncertainty  of 
available offers (79).  

strategy,  which  also 

(79)  EC,  Article  83-  public  procurement  monitoring  reporting,  – 

2021-2023. 

40 

 
 
Table A4.1:  Making Business Easier: indicators. 

*Change in methodology in 2024: reporting late payments from public and private entities separately. 
**The 2024 data on single bids is provisional and subject to revision. Please note that approximately 100% of the total data is 
currently missing, which may impact the accuracy and completeness of the information. Due to missing data, the EU average of 
direct awards data is calculated without Romania. 
Sources: (1) ECFIN BCS, (2) Eurostat, (3) EIB IS, (4) Digital Decade Country reports, (5) Intrum Payment Report, (6) SAFE survey, 
(7) OECD, (8) up to 2023: Single Market and Competitiveness Scoreboard, 2024: Public procurement data space (PPDS). 

41 

POLICY AREA20202021202220232024EU-27 average9.047.341.524.09.210.016.227.133.144.324.320.21.72.43.03.23.52.320.418.327.130.329.613.4-100100100-78.8-48.056.269.6-64.0-20.0100100-89.3Regulatory environment16.215.714.214.916.924.50.00.00.00.015.60.00.00.00.015.1from public or private entities in the last 6 months73.864.460.976.0--from private entities in the previous or current quarter----63.147.9from public entities in the previous or current quarter----22.316.663.359.863.963.264.041.6-----0.0500.71.10.40.60.50.80.81.00.60.40.60.991.793.886.790.077.884.924.019.015.013.015.024.41591515--1191357.0MaltaINDICATOR NAMEInvestment climateShortagesMaterial shortage, firms facing constraints, %1Labour shortage, firms facing constraints, %1Vacancy rate, vacant posts as a % of all available ones (vacant + occupied)2InfrastructureTransport infrastructure as an obstacle to investment, % of firms reporting it as a major obstacle3VHCN coverage, %4FTTP coverage, %45G coverage, %4Reduction of regulatory and administrative barriersImpact of regulation on long-term investment, % firms reporting business regulation as a major obstacle3Late paymentsPayment gap - corporates B2B, difference in days between offered and actual payment5Payment gap - public sector, difference in days between offered and actual payment5Share of SMEs experiencing late payments, %*6Single MarketIntegrationEU trade integration, % (Average intra-EU imports + average intra EU exports)/GDP2EEA Services Trade Restrictiveness Index7ComplianceTransposition deficit, % of all directives not transposed8Conformity deficit, % of all directives transposed incorrectly8SOLVIT, % resolution rate per country8Number of pending infringement proceedings8Competition and transparency in public procurementSingle bids, % of total contractors**8Direct awards, %**8Public procurement 
 
 
      
 
ANNEX 5: CAPITAL MARKETS, FINANCIAL STABILITY AND ACCESS TO FINANCE 

last  decade,  the  bulk  of  the  private  net  savings 
were  privately  invested  in  the  domestic  economy 
(46%  of  the  total)  or  abroad  (41%  of  the  total), 
while the government’s fiscal deficits absorbed the 
remaining 13%.  

Graph A5.1: Net savings-investment balance 

Source: AMECO. 

Consistent  with  its  regular  position  of  a  net 
annual creditor to the rest of the world, the 
Maltese  economy  strengthened  its  positive 
net  international  investment  position.  Malta 
has  an  established  international  reputation  as  a 
jurisdiction  that  provides 
legal  protection  for 
establishing businesses and rerouting investments. 
Due  to  that  national  particularity,  as  of  Q3  2024, 
total  assets  on  foreigners  reached  the  equivalent 
of  3  095%  of  GDP,  down  from  3  268%  in  2017, 
while  liabilities  to  foreigners  stood  at  2  995%  of 
GDP,  down  from  3  201%  in  2017  (see  Graph 
A5.2).  As  a  result,  the  positive  net  international 
investment  position  (NIIP)  further  increased  from 
67.3% in 2017 to 100.3% of GDP as of Q3 2024, 
showing  that  the  Maltese  economy,  in  net  terms, 
increased  its  overall  assets  on  foreigners  by  the 
equivalent of 33% of GDP between 2017 and Q3 
2024. The improvement came exclusively from the 
net  change 
in  financial  assets,  which  alone 
increased in net terms, while the net stock of both 
foreign direct and portfolio investments decreased 
meanwhile.  Thus,  though  lately  gross  outstanding 
volumes  of  foreign  assets  and  foreign  liabilities 
remained 
declined, 
exceptionally  well-integrated 
international 
capital flow, successfully increasing its net foreign 
wealth. 

economy 
in 

the  Maltese 

the 

has 

country 

backdrop, 

The  significant  net  private  savings  in  Malta 
are  mostly  channelled  towards  private 
investments  at  home  and  abroad,  even  if 
lately  government  deficits  have  been 
absorbing  also  a  non-negligible  part.  Against 
this 
further 
strengthened its positive net international position. 
Nevertheless,  domestic  capital  markets  remain 
largely  underdeveloped  and  do  not  make  a 
material contribution to the funding of businesses, 
which rely primarily on internal financing and bank 
lending.  The  predominantly 
size  of 
companies  and  the  relatively  low  capital  intensity 
of  the  economy  account  for  this  outcome.  Banks, 
which  enjoy  high  resilience  to  risks  and  ample 
liquidity,  have  a  strong  capacity  to  finance  the 
economy,  as illustrated  by  persistently  high  credit 
growth  rates.  Non-bank  financial  intermediaries, 
which  appear  large,  use  Malta  as  a  registration 
jurisdiction and do not play a significant role in the 
funding  of  the  economy.  So  far,  Maltese  retail 
investors  have  had  a  conservative  approach  to 
managing  wealth,  which  creates  a  wide  potential 
for  boosting  their  participation  in  capital  markets, 
thereby directing bank deposits to more productive 
uses. 

small 

Availability and use of domestic 
savings 

The  comparatively  high  net  private  savings 
of 
the  Maltese  economy  have  been 
supporting  primarily  private  investment  at 
home  and  abroad.  As  of  end-2023,  the  private 
savings  ratio,  net  of  fixed  capital  consumption, 
which  has  been  historically  very  high,  reached 
14.8%  of  GDP,  i.e.  slightly  below  its  ten-year 
average  of  15.8%  of  GDP  (see  Graph  A5.1).  The 
net  private  investment  ratio,  which  measures  the 
net  contribution  of  the  private  sector  to  capital 
accumulation  in  the  country,  fell  to  4.3%  of  GDP 
as of end-2023, i.e. significantly below its ten-year 
average of 7.2%. Since 2020 the government has 
started  running  deficits  again,  thereby  absorbing 
private  savings  that  averaged  the  equivalent  of 
2.1% of GDP in the period 2014-2023. As a result 
of  these  trends  and  structural  changes,  the 
Maltese  economy  has  been  a  net  creditor  to  the 
rest  of  the  world  for  the  equivalent  of  6.5%  of 
GDP  per  year  over  the  last  decade,  with  the 
notable  exception  of  2020,  when  it  borrowed 
about  0.6%  of  GDP  from  abroad.  Thus,  over  the 

42 

-15-10-5051015202530352017201820192020202120222023% of GDPPrivate investment, netLending to the governmentPrivate savings, netPrivate savings, grossBorrowing from the rest of the world 
 
   
 
 
Graph A5.2: International investment position 

Source: ECB. 

Structure of the capital markets and 
size of the financial sector 

Despite  high  domestic  savings,  capital 
markets 
in  Malta  appear  as  relatively 
underdeveloped.  The  market  capitalisation  of 
listed  equity  reached  41%  of  GDP  at  end-2023, 
which is much below the EU average of 67% (see 
Graph A5.3). Non-financial corporations accounted 
for less than a third of that capitalisation, which is 
another sign of the high degree of financialisation 
of  the  Maltese  economy.  Traded  volumes  at  the 
Malta  Stock  Exchange  are  very 
low,  at 
EUR 365 mn  in  2024,  including  bonds,  equity, 
exchange-traded  funds  (ETFs)  and  treasury  bills, 
with  trade  in  government  bonds  representing 
about  half  of  the  turnover.  The  outstanding 
volume of debt securities reached 75% of GDP at 
end-2023, which is also significantly below the EU 
average  of  137%  of  GDP.  General  government 
bonds  accounted  for  60%  of  the  outstanding 
amounts.  The  remainder  was  distributed  between 
banks  (5%),  non-financial  corporations  (8%)  and 
other  financial  intermediaries  (27%).  Thus,  the 
contribution  of  capital  markets  in  Malta  to  the 
financing of the domestic economy, and especially 
of  the  private  non-financial  sector,  appears  to  be 
very limited. 

Banks  continue  to  dominate  the  financial 
in  Malta  but  non-bank  financial 
sector 
intermediaries  have  significant  importance 
as  well.  As  of  end-2023,  banks’  total  assets, 
stood at of 209% of GDP, below the EU average of 
253%  and  much  lower  than  their  2020  size  of 
281% of GDP. Foreign banks, which were attracted 
by  the  special  jurisdictional  status  of  Malta, 
significantly  reduced  their  presence  from  58%  of 

total assets in 2017 to 34% as of end-2023. With 
the  top  five  monetary  financial  institutions  (MFIs) 
controlling  more  than  75%  of  the  sector  as  of 
end-2023,  banking  concentration  appears  to  be 
higher than the EU average of 54%. The insurance 
sector, despite a decline in its total assets of about 
17  percentage  points  of  GDP,  remains  very  well 
developed. Its total assets stood at the equivalent 
of 73.2% of GDP at end-2023, well above the EU 
average  of  55%.  Pension  funds,  with  total  assets 
of  38%  of  GDP  at  end-2023,  are  also  more 
developed than the EU average. Investment funds 
are  also  very  prominent  in  Malta,  even  though 
their total assets decreased from the equivalent of 
150%  of  GDP  in  2021  to  115.4%  of  GDP  as  of 
end-2023.  However,  most  of 
the  non-bank 
financial intermediaries use Malta as a registration 
jurisdiction  and  do  not  have  local  business  ties 
(see the discussion on institutional investors). 

Graph A5.3: Capital markets and financial 
intermediaries 

Source: ECB, EIOPA, AMECO. 

Resilience of the banking sector 

the  aggregate 

Banks  in  Malta  exhibit  high  resilience  to 
risks, thanks to comparatively high levels of 
capital.  Historically, 
capital 
adequacy ratio in Malta has been relatively higher 
than  elsewhere  in  Europe.  As  of  Q3  2024,  the 
overall  capital  ratio  averaged  24.3%,  well  above 
the EU average of 20.1% (see Table  A5.1). At the 
same  time,  the  common  equity  tier  1  ratio  stood 
at  20.2%,  again  well  above  the  EU  average  of 
16.6%.  However,  the  coverage  ratio  of  non-
performing  loans  by  provisions,  which  stood  at 
35% as of Q3 2024, i.e. 7 percentage points below 

43 

020406080100120-5000-4000-3000-2000-100001000200030004000500020172018201920202021202220232024-Q3% of GDPForeign Direct Investment, AssetsPortfolio Investment, AssetsOther investment, AssetsOfficial reserve assetsForeign Direct Investment, LiabilitiesPortfolio Investment, LiabilitiesOther investment, LiabilitiesNIIP (rhs)Non-financial corporationsFinancial corporationsNon-financial corporationsMFIsInsurance  and pension fundsOther financialsGovernmentMFIsPension fundsInsurance corporationsInvestment funds050100150200250Listed equity                    Bonds                          Assets by sector% of GDP 
     
   
the  EU  average,  continues  to  be  lower  than 
elsewhere in  Europe.  While  this might  be  justified 
by  the  comparatively  better  quality  of  assets  and 
does  not  constitute  a  vulnerability, 
it  might 
indicate  a  structural  accounting  boost  to  capital 
levels.  Maltese  banks’  aggregate  Minimum 
Requirement for Own Funds and Eligible Liabilities 
(MREL)  rate  stood  at  32.3%  of  risk-weighted 
assets at the end-2023, which was 3.7 percentage 
points above the required level. 

While the satisfactory asset quality is a good 
basis  for  future  profitability,  banks  need  to 
boost  their  returns.  With  an  aggregate  non-
performing  loan  (NPL)  ratio  of  1.8%  as  of  Q3 
2024,  which  is  below  the  EU  average  of  1.9%, 
credit  quality  remains  satisfactory.  The  corporate 
NPL  ratio,  which  has  been  persistently  declining 
since its recent peak of 7.1% in 2020 fell to 3.3% 
as of Q3 2024, again below the 3.5% EU average. 
loans  to  households  are 
Less  than  2%  of 
delinquent.  So  far,  there 
is  no  evidence  of 
deteriorated  asset  quality  due  to  the  tightening 
cycle  of  interest  rates.  The  average  return  on 
equity, which was closer to the lower end in the EU 
in  2021-2022,  increased  recently  and  reached 
10.4% as of Q3 2024, just above the EU average 
of 10%. However, this average return appears out 
of  phase  with  the  very  significant  credit  growth 
rates,  well  above  the  EU  averages,  in  both 
corporate  and  household  segments.  This  implies 
that, despite expanding its interest-bearing assets 
more  than  their  EU  peers,  banks  in  Malta  did  not 
manage to generate higher net returns. To remedy 
the  situation,  banks  need  to 
improve  their 
operational efficiency in the future. 

Maltese banks maintain very strong liquidity 
positions and have a low structural exposure 
to the liquidity risk. Banks in Malta are exposed 
to  a  low  liquidity  funding  risk  and  show  a 
satisfactory  term  adequacy  between  assets  and 
liabilities.  Their  loan-to-deposit  ratio  stood  at 
55.9%  as  of  Q3  2024,  the  second  best  in  the 
Union and well below the EU average of 96%. This 
shows  a  structurally  better  coverage  of  deposits 
by  other,  marketable  and  liquid,  assets.  The 
impressively  high  aggregate  liquidity  coverage 
ratio  of  358%  as  of  Q3  2024  also  illustrates  the 
excellent situation of ample immediately available 
liquidity  for  meeting  short-term  needs.  At  the 
same  time,  the  net  stable  funding  ratio,  which 
measures  the  availability  of  stable  longer-term 
funding, reached 171% of GDP, i.e. 42 percentage 
points above the EU average. 

Resilience of the non-bank financial 
intermediaries 

is 
The  non-bank  financial  sector  that 
domestically  relevant  is  relatively  small, 
with total assets of the insurance sector and 
investment  funds  around  25%  of  GDP.  Both 
sectors  increased  their  assets  in  the  first  six 
months  of  2024.  Insurance  sector  holds  solid 
capital  and  liquidity  positions  but  there  is  some 
pressure  in  the  life  insurance  segment  due  to 
declining  premia  in  the  insurances  with  profit 
participation.  Profitability  of  domestically-relevant 
investment 
funds  was  supported  by  price 
increases in equity markets and a modest increase 
in fixed-income securities. As a structural  feature, 
most  domestically-relevant  investment  funds  are 
owned  by  core  domestic  banks  and  hold 
approximately  10%  of  their  overall  assets  in 
investments issued by core domestic banks.  

The  predominant  driver  of  Maltese  financial 
system  expansion  since  2019  was  growth  in 
the  non-bank  sector.    This  sector  registered  a 
47.4%  increase  in  total  assets  to  reach  €744.6 
billion by end-2023. In December 2022, 89.6% of 
the total financial system’s assets were non-bank 
financial 
the  broader 
measure), second highest ratio in the EU. In Malta, 
the dominant component (95%) of the NBFI is the 
category  of  Captive  Financial  Institutions  and 
Money Lenders.  

intermediaries 

(NBFI, 

Sources of business funding and the 
role of banks 

Firms in Malta rely more than the EU average 
on funding from banks and less than the EU 
average  on  funding  from  capital  markets. 
More specifically, at the end of 2023, bank finance 
through  loans  constituted  42.6%  of  all  funding 
sources  for  Maltese  non-financial  corporations 
(NFCs), while listed shares and bonds represented 
only  6%  of  the  aggregate  funding  sources.  The 
equivalent  figures  for  the  EU  average  are  27.2% 
levels  also 
and  23.8%,  with 
substantially  higher  as  a  percentage  of  GDP  (as 
the  overall  level  of  NFC  funding  was  153.8%  of 
GDP  in  Malta  and  230.3%  of  GDP  for  the  EU 
average, see Graph A5.4). 

the  overall 

44 

 
Graph A5.4: Composition of NFC liabilities as a % 
of GDP 

equity  was relevant for them, compared to an EU 
average of 11.7% (81). 

The  high  resilience  to  risks  and  the  ample 
available 
liquidity  account  for  the  high 
capacity of the banking sector to finance the 
economy.  Malta  has  experienced  a  prolonged 
period  of  economic  growth  in  the  last  four  years, 
well  above  the  EU  average.  Rapid  population 
growth  and 
in 
residential  property, together  with  continued  bank 
credit expansion, contributed to this outcome. After 
growing  by  7.3%  and  10.2%  respectively in  2022 
and  2023,  credit  growth  to  NFCs  moderated  to 
3.7%  as  of  Q3  2024.  Credit  to  households 
continued to expand at the sustained rate of 9.2% 
as of Q3 2024 (see Table A5.1). 

foreign  direct 

investments 

Retail investment in capital markets 

Maltese  households,  in  relative  terms,  own 
slightly  more  financial  assets  in  certain 
categories than households in the rest of the 
EU.  In  particular,  compared  to  the  EU  average, 
Maltese  households  keep  a  much  larger  share  of 
their  assets  in  currency  and  deposits  as  well  as 
bonds 
(see  Graph  A5.5),  which  suggests  a 
conservative  approach  to  managing  wealth.  They 
also  keep  a  smaller  part  of  their  financial  assets, 
in  comparison  to  other  EU  countries,  in  insurance 
and  pension  funds.  Two  factors  explain  this 
outcome.  First,  despite  a  large  insurance  sector, 
given Malta’s special jurisdictional status, the part 
of it that is relevant for residents is small. Second, 
the  country  does  not  have  second-pilar  pension 
scheme  and  about  85%  of  the  members  of  third 
pillar  pension  funds  are  non-residents  at  the  end 
of  2023,  even  though  the  number  of  domestic 
participants has risen rapidly since 2019. 

Source: Eurostat and E2 calculations. 

that 

than 

reported 

Businesses in Malta depend more on internal 
financing 
their  European  peers. 
According  to  the  2024  EIB  Investment  Survey, 
their 
79%  of  Maltese  firms 
investment needs are covered by internal funding, 
compared to an EU average of 66%. At the same 
time,  83%  of  Maltese  firms  believed  that  their 
investment  activities  over  the  last  three  years 
were  about  the  right  amount,  higher  than  the  EU 
average  of  80%,  suggesting  that  there  is  no 
material  financing  gap  relative  to  investment 
demand.  However,  this  may  not  be  the  case  for 
firms  with  no  or  limited  capacity  for  internal 
funding, such as innovative start-up firms. 

Maltese companies are using capital markets 
less  than  their  EU  peers.  Maltese  NFCs  have  a 
higher  share  of  unlisted  equity  compared  to  their 
euro  area  peers,  which  suggests  that  a  large 
portion  of  corporate  ownership  remains  private 
and that many businesses do not need or want to 
access capital by going public. Bond issuances are 
used more commonly as an instrument for raising 
funds  than  initial  public  offerings  (IPOs)  or  stock 
listings.  Over  2020-2023,  Malta  had  the  highest 
rate  among  all  EU  countries  of  NFC  bond 
issuances as a percentage of total  NFC financing, 
due  to  few  large  bond  issuances  (80).  In  addition, 
Malta is a less capital-intensive economy than the 
EU  average,  which,  when  combined  with  the 
predominantly small size of its companies, creates 
less  demand  for  capital  market  instruments.  The 
use  of  equity  by  small  and  medium-sized 
enterprises  (SMEs)  is  low,  despite  13%  of  SMEs 
having  indicated  in  the  2024  SAFE  survey  that 

(80)  AFME, CMU Key Performance Indicators, 2023. 

Results by country, T27. 

(81)  Data  and  surveys  -  SAFE  -  European  Commission,  2024, 

45 

050100150200250MTEU% of GDPLoansTrade credit and advancesBondsListed sharesUnlisted sharesOther equity 
  
 
 
Graph A5.5: Composition of household financial 
assets per capita and as a % of GDP 

Source: Eurostat. 

There  is  significant  scope  to  increase  the 
level of direct or indirect retail investment in 
Malta. Cash and deposits represent a much higher 
share  of  households’  assets  compared  to  the  EU 
average 
(52.6%  vs  32.3%),  which  gives  an 
opportunity  to  develop  and  use  other  types  of 
saving  and  investment  options  that  may  bring 
higher  yield.  Furthermore,  the  dominance  of  the 
pillar-1  pension  system  does  not 
incentivise 
Maltese  households  to  invest  enough  into  high-
return  assets,  e.g.  equity,  for  their  retirement. 
Encouraging  the  build-up  of  universal  funded 
supplementary  pension  schemes  would  positively 
contribute to (i) the sustainability and adequacy of 
pension  benefits;  (ii)  investment  in  equity;  (iii) 
access to finance; (iv) growth; and (v) innovation. 

The role of domestic institutional 
investors 

While  non-bank  financial  intermediaries  are 
large,  most  of  them  are  only  registered  in 
Malta  and  do  not 
conduct  business 
domestically.  One  peculiarity  of  the  Maltese 
insurance  sector  is  that  most  licensed  insurance 
companies (57 out of 67 in 2023) did not conduct 
business in Malta. The ten companies that insured 
risks  located  in  Malta  or  sold  life  insurance 
products 
total  assets  of 
EUR 3.8 bn, equivalent to 18.3% of the 2023 GDP.  
Based  on  data  from  the  European  Insurance  and 
Occupational Pensions Authority (EIOPA), as of Q3 
2024,  the  sector’s  total  assets  of  EUR  10.4  bn 
were  invested  primarily  in  government  bonds 

residents  had 

to 

46 

(21.1%),  corporate  bonds 
(18.8%),  collective 
investment  undertakings  (15.9%),  mortgage  and 
loans  (13.3%)  and  equity  (5.9%).  15%  of  the 
portfolio was held in cash and deposits. As of end-
2023, the investment funds of domestic relevance 
had  EUR 1.6 bn  of  assets  under  management 
(equivalent to 7.7% of the 2023 GDP), with 64.4% 
of  these  assets  invested  in  bond  funds.  This 
suggests  that 
investors  have  a 
conservative investment profile and do not play a 
material  role  in  funding  the  domestic  corporate 
sector. 

institutional 

The depth of venture and growth 
capital 

The  domestic  private  equity  and  growth 
venture  capital  market  is  not  developed. 
There  were  no  registered  private  equity  and 
venture  capital  investments  in  2023,  which  were 
below 0.01% of GDP over the last five years. This 
underdeveloped growth capital market points to a 
financing  gap  for  early-stage  innovative  firms  in 
need  of 
tolerance, 
capital  with  high-risk 
throughout  their  life  cycle  (see  Annex  3).  On  the 
the  national 
public  side,  Malta  Enterprise, 
economic  development  agency,  offers  various 
support programmes (including grants), from early 
seed funding for small start-ups to larger support 
schemes for business development. 

Financing the green transition 

in  order 

Sustainable finance is not yet very developed 
in  Malta.  While  the integration  of  environmental, 
social  and  governance  (ESG)  criteria  in  Malta  is 
progressing,  the  market  has  not  yet  developed 
sufficiently  to  facilitate  the  promotion  of  green 
the  necessary 
finance 
investments  for  decarbonisation.  So  far,  only  one 
green  instrument  has  been  listed  on  the  Malta 
Stock  Exchange  and  Malta  has  not  yet  issued  a 
labelling (82).  The 
sovereign  bond  with  ESG 
financing  needs  of  the  green  transition  in  Malta 
are  mainly  supported  by  various  public  schemes. 
68.8% of the EUR 336.3 mn Maltese recovery and 

to  bring 

(82)  Source: AFME CMU Key Performance Indicators, Seventh 

Edition, November 2024. 

0501001502002500102030405060708090MTEUMTEUper capita (000 EUR) (lhs)% of GDP GDP (rhs)Currency and depositsInsurance and pension fundsInvestment fundsBondsListed sharesUnlisted sharesOther equityHH Debt (liability) 
  
 
Table A5.1:  Financial indicators 

Source: ECB, ESTAT, EIOPA, DG FISMA CMU Dashboard, AMECO. 

resilience  plan  are  allocated 
transition. 

to 

the  green 

Financial literacy 

The  level  of  financial  literacy  in  Malta  is 
slightly  above  the  EU  average.  The  overall 
financial literacy indicator of 48.5 is 3 percentage 
points above the EU average score of 45.5 (83). The 
2023  Eurobarometer  survey (84)  on  financial 
knowledge  shows  that  26%  of  Maltese  citizens 
have  a  high  level  of  financial  knowledge  (26%  in 
the EU) and 19% have a low level (24% in the EU). 
Malta  scores  slightly  below  the  EU  average  in 
using  digital  financial  services  (such  as  online 
banking or mobile payments), where 75% are ‘very 
comfortable’  or  ‘somewhat  comfortable’  in  using 
them,  compared  to  the  highest  score  of  95%  in 
Finland  and  77%  in  the  EU  overall.  Financial 
to  promote  retail-investor 
literacy 

is  crucial 

(83)  See Indicator 27 c) Average Score of Commission staff 

working document: Monitoring progress towards a capital 
markets union: a toolkit of indicators - 2024. 

(84) Source: Monitoring the level of financial literacy in the EU - 

July 2023 - Eurobarometer survey. 

47 

in  capital  markets  but  also  to 
participation 
familiarise  SMEs  with  alternatives 
to  bank 
financing. While financial literacy is not integrated 
into  the  Maltese  school  curriculum,  the  Central 
Bank of Malta offers a range of resources to build 
the  public’s  knowledge.  The  Malta  Financial 
in  an  EU-
Services  Authority  is  participating 
supported  project in  the  area  of  financial  literacy, 
to  improve  the  financial  literacy  levels  of  the 
Maltese population. 

20172018201920202021202220232024-Q3EUTotal assets of MFIs (% of GDP)383.3324.7283.8280.9255.5229.7208.8206.5248.4Common Equity Tier 1 ratio18.118.920.221.320.619.720.720.216.6Total capital adequacy ratio21.122.323.425.124.523.924.924.320.1Overall NPL ratio (% of all loans)3.13.13.23.63.02.32.01.81.9NPL (% loans to NFC-Non financial corporations)6.15.65.97.16.54.53.73.33.5NPL (% loans to HH-Households)4.23.93.33.53.02.31.91.92.2NPL-Non performing loans coverage ratio34.835.332.836.634.539.233.935.042.1Return on Equity17.25.26.00.33.54.310.610.410.0Loans to NFCs (% of GDP)26.825.825.127.924.223.723.021.830.0Loans to HHs (% of GDP)43.042.443.446.443.643.541.841.444.5NFC credit annual % growth-1.44.85.18.90.37.310.23.70.8HH credit annual % growth6.17.18.25.29.28.88.19.20.7Stock market capitalisation (% of GDP)55.951.847.449.449.946.140.840.569.3Initial public offerings (% of GDP)0.220.640.770.001.060.310.02-0.05Market funding ratio32.930.932.529.932.030.129.0-49.6Private equity (% of GDP)1.100.02--0.010.01--0.41Venture capital (% of GDP)0.000.020.000.000.010.000.00-0.05Financial literacy (composite)------48.5-45.5Bonds (as % of HH financial assets)12.111.110.39.18.18.110.7-2.7Listed shares (as % of HH financial assets)5.55.04.84.44.65.05.2-4.8Investment funds (as % of HH financial assets)7.17.27.06.26.24.74.7-10.0Insurance/pension funds (as % of HH financial assets)11.89.910.810.610.38.77.7-27.8Total assets of all insurers (% of GDP)76.968.987.491.482.966.973.264.554.8Pension funds assets (% of GDP)--47.249.452.743.237.938.723.41-34-1011-1718-2425-27Colours indicate performance ranking among 27 EU Member States.1 Annualized data.Credit growth and pension funds EU data refers to the EA average.Banking sectorNon-banks sector 
 
 
 
 
 
   
 
ANNEX 6: EFFECTIVE INSTITUTIONAL FRAMEWORK 

Malta’s  institutional  framework  influences 
its  competitiveness.  Malta  excels  in  digital 
public  services,  with  a  strong  infrastructure  for 
secure digital authentication and high uptake of e-
government  services.  However,  there  is  scope  to 
enhance  regulatory  practices  in  Malta,  simplify 
complex  regulations  and  reduce  administrative 
burdens.  Malta 
the 
is  working 
attractiveness  of  the  civil  service,  but  concerns 
around corruption remain. There are also concerns 
about  the  efficiency  of  the  justice  system,  partly 
due to still limited human resources. 

improve 

to 

Public perceptions 

Graph A6.1: Trust in justice, regional / local 
authorities and in government 

government has deteriorated further and stands at 
values below the EU average (86).  

Quality of legislation and regulatory 
simplification 

is  below 

Performance  in  developing  and  evaluating 
legislation 
the  EU  average. 
Performance  in  regulatory  tools  like  ex  ante 
impact  assessment,  public  consultation,  and 
regulatory reviews is similar for primary laws and 
subordinate  regulations.  It  is  also  stronger  for 
stakeholder  engagement  than  for  ex  ante  impact 
assessments  and ex  post evaluation,  the  last two 
showing a gap compared to the EU average due to 
weaker  requirements  in  methodology,  adoption, 
oversight,  and  quality  controls  for  both  types  of 
legislation (Graph A6.2). To enhance policymaking, 
Malta  is  working  on  building  capacity  in  strategic 
foresight and anticipatory governance (87).  

Graph A6.2: Indicators of Regulatory Policy and 
Governance (iREG) 

(1) EU-27 from 2019; EU-28 before 
Source: Standard Eurobarometer surveys 

Trust  in  public  institutions  has  fluctuated 
greatly  over  the  past  decade.  Trust  in  public 
institutions increased overall in 2024, though trust 
in justice still scored below the EU average (Graph 
A6.1).  Trust  in government  continues to  be  higher 
than  in  justice,  in  contrast  to  the  established  EU 
trend.  Aspects  that  can  improve  trust  in  public 
administration  are  greater 
in 
decision-making  and  use  of  public  money,  less 
bureaucracy and more moral integrity in the public 
(85).  The  perceived  quality  of 
administration 

transparency 

(85)  Understanding Europeans’ views on reform needs - April 
2023 - Eurobarometer survey, Country Fact Sheet. 

Source: OECD (2025), Regulatory Policy Outlook 2025 and 
Better Regulation across the European Union 2025 
(forthcoming). 

There  is  scope  to  further  strengthen  the 
mechanisms  for  simplifying  regulation.  For 
example, when drafting legislation or evaluating it 
after  adoption,  the  government  is  required  to 

(86)  Inforegio - European Quality of Government Index 

(87)  Closure of the project “Strengthening of Strategic Foresight 
and Anticipatory Governance Practices in the Maltese Public 
Administration (LIMINAL)”, 1 October 2024. 

48 

00.10.20.30.40.50.60.7AutumnSpringAutumnSpringAutumnSpringAutumnSpringAutumnSpringAutumnSummerWinterSummerWinterSpringAutumnSpringAutumn2014201520162017201820192020202220232024Justice,  legal system EU27Justice,  legal system MTRegional or local public authorities EU27Regional or local public authorities MTGovernment  EU27Government  MT0.00.51.01.52.02.53.03.54.0Primary lawsSubordinateregulationsPrimary lawsSubordinateregulationsPrimary lawsSubordinateregulationsMT_StakeholderengagementMT_Regulatory ImpactAssessmentMT_Ex-post evaluation oflegislationMethodologySystematic adoptionTransparencyOversight and quality control2021EU-27 
 
       
 
   
 
 
 
Table A6.1:  Malta. Selected indicators on administrative burden reduction and simplification 

(1) This table presents a subset of iREG indicators focusing on regulatory costs. The indicators refer to primary legislation. 
Source:  OECD (2025), Regulatory Policy Outlook 2025 [https://doi.org/10.1787/56b60e39-en] and Better Regulation across the 
European Union 2025 (forthcoming). 

required 

identify  administrative  burdens  but  only  for  some 
primary  laws.  Ex-ante  and  ex-post  evaluations  of 
to  contain  an 
legislation  are  not 
assessment  of  substantive  compliance  costs. 
Moreover,  periodic  ex  post  evaluation  of  existing 
regulations  is  not  mandatory.  In  addition,  the 
government  has  not  conducted  recently  in-depth 
reviews  of  specific  regulatory  areas  and  public 
stocktakes of legislation (see table A6.1).  

required/issued 

does not keep an up-to-date online inventory of all 
the  permits  and 
to 
licences 
businesses  by  public  bodies,  and  there  is  no 
requirement 
licences  and  permits 
introduced  by  central/federal  government  bodies 
must be risk proportionate. Nor do public bodies at 
central  level  have  to  observe  to  the  once-only 
principle (see also Annex 4).  

that  new 

Efficiency of selected administrative 
procedures 

Social dialogue 

Selected  indicators  point  to  Malta’s  public 
administration  taking  longer  to  complete 
procedures.  For  example,  the  mean  time  for 
decision-making by public buyers, measured as the 
time from the deadline for receiving offers to the 
date  the  contract  is  awarded,  is  above  the  EU 
average (165 days in Malta vs 99 days in the EU-
27).  This  creates  additional  uncertainty  for 
companies. Furthermore, the OECD product market 
regulation  (PMR)  indicator  shows  that  Malta’s 
licensing system is slightly more burdensome than 
the  EU  average.  There  is  room  to  further  align  it 
with  best  practices.  For  example,  the  government 

dialogue 

encounters 

Social 
numerous 
structural  barriers  in  Malta,  centred  mostly 
on  information  sharing  rather  than  active 
engagement.  The  current  model  suffers  from 
short consultation timelines, insufficient resources, 
representation,  all  of  which 
and  a 
undermine  its  effectiveness,  despite  support  from 
ESF+ in capacity  building, training and networking 
initiatives  (88)  (see  also  Annex  10).  Trade  union 

limited 

(88)  Servizzi Ewropej f’Malta (SEM) (2021). Promoting Improved 

Social Dialogue in Malta. Misco. 

49 

Ex ante impact assessment of legislationEx post evaluation of legislationIdentify and assess the impacts of the baseline or ‘do nothing’ option.Is required to consider the consistency of regulations and address areas of duplication.Identify and assess the impacts of alternative non-regulatory options.Is required to contain an assessment of administrative burdens.Quantify administrative burdens of new regulations.Is required to contain an assessment of substantive compliance costs.Quantify substantial costs of compliance of new regulations.Compares the impact of the existing regulation to alternative options.Assess macroeconomic costs of new regulations. Periodic ex post evaluation of existing regulations is mandatory.Assess the level of compliance.Government uses stock-flow linkage rules when introducing new regulations (e.g., one-in one-out).Identify and assess potential enforcement mechanisms.A standing body has published an in-depth review of specific regulatory areas in the last 3 years.In the last 5 years, public stocktakes have invited businesses and citizens to assess the effectiveness, efficiency, and burdens of legislation.When developing new legislation, regulators are required to …Yes /  For all primary laws For major primary laws For some primary lawsNo / Never 
 
 
 
   
 
 
Table A6.2:  Digital Decade targets monitored through the Digital Economy and Society Index 

Source: State of the Digital Decade report 2024 

density  recently  declined,  to  41.9%  in  2023  (89). 
This  is  due  to  difficulties  with  engaging  workers, 
as  well  as  the  reported  dominance  of  the  Malta 
Council  for  Economic  and  Social  Development 
(MCESD) as the main platform for dialogue, which 
is criticised for a lack of transparency (90).(91) 

Digital public services 

Malta is the European leader in the provision 
of  online  public  services  (Table  A4.2).  The 
country  has  already  reached  the  Digital  Decade 
targets  for  public  services  for  citizens  and 
businesses.  Servizz.gov  centralises  citizen-centric 
government  services,  whereas  Business  First 
serves  as  an  information  point  for  entrepreneurs 
and  self-employed  to  access  essential  business-
related 
starting, 
managing  and  growing  a  business  in  Malta. 
Furthermore,  access  to  e-health  records  has 
improved  considerably  and  scores  well  above  the 
EU  average.  This  progress  reflects  the  country’s 
commitment 
to  enhancing  digital  healthcare 
infrastructure,  enabling  people  to  manage  their 

government 

services 

for 

(89)  ILOSTAT trade union density rate. 

(90)  Zammit, E. L. (2019). Social dialogue and competence 

development: the role of Malta’s social partners. Centre for 
Labour Studies: Biennial Report: 2017-2018. 

(91)  For an analysis of the involvement of Malta’s social partners 
at national level in the European Semester and the Recovery 
and Resilience Facility, see Eurofound (2025), National-level 
social  governance  of  the  European  Semester  and  the 
Recovery and Resilience Facility. 

50 

health  more 
interoperability across healthcare systems. 

effectively  while 

supporting 

The  take-up  of  digital  services  is  above  the 
EU  average.  The  share  of  e-government  users 
among  the  population  in  2024  stood  at  81%(92). 
Moreover,  54.6%  of  individuals  used  their  eID  to 
access  online  services  for  private  purposes, 
surpassing the EU average of 41.1%. This reflects 
Malta’s  strong  infrastructure  for  secure  digital 
authentication  and  its  success  in  encouraging  the 
public to embrace eID for a variety of purposes.  

Malta  is  now  closer  to  being  ready  for 
seamless,  automated  exchange  of  authentic 
documents  and  data  across  the  EU.  It  has 
completed  its  first  transactions  using  the  Once-
Only  Technical  System,  part  of  the  EU  Single 
Digital  Gateway,  and  is  ready  to  roll  out  services 
for citizens and business (93). 

Malta  has  not  yet  set  up  and  notified  eID 
schemes  for  legal  persons  under  the  eIDAS 
Regulation.  This  means  that  Maltese  businesses 
cannot  authenticate  themselves  to  access  public 
services  provided  by  other  Member  States, 
the  Once-Only 
including 
Technical  System,  part  of  the  EU  Single  Digital 
Gateway (94). 

those  enabled  by 

(92)  Eurostat. E-government activities of individuals via websites.  

(93)  European Commission, The Once Only Principle System: A 

breakthrough for the EU’s Digital Single Market  

(94)  European Commission, Once-Only Technical System 

Acceleratormeter 

Digital Decadetarget by 20302022202320242024EU-27Digitalisation of public services110010010079100Score (0 to 100)202120222023202320302979710085100Score (0 to 100)202120222023202320303na788879100Score (0 to 100)20212022202320232030MaltaEU-27Digital public services for citizensDigital public services for businessesAccess to e-health records 
 
 
 
 
 
  
 
the 

corporate 

Malta  is  continuing  its  efforts  to  promote 
digitalisation  within  the  public  service  by 
implementing 
document 
management system, revamping the citizen portal 
and  developing  an  interactive  intelligent  business 
portal (95). Other measures under Malta’s recovery 
and resilience plan (RRP) include providing a better 
customer  experience  for  the  public  and  for 
businesses  and  increasing  the  uptake  of  online 
services. 

Civil service 

announced 

government 

reform  of  wage 

including 
the 

Malta  is  making  efforts  to  increase  the 
attractiveness  of  its  public  administration. 
The  proportion  of  Maltese  civil  servants  who 
frequently  telework  has  increased  and  is  well 
above the EU average (96). This could be due to the 
administration’s  policy  of  encouraging  remote 
through  RRP  measures. 
working, 
Moreover, 
a 
legislation, 
comprehensive 
marking  the  first  full  overhaul  in  over  70  years. 
This initiative aims to update over 60 labour laws 
to  reflect  modern  labour  market  realities  and 
improve working conditions across various sectors 
(97).  Malta  has  also  started  working  on  assessing 
the  current  skills  framework  and  practices  in  the 
public  service  to  improve  workforce  planning, 
employee  performance  and  career  progression.  In 
2024,  the  participation  rate  in  adult  learning  of 
employees  in  public  administration,  defence  and 
social  security  rose  to  26.3%,  above  the  EU 
average  of  18.9%.  However,  the  proportion  of 
those  employees  with  higher  education  is  one  of 
the  lowest  in  the  EU  (98).  Malta  is  steadily 
in  senior 
its  share  of  women 
improving 
national 
the 
management 

positions 

in 

administration (47.6% compared to EU average of 
46.5) (99). 

Integrity 

A  higher  proportion  of  companies  than  the 
EU  average  consider  corruption  to  be 
widespread and a problem in doing business, 
with  only  few  corruption  cases  leading  to 
final  decisions.  In  Malta,  71%  of  companies 
consider that corruption is widespread (EU average 
64%)  and  55%  consider  that  corruption  is  a 
problem  when  doing  business  (EU  average  36%). 
Moreover,  36%  of  companies  believe  that  people 
and businesses caught bribing a senior official are 
appropriately punished (still above the EU average 
of 31%) (100). The length of investigations remains 
problematic,  and  no  progress  was  made  on 
establishing  a 
record  of  final 
judgments  (101).  Furthermore,  Malta  is  not  a 
signatory  party 
the  OECD  Anti-Bribery 
Convention.  

robust 

track 

to 

Although  preventive  measures  exist,  the 
2023 National Audit Office reports indicated 
is  a 
that  public  procurement  procedure 
sector at high risk of corruption in Malta (102). 
26%  of  companies  (EU  average  27%)  think  that 
corruption  has  prevented  them  from  winning  a 
public  tender  or  a  public  procurement  contract  in 
practice  in  the  last  three  years(103)  .  In  2023,  the 
department  of  public  procurement  developed  an 
conflict-of-interests 
of 
internal 
declarations and public officials continue to follow 
training  on 
in  public 
procurement. Investor citizenship schemes present 

standards 

database 

integrity 

(95)  Digital Decade Strategic Roadmap 2023-2030 of Malta: 
National Digital Decade strategic roadmaps | Shaping 
Europe’s digital future. 

(96)  Eurostat. Employed persons working from home as a 
percentage of the total employment, by sex, age and 
professional status (%). 

(97)  Government press release, 8 November 2024. 

(98)  Labour Force Survey – 2024 data, Eurostat. 

(99)  National  administrations:  top  two  tiers  of  administrators  by 
function  of  government  -  European  Institute  for  Gender 
Equality. 

(100) Flash  Eurobarometer  543  on  businesses’  attitudes  towards 

corruption in the EU (2024). 

(101)  See the 2024 country-specific chapter for Malta of the Rule 

of Law Report, pp. 12-13. 

(102)  The 2023 activity reports were related to activities occurred 
in 2022. See the 2024 country-specific chapter for Malta of 
the Rule of Law Report, pp. 17-18. 

(103) Flash Eurobarometer 543 on businesses’ attitudes towards 

corruption in the EU (2024). 

51 

 
 
 
inherent  risks  of  corruption  and  continue  to  raise 
concerns. (104) 

recommendations 

received  several 

Concerns  remain  regarding  the  extent  of 
integrity  measures,  including  measures  on 
lobbying,  applied  to  high-ranking  officials. 
Malta 
to 
improve the integrity and transparency framework 
including 
for  elected  and  appointed  officials, 
lobbying  measures  (105).  These  recommendations 
on  lobbying  include  clear  definitions  of  ‘lobbying’ 
and  ‘lobbyists’  as  well  as  coherent  strategies  and 
mechanisms, such as a register. So far, the actions 
suggested have not yet been implemented (106). 

Justice 

remain  about 

the 
Significant  concerns 
efficiency of the justice system. The estimated 
time taken to resolve administrative cases at first 
instance has significantly increased (1 350 days in 
2023,  the  longest  in  the  EU,  compared  to  1 081 
days  in  2022).  The  average  duration  of  litigious 
civil  and  commercial  cases  at  first  instance  was 
also long in 2023 (454 days), though it decreased 
from  491  days  in  2022.  While  the  overall  quality 
of  the  justice  system  is  good,  the  low  number  of 
judges per capita (the third lowest in the EU), the 
shortage  of  clerical  staff,  and  limited  available 
premises  are  still  a  concern  despite  ongoing 
efforts  made  by  Malta  (107).  The  national  digital 
justice  strategy  for  2022-2027,  partly  funded  by 
the  Recovery  and  Resilience  Facility  (RRF),  is 
currently under implementation. As regards judicial 
independence, no systemic deficiencies have been 
reported (108). 

(104) Ibid., pp. 17-18. 

(105) Including from the OECD and GRECO. See the 2024 country-
specific chapter for Malta of the Rule of Law Report, pp. 11-
16, with further references. 

(106) Ibid. 

(107) Ibid., p. 6. 

(108)  For more detailed analysis of the performance of the justice 
system  in  Malta,  see  the  upcoming  2025  EU  Justice 
Scoreboard and the 2025 Rule of Law Report. 

52 

 
 
SUSTAINABILITY 
ANNEX 7: CLEAN INDUSTRY AND CLIMATE MITIGATION 

imports 

highlight 

Malta  faces  significant  challenges  regarding 
its  clean  industry  transition  and  climate 
mitigation:  its  slow  advancement  in  renewable 
energy  systems  and  high  dependency  on  critical 
raw  material 
strategic 
vulnerabilities.  Although  improvements  are  noted 
in 
in  circular  economy  practices,  Malta 
recycling rates, and has a significant gap between 
planned  climate  policy  measures  and  its  2030 
climate  target,  with  emissions  from  transport 
being  a  particular  challenge.  This  annex  reviews 
the  areas  in  need  of  urgent  attention  in  Malta’s 
clean  industry  transition  and  climate  mitigation, 
looking at different dimensions. 

lags 

to 

the 

lack  of 

alternative energy engines (around 3% at the end 
of  2023  compared  to  6.17%  in  the  EU)  (111).  This 
shows  that  the  deployment  of  a  greener  and 
electrified  vehicle  fleet  is  still  facing  challenges, 
mainly  due 
the  necessary 
infrastructure  such  as  charging  stations,  but  also 
current grid capacity. In this regard, cohesion funds 
will  support  the  instalment  of  recharging  points. 
Moreover, through its recovery and resilience plan 
and  cohesion  funds,  Malta  is  investing  in  its 
electricity  distribution  network.  Moreover,  through 
its  recovery  and  resilience  plan  and  cohesion 
funds,  Malta 
its  electricity 
investing 
distribution network. 

in 

is 

Strategic autonomy and technology 
for the green transition  

Critical raw materials  

systems 

renewable 

Malta’s  net  zero 
industry  manufacturing 
activities  are  at  an  early  stage,  and  the 
installation  of 
is 
advancing  slowly  (see  also  Annex  8  on  the 
Affordable  Energy  Transition).  In  2022,  Malta’s 
Energy  Intensive  Industries  represented  1.1%  of 
total  gross  added  value 
(GVA).  The  most 
significant  industry  being  the  manufacturing  of 
other non-metallic mineral products, with 0.5% of 
the total GVA (109). 

Although  small  in  size,  Malta’s  manufacturing 
sector  is  involved  in  motor  vehicles  parts  and 
accessory  production,  while  the  transition  of  the 
car  mobility  progresses  only  gradually.  There  is  a 
small  number  of  businesses  operating  in  the 
sector.  The  industry  has  experienced  significant 
growth  over  the  past  5  years,  with  a  compound 
annual  growth  rate  (CAGR)  of  17.2%.  The  sector 
produces  a  range  of  products  such  as  airbags, 
seats,  and  electrical  equipment  (110).  However,  it 
may  be  worth  noting  that,  in  2024,  41  new 
passenger  cars  a  day  were  registered,  adding  to 
the  congestion  problem  on  the  islands’  streets. 
Additionally,  Malta  is  among  the  EU  Member 
lowest  share  of  cars  with 
States  with  the 

(109)  EC, Eurostat. 

(110) https://www.ibisworld.com/malta/industry/motor-vehicle-

parts-accessories-
manufacturing/200189/#IndustryStatisticsAndTrends  

Manufacturing  in  Malta  depends  on  imports 
of  critical  raw  materials  needed  for  the 
green and digital transitions. Currently, Malta’s 
Waste  Management  Plan  is  lacking  a  critical  raw 
materials (CRM) strategy. Malta did not provide the 
Commission  with  any  information  on  policies  to 
increase recycling rates for waste containing CRM.  

imports. 

Its  material 

While  critical  raw  materials  are  needed  for 
developing  net  zero  industry,  Malta  depends 
import 
heavily  on 
dependency  stood  at  70.9%  in  2023  (EU  average 
22%),  the  second  highest  among  EU  Member 
States.  Malta’s  critical  raw  material  import  is 
mainly  helium,  which  is  used  e.g.  in  the  food  and 
beverage industry, metal fabrication, ship building 
and  semiconductor  manufacturing.  It  is  mainly 
imported  from  Qatar  and  Algeria (112).  As  regards 
level  of  strategic  dependencies  on  raw 
the 
materials  (113),  Malta  is  below  the  EU  average 
(0.21  vs  0.23)  together  with  Italy,  Cyprus  and 
Czechia (114). The recycling rate for e-waste, a key 

(111)  European Union (EU27) | European Alternative Fuels Observatory 

(112) EC, Raw Materials Information System (RMIS) – Country 

Profile - Malta 

(113) The value of this concentration index shows how much a 

country relies on a number of partner countries for a basket 
of critical raw materials. Higher values indicate higher import 
dependency – a value of 0.25 indicates high dependency, 
0.15-0.25 refers to a moderate degree, and below 0.15 
import dependency is low. 

(114) EC, 2025 Single Market and Competitiveness Scoreboard. 

53 

 
 
 
 
 
 
 
source  of  critical  raw  materials,  is  below  the  EU 
average,  with  76%  in  2022.  The  reuse  and 
recycling rate for end-of-life vehicles is also below 
the EU average (84% vs. 89% in 2022).  

manufacturing  increased  by  4  percentage  points, 
to reach 74% in 2022, the second highest value in 
the  EU. 
intensity  of 
manufacturing  production  decreased  by  12%, 
from 0.7 to 0.6 GWh per euro of GVA.  

In  parallel,  the  energy 

contributor 

F-gases are an important part of greenhouse 
gas  emissions  from  manufacturing  in  Malta. 
In terms of carbon dioxide equivalents, they are a 
significant 
these  emissions, 
especially  due  to  their  high  global  warming 
potential.  From  among  the  greenhouse  emissions 
from  industrial  processes  and  product  use  in 
Malta, the most  relevant is the use of fluorinated 
fluids (116).  

to 

Graph A7.1: GHG emission intensity of manu-
facturing and energy-intensive sectors, 2022 

Climate mitigation 

1 - Industry decarbonisation: 

to 

role 

reduce 

Malta’s  industry,  though  limited  in  scale,  is 
its  greenhouse  gas 
trying 
emissions.  The  manufacturing  industry  plays  a 
minor 
in  Malta’s  overall  greenhouse 
emissions:  about  2%,  the  lowest  share  in  the 
EU (115).  In  2022,  manufacturing  in  Malta  emitted 
70 g CO2eq of greenhouse gases per unit of GVA, 
the third lowest intensity in the EU and less than a 
third  of  the  EU  average.  Since  2017,  the 
greenhosue  gas  intensity  of  manufacturing  in 
Malta has been reduced by  16%, less than in the 
EU  overall  (21%).  In  Malta’s  overall  industrial 
greenhouse  emissions,  the  shares  of  energy  and 
non-energy-related  emissions  are  30% and  70%, 
respectively; the latter relate to industry processes 
and product use. Its share is the highest in the EU. 

improving 

Clean  energy  supply  and  energy  efficiency 
are 
in  Malta’s  manufacturing 
sector,  but  the  intensity  of  energy-related 
greenhouse  emissions  has  increased  lately. 
Between  2017  and  2022,  the  energy-related 
greenhouse  gas  emissions  intensity  of  Maltese 
manufacturing  increased  by  40%,  to  55 g  CO2eq 
per euro of GVA, albeit still low relative to the EU 
average,  133 g/€.  At  the  same  time,  its  process- 
and  product  use-related  emissions 
intensity 
(sightly  more  than  the 
decreased  by  27%, 
decrease  in  the  EU  overall,  23%),  to  125  g/€, 
about  25%  above  the  EU  average  level.  In  the 
the  share  of  electricity  and 
same  period, 
in 
final  energy  consumption 
in 
renewables 

(115)  In  2023.  Manufacturing  includes  all  divisions  of  the  “C” 
section  of  the  NACE  Rev.  2  statistical  classification  of 
economic  activities.  In  the  remainder  of  this  section,  unless 
indicated  otherwise,  data  on  manufacturing  refer  to  the 
divisions  of  the  NACE  section  C  excluding  division  C19 
(manufacture  of  coke  and  refined  petroleum  products),  and 
the  year  2022.  The  source  of  all  data  in  this  section  is 
Eurostat;  data  following  the  UNFCCC  Common  Reporting 
Framework (CRF) are from the European Environment Agency 
(EEA), republished by Eurostat.  

Source: Eurostat. 

Energy-intensive  manufacturing  sectors  only 
have a minor role in Malta (117). The processing 
of  non-metallic  minerals  has  a  more  pronounced 

(116)  For  the  GHG  emissions  intensity  of  GVA  related  to  energy 
use  and  industrial  processes  and  product  use  respectively, 
GHG  emissions  are  from  inventory  data  in  line  with  the 
UNFCCC  Common  Reporting  Format  (CRF),  notably  referring 
to  the  source  sectors  CRF1.A.2  –    fuel  combustion  in 
manufacturing  industries  and  construction  and  CRF2  – 
industrial  processes  and  product  use.  The  CRF1.A.2  data 
broadly correspond to the NACE C and E sectors, excluding C-
19.  GVA  data  (in  the  denominator  for  both  intensities)  are 
aligned  with  this  sectoral  coverage.  Therefore,  they  are  not 
fully consistent with the data referred to in other part of this 
section. 

(117)EU-wide, energy-intensive sectors comprise the manufacture 
of  paper  and  paper  products  (NACE  division  C17),  of 
chemicals and chemical products (C20), “other” non-metallic 
mineral  products  (C23;  this  division  includes  manufacturing 
activities related to a single substance of mineral origin, such 
as  glass,  ceramic  products,  tiles,  and  cement  and  plaster), 
and basic metals (C24). To date, these industries are energy-
intensive – i.e. consuming much energy both on site and/or in 
the  form  of  purchased  electricity  –  and  greenhouse  gas 
emissions intensive, in various combinations. In Malta, all of 
these  sectors  are  present  but  their  overall  share  in  GDP  is 
below 1 per cent.  

54 

00.511.522.533.54C-C19C17C20C23C24KG CO2eq / €MaltaEU-27 
 
 
   
 
presence,  having  provided  about  7%  of 
manufacturing  GVA  in  2022.  Still,  the  overall 
greenhouse  gas  emissions 
intensity  of  these 
sectors is low. 

sector. 

of  most 

“indirect” 
is  based  on 

Malta  has  an  indirect  approach  towards 
industry  decarbonisation.  Malta’s  Climate 
Action  Act  commits  the  government  to  achieving 
climate  neutrality  by  2050,  but  Malta  does  not 
have  specific  sectoral  targets,  including  for  the 
industrial 
industrial 
Its 
decarbonisation  strategy 
the 
energy-consuming 
electrification 
processes  and  end-uses,  while  exploring  biofuels 
and green hydrogen as sustainable energy options 
for  hard-to-abate  processes  and  sectors,  and 
supporting  technological  innovation  and  research 
to develop new solutions tailored to Malta's unique 
context.  The  solutions  being  explored  include 
offshore wind and solar power as well as flexibility 
solutions  such  as  battery  storage.  Malta  is  also 
investing  in  the  infrastructure  needed  for  the 
electrification  of  energy-consuming  processes. 
Studies  are  underway  to  identify  cost-optimal 
options  for  electricity  infrastructure  and  develop 
strategies  for  decarbonising  the  industry  and 
service  sectors.  Malta  is  also  considering  the 
potential  of  biofuels  and  green  hydrogen  as 
sustainable energy options (118). 

2-  Reduction  of  emissions  in  the  effort 
sharing sectors: 

to 

swiftly 

To  attain  its  2030  effort  sharing  target, 
Malta  needs 
specify  and 
implement further climate mitigation policies 
(119).  In  2023,  greenhouse  gas  emissions  from 
Malta’s effort sharing sectors are expected to have 
been  30.6%  above  those  of  2005.  By  2030, 
current policies are projected to limit their increase 

to  42.6%  above  2005  levels;  additional  policies 
considered  in  Malta’s  final  updated  NECP  are 
projected  to  limit  the  increase  to  29.4%.  This 
results  in  a  significant  shortfall  regarding  Malta’s 
effort  sharing  target,  -19%,  by  48.4 percentage 
points  (120),  highlighting  the  need  for  much  more 
ambitious  climate  action.  While  Malta  could  use 
domestic  flexibilities  available  under  the  effort 
sharing  regulation,  this  would  not  be  sufficient  to 
close the gap to target. 

Swift  action  on  decarbonising  transport 
in  Malta. 
appears  particularly  exigent 
Between  2005  and  2023,  greenhouse  gas 
emissions  from  road  transport  increased  by  32% 
in  Malta,  while  they  decreased  by  5%  in  the  EU 
overall.  Speeding  up  climate  mitigation  in  these 
sectors would help protect households, businesses 
and  transport  users  in  Malta  from  the  impact  of 
the carbon pricing.  

Graph A7.2: Greenhouse gas emissions in the 
effort sharing sectors, 2005 and 2023 

Source: European Environment Agency. 

Sustainable industry 

(118)  Malta’s  final  national  energy  and  climate  plan  (NECP) 
enumerates  a  range  of  specific  projects  in  the  filed  of  e.g. 
offshore  energy  storage  systems;  the  decarbonisation  of 
ports  using  microgrid  technologies;  reducing  the  operational 
carbon  footprint  of  construction;  the  construction  and 
monitoring of deep aquifer boreholes, to use ground heat as 
an  energy  source;  using  Liquified  Natural  Gas  (LNG)  in  ship 
innovative 
propulsion;  a  pilot  study  developing  an 
methodology to analyse the thermal behaviour of traditional 
and modified roofs; and others. 

in  Regulation 

(119) The national greenhouse gas emission reduction target is set 
(the  Effort  Sharing 
(EU)  2023/857 
out 
Regulation).  It  applies  jointly  to  buildings  (heating  and 
cooling); road transport, agriculture; waste; and small industry 
(known as the effort sharing sectors). 

1 - Circular economy transition: 

Malta  shows  robust  improvement  on  some 
circular  economy  indicators.  It  is  currently 

(120)  The effort sharing emissions for 2023 are based on 
approximated inventory data. The final data will be 
established in 2027 after a comprehensive review. 
Projections on the impact of current policies (“with existing 
measures”, WEM) and additional policies (“with additional 
measures”, WAM) as per Malta’s final updated NECP. 

55 

00.20.40.60.811.21.420052023MtCO2eDomestic transport (excl. aviation)Buildings (under ESR)AgricultureSmall industryWaste 
 
       
 
to 

for 

transition 

longer-term 

working  on  a  National  Strategy 
the 
Environment  2050,  which  will  set  the  framework 
for  a 
increased 
sustainability.  The  circular  economy  is  mentioned 
throughout the text, which includes more upstream 
measures  on  the  sustainable  design  of  products 
and  initiatives  empowering  consumers,  reflecting 
the  measures  of  the  EU  2020  Circular  Economy 
Action  Plan.  Malta's  circular  use  of  materials  – 
which is key to reducing its dependence on imports 
–  has  been  steadily 
increasing  since  2016, 
reaching  19.8%  in  2023  and  remains  well  above 
the  EU  average  of  11.8%.  As  regards  resource 
productivity,  in  2023,  Malta  generated  EUR  3.52 
per  kg  of  material  consumed  after  a  steady 
increase  of  70%  since  2018,  above  the  EU 
average of EUR 2.74.  

Graph A7.3: Municipal waste treatment 

Source: Eurostat 

faces 

challenges 

Malta 
in 
significant 
transitioning to a circular economy, including 
stagnation in municipal waste reduction, low 
recycling  rates  and  a  reliance  on  landfilling. 
In  2020,  Malta  adopted  its  national  Strategic 
towards  a  Circular 
Vision  2020-2030  – 
Economy (121). With this, Malta introduced a series 
of  measures  to  reduce  waste  generation  and  in 
particular landfilling. However, there are as yet no 
tangible  results  on  the  ground.  Municipal  waste 

generation in Malta has stagnated in recent years. 
In  2023,  the  country  generated  606  kg/capita  of 
municipal  waste,  which  is  significantly  above  the 
estimated  EU27  average  of  511  kg/cap  in  the 
same year (see Graph A7.3). Malta has shown very 
low  rates  of  preparing  municipal  waste  for  reuse 
and recycling in recent years. In 2023, only 17,1% 
of  municipal  waste  was  prepared,  significantly 
below  the  estimated  EU  average  of  48%  in  the 
same  year.  This  has  not  improved  in  the  last 
decade.  Landfilling  is  the  dominant  treatment 
method  in  Malta  and  the  landfilling  rate  has 
remained relatively stable. 

packaging  waste 

Malta’s 
generation 
increased  between  2010  and  2022.  In  2022, 
the country generated 167 kg/capita of packaging 
waste,  which  is  slightly  below  the  estimated 
European  average  of  186  kg/capita  in  the  same 
year (122).  Malta’s  overall  packaging  waste 
recycling  rate  was  32%  in  2022  and  has  not 
improved  overall  in  the  past  decade.  Initiatives 
regarding single-use plastics include: (i) ‘The Single 
Use  Plastics  Strategy  2021-2030  –  Rethink 
Plastics’,  which  introduces  measures  aiming  at 
reducing  the  consumption  of  certain  single-use 
plastic  products  through  a  ban  on  imports  and 
production  for  some  products  and  a  ban  on  the 
sale  and  distribution  of  others (123).  (ii)  The  2024 
‘Bring  Your  Own  Container’  scheme,  which 
promotes  product  reuse  as  opposed  to  single-use 
consumption (124). Yearly  investment  needs  in  the 
fields of circular economy and waste management 
are  EUR  248  m.  Currently  additional  investment 
worth EUR 31 m is needed to meet this total.  

2 - Zero pollution industry: 

Air quality in Malta has improved, with some 
exceptions.  The  emissions  of  several  air 
pollutants  have  decreased  significantly  in  Malta 
since  2005,  while  GDP  growth  has  continued. 
Malta meets its emissions reduction commitments 
for  2020-2029  for  air  pollutants  NOx,  non-
methane  volatile  organic  compounds  (NMVOC), 

(122) The EU average might be influenced by the situation that 

not all Member States already fully apply the reporting rules 
for packaging waste as defined in Commission Implementing 
Decision 2019/665. 

(123) Environment & Resources Authority, 2021, Single-Use 
Plastic Products Strategy for Malta 2021-2030, Link. 

(124)  Circular Economy Malta, BRING YOUR OWN CONTAINER 

(121)  Circular Economy Malta, Strategy 2020 – 2030, Link. 

(BYOC) Initiative, Link. 

56 

697642611618606010020030040050060070080020192020202120222023Kg per capitaMaterial recyclingComposting and digestionLandfill/disposalTotal incineration (incl. energy recovery)Waste treatment unspecifiedEU-27 total waste per capita 
       
 
 
sulphur  dioxide  (SO2),  ammonia  (NH3)  and  PM2.5.  
According  to  the  latest  projections,  Malta  would 
meet  its  emissions  reduction  commitments  for 
2030 onwards for NMVOC, SO2 and PM2.5, but not 
for  NOx  and  NH3.  Nevertheless, 
in  2023, 
exceedances  above  the  legal  limit  values  were 
registered for PM10 in one air quality zone; and in 
another  air  quality  zone  the  target  values  for 
ozone concentrations were not met (125). 

Malta’s  industry  releases  significant  water 
pollutants. Malta ranks 8th in emissions intensity 
of  heavy  metals  to  water  in  the  EU,  the  main 
contributors being the energy and livestock sectors 
(the  latter  for  nitrogen,  total  organic  carbon  and 
phosphorous). Malta submitted its first national air 
pollution control programme to the Commission on 
18  March  2020.  An  update  was  due  four  years 
afterwards.  Malta  also  has  to  update  its  policies 
and  measures  for  reducing  air  emissions.  The 
yearly  investment  needs  in  the  field  of  pollution 
prevention  and  control  are  EUR  57  m  (a  yearly 
shortfall of EUR 32 m) (126). 

(125)  Malta exceeded the daily limit value for PM10 on 52 days 
and the ozone target value on 36 days in those zones in 
2023, EIONET Central Data Repository, Link. 

(126)  European Commission, DG Environment, Environmental 

investment needs & gaps assessment programme, 2025 
update. Expressed in 2022 prices. 

57 

 
 
Table A7.1:  Key clean industry and climate mitigation indicators: Malta 

Source:  Net zero industry: European Commission: The net-zero manufacturing industry landscape across Member States: final 
report, 2025. Automotive industry transformation: Eurostat. Critical raw materials: Eurostat. Climate mitigation: See 
footnotes in the "climate mitigation" section; reduction of effort sharing emissions: EEA greenhouse gases data viewer; European 
Commission, Climate Action Progress Report, 2024. Sustainable industry: Years of life lost due to PM2.5: Eurostat and EEA, 
Harm to human health from air pollution in Europe: burden of disease status, 2024. Air pollution damage: EEA, EU large industry 
air pollution damage costs intensity, 2024. Emissions covered: As, benzene, Cd, Cr, Hg, NH3, Ni, NMVOC, NOX, Pb, dioxins, PM10, 
PAH, SOX. Water pollution intensity: EEA, EU large industry water pollution intensity, 2024. Releases into water covered from 
cadmium, lead, mercury, nickel. Other indicators: Eurostat. 

58 

Strategic autonomy and technology for the green transitionNet zero industryOperational manufacturing capacity 2023- Solar PV (c: cell, w: wafer, m: module), MW-- Electrolyzer, MW-- Wind (b: blade, t: turbine, n: nacelle), MW0- battery, MWh-Automotive industry transformation201720182019202020212022202320182021Motorisation rate (passenger cars per 1000 inhabitants), %615609597597602585575539561New zero-emission vehicles, electricity motor, %0.313.493.653.877.9215.4020.311.038.96Critical raw materials201720182019202020212022202320182021Material import dependency, %75.170.169.371.370.270.924.222.6Climate mitigationTrendIndustry decarbonisation201720182019202020212022202320172022GHG emissions intensity of manufacturing production, kg/€0.10.090.090.090.080.08 0.340.27Share of energy-related emissions in industrial GHG emissions79.281.280.276.972.471.669.444.842.5Energy-related GHG emissions intensity of manufacturing39.536.839.751.950.455.2-158.4132.9and construction, kg/€Share of electricity and renewables in final energy consumption70.072.273.173.274.173.877.043.344.2in manufacturing, %Energy intensity of manufacturing, GWh/€0.680.640.630.620.610.600.531.291.09Share of energy-intensive industries in manufacturing production9.17.3GHG emissions intensity of production in sector [...], kg/€- paper and paper products (NACE C-17)-0.200.21-0.150.200.20-0.730.68- chemicals and chemical products (NACE C20)0.25-0.210.190.160.140.13-1.251.26- other non-metallic mineral products (NACE C23)---0.360.290.450.42-2.532.24- basic metals (NACE C24)0.020.030.020.010.010.010.01-2.793.49Reduction of effort sharing emissions20182019202020212022202320182023GHG emission reductions relative to base year, % 30.143.630.6- domestic road transport24.932.69.617.537.032.21.45.2- buildings10.120.26.08.530.3-50.021.432.92005202120222023TargetWEMWAMEffort sharing: GHG emissions, Mt; target, gap, %1.01.31.51.3-19.0-61.6-48.4Sustainable industryTrendCircular economy transition20182019202020212022202320182021Material footprint, tonnes per person10.011.011.19.410.15.814.715.0Circular material use rate, %8.3        12.8      16.5      19.2      21.5      19.8      11.611.1Resource productivity, €/kg2.1        2.4        2.0        2.6        3.2        3.5        2.12.3Zero pollution industryYears of life lost due to PM2.5, per 100,000 inhabitants482      447      326      438      536      -702571Air pollution damage cost intensity, per thousand € of GVA    1.7            27.5      Water pollution intensity, kg weighted by human factors per bn € GVA    1.2   0.9MaltaEU-27MaltaEU-27MaltaEU-27 
 
 
 
 
   
 
ANNEX 8: AFFORDABLE ENERGY TRANSITION 

This  annex  outlines  the  progress  made  and 
the  ongoing  challenges  faced  in  enhancing 
energy  competitiveness  and  affordability, 
while advancing the transition to net zero. It 
examines  the  measures  and  targets  proposed  in 
the  final  (draft)  updates  to  the  national  energy 
and climate plans (NECPs) for 2030. 

to 

Despite  some  limited  progresses  in  terms  of 
policy  support 
the  deployment  of 
renewables  and  strengthen  its  electricity 
grid,  the  energy  system  of  Malta  remains 
dominated by fossil  fuels.  Energy  consumption 
in the residential sector remains high. 

Energy prices and costs 

Graph A8.1: Retail energy price components for 
household and non-household consumers, 2024 

(i) For household consumers, consumption band is DC for 
electricity and D2 for gas. Taxes and levies are shown 
including VAT. 
(ii) For non-household consumers, consumption band is ID for 
electricity and I4 for gas. Taxes and levies are shown 
excluding VAT and recoverable charges, as these are typically 
recovered by businesses. 
Source: Eurostat 

in  2024 
Malta’s  electricity  retail  prices 
remained  stable,  and  among  the  lowest  in 
the  EU,  especially  for  household  consumers. 
This trend is largely driven by a reduced burden of 
taxes and levies compared to the EU average. The 
later,  for  non-household  consumer,  accounts  for 
5,9%  of  the  electricity  final  price  for  household  
consumers 
non-household 
consumers  (against  an  EU  average  of  25%  and 
11,4%  respectively).  The  retail  market  in  Malta  is 
not  fully  liberalised.  Malta  do  not  report  natural 
gas prices in the non-household sector. 

1,2% 

and 

for 

Graph A8.2: Monthly average day-ahead wholesale 
electricity prices and European benchmark 
natural gas prices (Dutch TTF) 

(i) the Title Transfer Facility (TTF) is a virtual trading point for 
natural gas in the Netherlands. It serves as the primary 
benchmark for European natural gas prices. 
(ii) CWE gives average prices in the central-western European 
market (Belgium, France, Germany, Luxembourg, the 
Netherlands and Austria). 
Source: S&P Platts and ENTSO-E 

Flexibility and electricity grids 

Malta  is  currently  interconnected  with  the 
European  electricity  grid  through  a  single 
submarine  power  cable  link  with  Italy.  To 
further strengthen the security of electricity supply 
in the country, a decision was taken to invest, with 
support  from  the  Cohesion  Fund,  in  a  second 
225 MW  electricity  sub-sea  link  with  Italy  (Sicily) 
by  2026.  This  second  cable  link  connecting  the 
existing  Maghtab  terminal  station  and  Ragusa 
terminal  station  will  contribute  to 
long-term 
security  of  supply  as  well  as  allow  for  the 
integration of a higher share of renewable energy 
sources.  The  planning  and  design  phase  for  the 
cable  is  progressing  well.  With  a  distribution 
network  connection  to  Italy,  Malta  is  indirectly 
linked  to  the  Greece-Italy  capacity  calculation 
region. 

is  not 

interconnected  with 

the 
Malta 
European  gas  grid.  It  imports  natural  gas 
through  a  liquefied  natural  gas  terminal. 
Malta  is  also  considering  a  new  hydrogen-ready 
gas  interconnector  with  Italy,  which  would  be 
capable  of  transmitting  100%  hydrogen  from  its 
It  will  benefit  from  an 
commissioning  date. 
the  TEN-E 
exemption  under  Article 24  of 

59 

 
 
 
 
 
 
Regulation  and  continue  to  be  a  project  of 
common  interest  in  the  first  Union  list  under  the 
revised Regulation. 

Malta is taking some steps to strengthen its 
national grid. Through its recovery and resilience 
plan, Malta is investing in its electricity distribution 
network. This takes the form of investments in the 
grid and in distribution services. 

The  electricity  supply  market 
in  Malta 
remains closed, with Enemalta being the only 
electricity  supplier  on  the  island,  with  few 
opportunities for consumer empowerment.  In 
terms  of  consumer  empowerment,  94%  of  final 
household  consumers  had  smart  meters  installed 
by  2023.  However,  the  absence  of  a  liquid 
wholesale market hindered the liberalisation of the 
electricity  market,  as  well  as  the  development  of 
demand-side  response  mechanisms  and  further 
aggregation  opportunities.  Nevertheless,  9.5%  of 
households  in  Malta  produce  their  own  energy, 
which  is  considerably  greater  than  the  proportion 
of  prosumers  in  most  of  the  EU  Member  States. 
Energy communities have not yet found their place 
in  the  Maltese  energy  system,  with  no  such 
communities registered in Malta in 2023. 

In  2023,  electricity  accounted  for  39.2%  of 
Malta’s  final  energy  consumption,  above  the 
EU  average  of  22.9%,  and  this  share  has 
seen a slight increase in the last decade(127). 
When it comes to households, electricity  accounts 
for  75.4%  of  final  energy  consumption,  while  in 
industry  it  represents  66.5%  (see  also  Annex  7). 
For  the  transport  sector,  this  share  remains 
negligible 
in 
electrification  across  sectors  is  required  for  cost 
effectively  decarbonising 
the  economy  and 
bringing  the  benefits  of  affordable  renewable 
generation to consumers. 

at  0.6%. 

progress 

Further 

Renewables and long-term contracts 

of 

renewable 

in  Malta 
Deployment 
progresses at a slow pace. Renewable installed 
capacity  in  Malta  in  2024  increased  by  3% 
compared  to  2023.  The  total  renewable  energy 

capacity  stood  at  237 MW(128).  An  overwhelming 
share  of  total  installed  capacity  is  solar,  with 
233 MW  in  2024.  Wind  capacity  is  still  null  as  of 
2024.  The  share  of  renewable  energy  sources 
(RES)  in  Malta’s  electricity  mix  in  2024  was 
16.7%(129),  far  below  the  EU  overall  RES  share 
(47%) and one of the lowest in the EU. 

Graph A8.3: Malta's installed renewable capacity 
(left) and electricity generation mix (right) 

“Other” includes renewable municipal waste, solid biofuels, 
liquid biofuels, and biogas. 
Source: IRENA, Ember 

to 

reform 

the 
The  government  plans 
permitting  framework  for  renewable  energy 
projects, as outlined in the NECP, in order to 
accelerate  application  and  permit-granting 
procedures.  However,  there  is  still  a  need  for 
internal 
coordination  around  permit-granting 
procedures. In practice, actual implementation and 
cooperation  may  vary  depending  on  the  context 
and  effectiveness  of  regulatory  oversight.  A  one-
stop-shop  could  facilitate  procedures  and  reduce 
the  number  of  authorities  involved.  Malta  has 
already  developed 
two  functioning  electronic 
portals to that effect. 

in  Annex 

 Malta’s contribution regarding its renewable 
energy  share,  24.5%,  is  below  the  28% 
objective calculated according to the formula 
set 
the  Governance 
II  of 
Regulation. Furthermore,  2024  is  the  last  year 
for  which  Malta  has  released  a  schedule  on  the 
expected  allocation  of  support  for  renewables  on 
the Union Renewables Development Platform. 

Malta  has taken  some steps to  develop  long 
term  contracts  to  support  RES  deployment. 
Regarding  the  power  purchase  agreement  (PPA) 

(127) CAGR (compound annual growth rate) of -0.2% between 
2013 and 2023 and minimum/maximum share of 39.0% and 
40.9%, respectively. 

(128)  IRENA 2025: Renewable Energy Capacity Statistics 2025 

(129)  Yearly electricity data, Ember. These data might still be 
subject to change once final figures become available.  

60 

 
 
 
 
and  contract  for  difference  (CfD)  markets,  Malta 
has  launched  a  tender  to  assess  the  regulatory 
and  administrative  barriers  to  PPAs  for  long-term 
renewables  and  in  2024  a  bidding  process  for 
solar  was  launched  based  on  a  two-way  contract 
for difference. 

Energy efficiency 

In  2023,  primary  energy  consumption  (PEC) 
increased  in  Malta  by  3.0%  to  0.91 Mtoe. 
Final  energy consumption  (FEC)  increased  by 
3.2% to 0.72 Mtoe(130). Compared to 2022, FEC 
decreased  in  all  main  sectors  but  transport,  in 
which  FEC  increased  by  10.3%.  In  residential,  FEC 
decreased  by  2.4%,  in  industry  by  13.8%  and  in 
services  by  0.6%.  Under  the  recast  Energy 
Efficiency  Directive,  Malta  is  to  reach  a  PEC  of 
0.8 Mtoe and an FEC of 0.68 Mtoe by 2030. 

Malta  needs  to  step  up  its  efforts  in  the 
building  sector  to  make  a  meaningful 
contribution to the 2030 reduction target for 
energy  consumption  in  buildings.  As  per  its 
most  recent  long-term  renovation  strategy,  Malta 
intends  to  reduce  the  average  delivered  energy 
demand by 18% by 2030 in dwellings and to bring 
down the CO2 emissions from residential and non-
residential  buildings  by  38%  compared  to  2018. 
However,  between  2018  and  2022,  final  energy 
consumption  (climate  corrected)  in  the  residential 
sector increased by 13.5% and no lasting decrease 
can  be  observed  in  greenhouse  gas  emissions  in 
the household and service sectors. 

In  2022,  heating  and  cooling  represented 
60% of the country’s residential final energy 
consumption.  The  residential  electricity-to-oil 
price ratio is below 3, but it has increased by 35% 
over the past four years, making heat pumps less 
financially attractive. 

Malta  deploys  an  effective  supportive 
national  financing  framework  mobilising 
investment  composed 
energy  efficiency 
mainly  of  grants  and  mixed  schemes.  These 
instruments  cover  various  sectors,  mainly  in  the 
form  of  grants  and  subsidies (e.g.  grants  for  EVs, 
or  support  to  buy  energy  efficient  heating  & 

cooling  appliances).  However, 
services could benefit from more action. 

transport  and 

Security of supply and diversification 

In  2024, Malta  did  not depend on  Russia  for 
its  imports  of  natural  gas.  Malta  is  the  only 
Member  State  whose  natural  gas  demand 
increased between August 2022 and July 2024, by 
7%, compared to the average gas demand of the 
years  2017-2021,  mainly  due  to  the  shifting  of 
demand  from 
local 
electricity  generation  to  avoid  exacerbating  gas 
supply  issues  on  the  continent.  However,  between 
April  and  July  2024,  Maltese  gas  consumption 
decreased by an average of 3.75%. 

interconnector  onto 

the 

Malta’s  energy  mix  saw  a  slight  shift 
towards natural gas and renewables in 2023. 
The  share  of  natural  gas  increased  to  35.7%  in 
2023  while  renewables  and  biofuels  rose  to 
7,3%(131) Oil and petroleum products remained the 
dominant source but declined slightly to 51,3%(132) 

Fossil fuel subsidies 

In  2023,  environmentally  harmful(133)fossil 
fuel  subsidies  without  a  planned  phase-out 
before 2030 represented 1.6%(134) of Malta’s 
GDP(135),  above  the  EU  weighted  average  of 
0.49%.  Income/price  support  accounted  for  86% 
of  this  volume,  while  tax  measures  represented 
14%.  Fossil  fuel  subsidies  without  a  planned 
phase-out  before  2030  and  which  do  not 
specifically  address,  in  a  targeted  way,  energy 
poverty  nor  genuine  energy  security  concerns 
included  the  ongoing  emergency  support  to 

(131)  Electricity and heat are excluded to avoid double counting 

focusing on primary energy sources. 

(132)  Gross Inland Consumption: Energy Balances - Eurostat 
(133)  Direct fossil fuel subsidies that incentivise maintaining or 
increasing in the availability of fossil fuels and/or use of 
fossil fuels. 

(134)  For all Member States, it includes public R&D expenditures 
for fossil fuels as reported by the IEA (Energy Technology 
RD&D Budgets) and excludes, for methodological 
consistency, excise tax exemption on kerosene consumed in 
intra-EU27 air traffic. 

(130)  Source: Final energy balance, Eurostat. 

(135) 2023 Gross Domestic Product at market prices, Eurostat. 

61 

 
 
 
Enemalta,  subsidies 
to  petroleum  products, 
notably petrol and diesel, and a reduction of excise 
duties  on  petrol  and  diesel.  Additionally,  Malta’s 
2023 Effective Carbon Rate(136) averaged EUR 75.9 
per tonne of CO₂, below the EU weighted mean of 
EUR 84.80. 

(136) The Effective Carbon Rates is the sum of carbon taxes, ETS 

permit prices and fuel excise taxes, representing the 
aggregate effective carbon rate paid on emissions. 

62 

 
 
Table A8.1:  Key Energy Indicators 

Source: Eurostat, ENTSO-E, S&P Platts 

63 

20212022202320242021202220232024Household consumer - Electricity retail price (EUR/KWh)0.1301          0.1290              0.1271              0.1286          0.2314              0.2649          0.2877          0.2879          Energy & supply [%]73.3%73.2%72.0%72.3%36.6%54.3%55.6%47.8%Network costs20.8%20.9%22.0%21.8%26.7%25.3%24.8%27.2%Taxes and levies including VAT5.9%5.9%6.0%5.9%36.7%20.3%19.6%25.0%VAT4.8%4.7%4.8%4.7%14.5%13.4%13.8%14.6%Household consumer - Gas retail pricen/an/an/an/a0.0684              0.0948          0.1121          0.1128          Energy & supplyn/an/an/an/a43.7%61.0%64.5%53.9%Network costsn/an/an/an/a22.5%17.3%17.1%18.3%Taxes and levies including VATn/an/an/an/a33.8%21.7%18.4%27.8%VATn/an/an/an/a15.5%11.6%10.2%13.6%Non-household consumer - Electricity retail price0.1209          0.1187              0.1224              0.1225          0.1242              0.1895          0.1971          0.1661          Energy & supply72.8%72.4%72.3%72.3%43.0%66.5%63.0%55.8%Network costs21.3%21.7%21.8%21.8%15.8%10.7%11.9%15.5%Taxes and levies excluding VAT1.2%1.3%1.2%1.2%30.4%9.9%11.2%15.4%Non-household consumer - Gas retail pricen/an/an/an/a0.0328              0.0722          0.0672          0.0517          Energy & supplyn/an/an/an/a66.2%77.3%77.3%68.7%Network costsn/an/an/an/a7.7%3.8%5.3%7.1%Taxes and levies excluding VATn/an/an/an/a12.5%6.1%7.3%11.6%Wholesale electrity price (EUR/MWh)129.0295.1126.1112.2111.0233.299.184.7Dutch TTF (EUR/MWh)n/an/an/an/a46.9123.140.534.420172018201920202021202220232024Gross Electricity Production (GWh)1,652             1,962                2,060                2,143             2,215                2,293             2,345             -Combustible Fuels1,489         1,772             1,864             1,906         1,959            2,004         2,036         -Nuclear-              -                 -                 -              -                 -              -              -Hydro-              -                 -                 -              -                 -              -              -Wind0                 0                     0                     0                 0                    0                 0                 -Solar162             190                195                237             256                289             309             -Geothermal-              -                 -                 -              -                 -              -              -Other Sources-              -                 -                 -              -                 -              -              Gross Electricity Production [%]Combustible Fuels90.2%90.3%90.5%88.9%88.5%87.4%86.8%-Nuclear0.0%0.0%0.0%0.0%0.0%0.0%0.0%-Hydro0.0%0.0%0.0%0.0%0.0%0.0%0.0%-Wind0.0%0.0%0.0%0.0%0.0%0.0%0.0%-Solar9.8%9.7%9.5%11.1%11.5%12.6%13.2%-Geothermal0.0%0.0%0.0%0.0%0.0%0.0%0.0%-Other Sources0.0%0.0%0.0%0.0%0.0%0.0%0.0%-Net Imports of Electricity (GWh)861621636416511639622-As a % of electricity available for final consumption 37.1%26.0%25.7%17.5%20.4%23.7%22.7%-Electricity Interconnection [%]24.2%29.4%29.0%31.0%44.5%42.3%40.9%39.5%Share of renewable energy consumption - by sector [%]Electricity6.8%7.7%7.5%9.5%9.6%10.1%10.7%-Heating and cooling19.3%22.8%23.6%23.0%32.6%39.9%47.5%-Transport6.8%8.0%8.9%10.6%10.5%10.5%10.7%-Overall7.2%7.9%8.2%10.7%12.6%14.0%15.1%-20202021202220232020202120222023Import Dependency [%] 97.6%97.0%99.0%97.6%57.5%55.5%62.5%58.3%of Solid fossil fuels 0.0%0.0%0.0%0.0%35.8%37.2%45.9%40.8%of Oil and petroleum products 99.3%97.9%100.7%100.1%96.8%91.7%97.8%94.5%of Natural Gas 96.2%103.5%100.2%93.3%83.6%83.6%97.6%90.0%Dependency from Russian Fossil Fuels [%]of Natural Gas 0.0%0.0%0.0%0.0%41.0%40.9%20.7%9.3%of Crude Oil0.0%0.0%0.0%0.0%25.7%25.2%18.4%3.0%of Hard Coal0.0%0.0%0.0%0.0%49.1%47.4%21.5%1.0%2017201820192020202120222023Gas Consumption (in bcm)0.3                 0.3                     0.4                     0.4                 0.4                    0.4                 0.4                 Gas Consumption year-on-year change [%]-20.5%6.1%3.5%-0.2%1.6%4.4%Gas Imports - by type (in bcm)0.3                 0.4                     0.4                     0.4                 0.4                    0.4                 0.4                 Gas imports - pipeline-                 -                    -                    -                 -                    -                 -                 Gas imports - LNG0.30.40.40.40.40.40.4Gas Imports - by main source supplier [%]Trinidad and Tobago65.3%36.6%80.7%81.4%66.6%67.8%83.4%United States8.0%16.0%2.4%18.6%33.4%32.2%16.6%MaltaEU 
 
 
 
   
 
ANNEX 9: CLIMATE ADAPTATION, PREPAREDNESS AND ENVIRONMENT 

transport, 

it  becomes 

faces  multiple 

Malta 
climate-related 
increasingly 
challenges  as 
exposed  to  heatwaves,  droughts,  floods  and 
wildfires,  which  have  a  direct  impact  on  its 
society and economy.  In its national  adaptation 
strategy,  Malta  has 
identified  several  critical 
sectors  requiring  adaptation  measures.  Of  these, 
water  management  is  paramount,  followed  by 
land  use  and 
infrastructure  and 
buildings,  agriculture  and  fisheries,  and  others. 
Malta’s newly adopted national energy and climate 
plan  (NECP)  states  that  Malta  has  developed  its 
own pathway towards 2050, looking into climate-
change  mitigation  and  adaptation  aspects.  The 
country’s water resources are under severe stress 
due to high demand from the agriculture, tourism 
scarcity 
and 
exacerbated  during  the  summer  months.  Despite 
implementing  adaptation  strategies,  Malta  still 
struggles  with  significant  environmental  issues, 
treatment, 
insufficient  wastewater 
such  as 
degrading  biodiversity  and  ecosystems,  and 
nutrient  pollution  from  agriculture,  all  of  which 
undermine the nation’s climate resilience. 

sectors,  with  water 

energy 

Climate adaptation and preparedness 

Malta  is  increasingly  exposed  to  heatwaves, 
droughts,  floods  and  wildfires.  Climate  risks 
directly  affect  Malta’s  society  and  economy. 
Between 2018 and 2022, Malta recorded 84 heat-
inhabitants. 
related 
fatalities  per  100 000 
in 
Between  1980  and  2023  EUR 51  million 
economic losses were caused by extreme weather- 
and  climate-related  events.  However,  only  4%  of 
the  economic  damage  over  that  period  was 
insured,  compared  to  62%  in  Denmark (137).  This 
will have a particular impact on vulnerable groups 
and on regions in Malta with populations of lower 
socioeconomic  status  where  unemployment  is 
high,  due  to  their  lesser  capacity  to  adapt,  and 
where  climate  change  aggravates  pre-existing 
vulnerabilities (138). 

Malta is becoming more vulnerable to floods, 
as 
recent  events  have  demonstrated. 
Economic  losses  since  1980  amount  to  nearly  23 

million. In accordance with the EU Flood Directive, 
in February 2024 Malta adopted the second cycle 
of  flood  risk  management  plans  (FRMPs)  2021-
2027,  which is  being  assessed  to  ensure  that  the 
plans  provide  for  the  identification  and mitigation 
of flood risk on the islands. 

Several  national  policy  measures  related  to 
adaptation  and  preparedness  have  been 
implemented  over  recent  years.  Malta 
is 
included  in  two  of  the  three  regions  identified  as 
hotspots  for  climate  risks,  meaning  that  they  are 
most  affected  by  climate  change  –  Southern 
Europe  and  low-lying  coastal  regions (139).  Malta 
remains  vulnerable  to  urban  flash  floods,  water 
scarcity and heatwaves, with a low but improvable 
climate protection gap. 

resilience 

Malta  is  focusing  on  the  integration  of 
climate 
into  critical  sectors 
through  an  updated  adaptation  strategy,  a 
vulnerability  risk  assessment,  and  the  low 
carbon  development  strategy,  though  more 
progress  is  needed  to  further  develop  these 
frameworks.  Malta  has  identified  several  critical 
sectors  that  require  adaptation.  These  include 
water management, infrastructures and transport, 
land  use  and  buildings,  agriculture,  and  fisheries. 
Malta  updated  its  national  adaptation  strategy  in 
2021  and  is  currently  drawing  up  a  vulnerability 
risk  assessment  to  lay  the  ground  for  integrating 
climate  resilience  into  sectoral  policies.  The  low 
carbon  development  strategy 
(LCDS)  which 
updates  Malta’s  adaptation  strategy  revolves 
around  47  sector-specific  measures  addressing 
energy, transport, buildings, industry, waste, water 
and agriculture. A key measure is the requirement 
to carry out a vulnerability risk assessment (VRA). 
The  VRA  provides  a  detailed  analysis  of  sectoral 
vulnerabilities  and  adaptive  capacities  to  guide 
effective  adaptation  strategies. 
It  provides  a 
detailed  analysis  of  Malta’s  adaptation  goals, 
progress  and  ongoing  actions  is  provided  (140). 
Despite  recent  progress,  significant  work  remains 
to  be  done 
to  bring  Malta’s  adaptation 
frameworks, policies, planning and implementation 
up to the required level of maturity. 

(137)  EEA, 2024, Economic losses from weather- and climate-

(139)  EEA, 2024, European Climate Risk Assessment, Link. 

related extremes in Europe, Link. 

(140)  The Energy & Water Agency, 2025, 2030 National Energy 

(138)  EEA, 2024, European Climate Risk Assessment, p. 345. 

and Climate Plan, p. 62 ff., Link. 

64 

 
 
 
 
 
 
Malta  makes  use  of  several  EU  funds  to 
improve  its  preparedness.  These  include  the 
European  Regional  Development  Fund, 
the 
Common  Agricultural  Policy  (CAP)  strategic  plan, 
and the Recovery and Resilience Facility.  

Water resilience 

Large  areas  of  Malta  are  subject  to  water 
stress  due  to  demands  from  agriculture, 
tourism  and  energy.  These  sectors  are  heavily 
dependent on water supply, and irrigation is crucial 
in many rural  areas. Maltese water productivity  is 
considerably  higher  than  that  of  other  Member 
States, standing at EUR 308 per m3 of abstracted 
water  in  2022  and  showing  an  increasing  trend 
over a five-year period (141). The water exploitation 
index  plus  (WEI+)  rose  to  34.1%  in  2022  from 
26% in 2021. This illustrates a worrying trend over 
the  last  few  years,  with  Malta  over-using  its 
freshwater  resources.  Seasonal  data  show  that in 
the  summer  months  the  country’s  total  water 
consumption 
renewable 
freshwater resources. The highest WEI+ value (72) 
was reached in the third quarter of 2021 and the 
second  highest  value  (69)  in  2019.  The  main 
consumer of water is the agricultural sector (83% 
of  total  water  consumption  in  2022),  putting  a 
significant strain on the country’s water resources 

is  greater 

than 

its 

Water  quality  in  Malta  has  only  marginally 
improved,  and  concerns  remain  for  surface 
and groundwater bodies. Based on the reporting 
on  the  second  river  basin  management  plan, 
covering  the  years  2015-2021,  36.8%  of  all 
surface water bodies in Malta have reached good 
ecological  status  (with  unknown  ecological  status 
for  52.6%  of  all  surface  water  bodies)  while  only 
52.6%  have  a  good  chemical  status.  For 
groundwater bodies, 47.7% failed to achieve good 
chemical  status  and  10.5%  have  a  poor 
quantitative 
river  basin 
management  plan  (2022-2027)  currently  being 
assessed  by 
the  Commission  will  provide 
information  on,  inter  alia,  the  assessment  of  new 
physical modifications of water bodies in line with 
EU  water  legislation  and  the  consideration  of 
alternative  options  and  adequate  mitigation 

status.  The 

third 

for 

measures 
status  of 
groundwater, while enforcing measures to prevent 
and reduce nitrate pollution from agriculture. 

the  quantitative 

the  Directive 

Malta’s  wastewater  treatment  is  not  fully 
compliant with EU legislation. Malta has three 
agglomerations covered by the Urban Wastewater 
treatment Directive. One agglomeration generating 
6% of the urban wastewater is compliant with the 
requirements  of 
(Gozo  Main). 
However,  two  other  agglomerations,  generating 
the rest of the urban wastewater (Malta North and 
Malta South), are not compliant with the Directive, 
which  is  cause  for  concern  (142).  In  October  2024 
Malta was condemned  by the EU  Court of Justice 
for  that  reason,  compelling  the  country  to  take 
legal 
to 
immediate 
shortcomings.  To  that  end,  additional  measures, 
and  specific  projects  tapping  into  available  EU 
funding  (e.g.  the  European  Regional  Development 
Fund)  are  necessary.  The  investment  needs  for 
water protection and water management stand at 
EUR 61 million per year. 

redress 

action 

the 

Biodiversity and ecosystems 

The  state  of  nature  and  ecosystems 
continues  to  degrade  in  Malta,  reducing  the 
country’s  climate  resilience.  Malta  hosts  29 
habitat  types  and  66  species  covered  by  the 
Habitats Directive. In 2022, 13.3% of Malta's land 
area  was  covered  by  Natura  2000  sites  (EU 
average  18.6%).  Combined  with  other  nationally-
designated  protected  areas,  Malta's  protected 
areas  account  for  29%  of  its  territory,  while  only 
5.5%  of  marine  areas  are  protected  (below  the 
EU-27  average  of  12.1%).  According to  the  latest 
available  data,  27.6%  of  the  country’s  habitats 
have a good status, well above the EU average of 
14.7%.  As  regards  the  conservation  status  of 
species, 53.3% were reported in 2018 as having a 
good  status,  higher  than  the  EU  average  of  27%. 
However,  illegal  trapping  and  killing  of  protected 
species remains a pressing concern and is subject 
situation 
to 
regarding  the  conservation  of  soils,  grassland 
habitat  types  and  forest  are  unsustainable  and 
unfavourable.  The  overall  situation  can  have 

infringement  proceedings.  The 

(141)  Measured as GDP in 2010 chain linked volumes over total 

(142)  European Commission, 2024, 12th UWWTD Implementation 

fresh surface water abstracted in cubic metres. 

Report. 

65 

 
 
 
implications  for  Malta’s  climate  resilience,  as  the 
loss  of  biodiversity  impairs  ecosystems’  ability  to 
provide  services  that  help  mitigate  the  effects  of 
climate  change,  such  as  regulating  water  cycles, 
maintaining soil health and sequestering carbon. 

Graph A9.1: Direct dependency(1) on ecosystem 
services(2) of the gross value added generated by 
economic sector in 2022 

chain and transport, also rank as important sectors 
whose gross value added and competitiveness rely 
on nature. This means that failure to maintain the 
capacity  of  ecosystems  to  deliver  services  could 
entail  significant  costs  or  even  stop  production  in 
these sectors. Furthermore, excessive construction 
continues  to  increase  the  amount  of  sealed, 
artificially modified and/or degraded soil. The area 
of sealed soil is an important factor in monitoring 
land-use  change  and  represents  a  significant 
pressure on nature and biodiversity. Based on the 
limited  data  available,  the  contributor  to  Malta’s 
unhealthy  soils  is  unsustainable  soil  erosion  by 
water,  wind,  tillage  and  harvest,  which  affects 
97 %  of  cropland  area.  18 %  of  the  country 
experiences 
50 % 
imperviousness (143).  Protecting  and  restoring  key 
ecosystems  would  ensure  that  the  long-term 
competitiveness  of  these  economic  sectors  is 
preserved.  Malta  is  investing  EUR 56  million  each 
year to meet its financial needs. 

sealing 

above 

soil 

Sustainable agriculture and land use 

Malta’s  carbon  removals  fall  short  of  the 
level  of  ambition  needed  to  meet  its  2030 
target  for  land  use,  land-use  change  and 
forestry  (LULUCF).  To  meet  its  2030  LULUCF 
target,  additional  carbon  removals  of  -0.002 
million  tonnes  of  CO2  equivalent  (CO2eq)  are 
needed (144). The latest available projections show 
a  gap  to  target  of  0.003  million  tonnes  of  CO2eq 
for  2030  (145).  Therefore,  additional  measures  are 
needed  to  reach  the  2030  target.  For  Malta,  this 
involves  managing  its  limited  land  resources  to 
maximise their carbon sink potential. 

is  a 

source  of 
Maltese  agriculture 
greenhouse  gas 
(GHG)  emissions  and 
continues to have a significant impact on air, 
water  and  soils.  In  2022,  agricultural  GHG 
emissions  in  Malta  amounted  to  86.1  thousand 
tonnes  of  CO2eq  emissions,  down  14.4%  since 
1990.  The  agricultural  sector's  overall  share  of 
total  national  emissions  has  not  fluctuated  much 

(143) European Commission, 2023, Impact Assessment on the 

Soil Monitoring Law, p. 10, Link. 

(144) National LULUCF targets of the Member States in line with 

Regulation (EU) 2023/839. 

(145)  Climate Action Progress Report 2024 COM/2024/498. 

(1) Dependency based on the sector’s own operations, 
excluding value chain operations within countries and across 
international value chains. A high dependency indicates a high 
potential exposure to nature-related shocks or deteriorating 
trends, which means that the disruption of an ecosystem  
service could cause production failure and severe financial 
loss. 
(2) Ecosystem services are the contributions of ecosystems to 
the benefits that are used in economic and other human 
activity, including provisioning services (e.g. biomass 
provisioning or water supply), regulating and maintenance 
services (e.g. soil quality regulation or pollination), and cultural 
services (e.g. recreational activities). 
Source: Hirschbuehl et al., 2025, The EU economy's 
dependency on nature, Link. 

Nature  degradation  creates  significant  risks 
to  Malta's  economy  and  competitiveness,  as 
it  is  one  of  the  Member  States  with  the 
highest  direct  dependency  on  ecosystem 
In  particular,  Malta’s  agriculture, 
services. 
fisheries  and  aquaculture,  construction  and  water 
utilities 
sectors  are  highly  dependent  on 
ecosystem  services  (see  Graph  A9.1),  with  100% 
of the gross value added of these sectors directly 
dependent  on  ecosystem  services.  With  a  lower, 
but  still  significant,  level  of  dependency,  aviation 
travel  and  tourism,  food  and  drink,  and  supply 

66 

0%20%40%60%80%100%AgricultureForestryFishery and acquacultureMining and metalsConstructionWater utilitiesHealthcare deliveryAviation travel and tourismFood beverages and tobaccoSupply chain and transportPublic services and othersElectricityChemical and materials industryElectronicsOil and gasReal estateHeat utilitiesAutomotiveRetail consumer goods and…Information technologyBanking and capital marketsInsurance and asset…Digital communicationsHighMediumLow 
   
 
in  the  past,  starting  at  3.6%  in  1990  and 
amounting  to  around  3%  in  2018,  which  is  low 
compared  to  the  EU  average.  However,  Malta  has 
the third highest figure among the Member States 
in  terms  of  GHG  emissions  from  the  agricultural 
sector  per  hectare  of  agriculture  land,  of  5.6 
CO2eq. According to the Nitrates Directive, 64% of 
the  groundwater  monitoring  stations  in  Malta 
reported  nitrates  concentrations  of  over  50 mg/l 
during  the  period  2016-2019,  exceeding  the 
healthy  threshold  for  human  consumption.  The 
latest  available  datapoint  from  2015  shows  that 
the nitrogen surplus (147 kg N/ha) and phosphorus 
surplus  (30 kg  P/ha)  are  well  above  the  EU 
average.  Malta  also  has  the  second  highest  total 
livestock density in the EU (3.3 livestock units per 
hectare  compared  to  the  EU  average  of  0.75). 
Ammonia emissions are showing a declining trend 
due  to  falling  livestock  populations  (except  for 
rabbits  and  horses)  resulting  from  a  rise  in  the 
import of meat and dairy products, but the manure 
management system remains rudimental. 

benefits, 

including 

land  with 

Malta  has  started 
its  transition  to  a  more 
sustainable  food  system  and  is  implementing 
policies to decrease the environmental footprint of 
agri-food.  Agricultural 
landscape 
features  provides  numerous  environmental  and 
carbon 
biodiversity 
sequestration, soil  erosion prevention, and habitat 
creation for wildlife. While a relatively large share 
of  utilised  agricultural  area  (UAA)  is  already 
covered  with  landscape  features  (27.7%),  Malta 
has  introduced  new  commitments  for  managing 
landscape features under its CAP strategic plan. In 
2022, only 0.62% of Malta’s land area was under 
organic farming, which is the worst result in the EU 
and  way  below the  EU  average  of  10.50%.  Malta 
aims  to  reach  5%  of  UAA  under  organic  farming 
by  2030,  but  conversion  to  organic  farming  is  a 
huge  challenge  for  Malta as  fields  are very  small 
and  fragmented.  The  plan  also  encourages 
farmers to adopt  a more sustainable approach to 
(by  promoting  alternative  pest 
pest  controls 
control  measures), 
restore 
biodiversity and to recover soil health and quality. 
Given  Malta's  water  scarcity,  the  plan  is  intended 
to  support  investments  in  water  capture,  storage 
and distribution systems. 

to  enhance  and 

67 

 
Table A9.1:  Key indicators for progress on climate adaptation, preparedness and environment 

(1) The data show the average for the timespan 2006-2023 based on EFFIS - European Forest Fire Information System. 
(2) Scale: 0 (no protection gap) – 4 (very high gap). EIOPA, 2024, Dashboard on insurance protection gap for natural catastrophes. 
(3) van Daalen, K. R. et al., 2024, The 2024 Europe report of the Lancet Countdown on health and climate change: unprecedented 
warming demands unprecedented action. The Lancet Public Health. 
(4) This indicator measures total water consumption as a percentage of the renewable freshwater resources available for a given 
territory and period. Values above 20% are generally considered to be a sign of water scarcity, while values equal or greater than 
40% indicate situations of severe water scarcity. 
(5) European Commission, 2024, seventh Implementation Report from the Commission to the Council and the European 
Parliament on the implementation of the Water Framework Directive (2000/60/EC) and the Floods Directive (2007/60/EC) (Third 
River Basin Management Plans and Second Flood Risk Management Plans). 
(6) For this indicator, the EU average includes the figure for the UK under the previous configuration, EU-28. 
(7) European Commission, 2023, EU Bioeconomy Monitoring System dashboards. 
(8) Nitrates can persist in groundwater for a long time and accumulate at a high level through inputs from anthropogenic sources 
(mainly agriculture). The EU drinking water standard sets a limit of 50 mg NO3/L to avoid threats to human health. 
(9) Net removals are expressed in negative figures, net emissions in positive figures. Reported data are from the 2024 
greenhouse gas inventory submission. 2030 value of net greenhouse gas removals as in Regulation (EU) 2023/839 – Annex IIa. 
Source: Eurostat, EEA. 

68 

Climate adaptation and preparedness:20182019202020212022202320182021Drought impact on ecosystems15.72000.32006.772.76[area impacted by drought as % of total]Forest-fire burnt area (1)------[ha, annual average 2006-2023]Economic losses from extreme events-           27            -           -           -           2              24 142       62 981       [EUR million at constant 2022 prices]Insurance protection gap (2)----1.00         0.88         [composite score between 0 and 4]Heat-related mortality (3)84            84            84            84            84            [number of deaths per 100 000 inhabitants in 2013-2022]Sub-national climate adaptation action28            30            30            30            27            26            4144[% of population covered by the EU Covenant of Mayors for Climate & Energy]Water resilience:20182019202020212022202320182021Water Exploitation Index Plus, WEI+ (4)27.027.134.426.034.1-4.54.6[total water consumption as % of renewable freshwater resources]Water consumption23            21            21            20            20            -           [million m3]Ecological/quantitative status of water bodies (5)[% of water bodies failing to achieve good status]Surface water bodies-------59%Groundwater bodies-------93%Biodiversity and ecosystems:20182019202020212022202320182021Conservation status of habitats (6)27.6-----14.7-[% of habitats having a good conservation status]Common farmland bird index------72.274.42000=100Protected areas---2929--26[% of protected land areas]Sustainable agriculture and land use:20182019202020212022202320182021Bioeconomy's added value (7)287          279          316          363          634 378     716 124     [EUR million]Landscape features----28            -[% of agricultural land covered with landscape features]Food waste------[kg per capita]Area under organic farming0.40.50.60.60.67.99-[% of total UAA]Nitrogen balance------[kg of nitrogen per ha of UAA]Nitrates in groundwater (8)53.459.459.259.0--[mgNO3/l]Net greenhouse gas removals from LULUCF (9)2              6              9              1              1              -           256 077-     240 984-     [Kt CO2-eq]MaltaEU-27MaltaEU-27MaltaEU-27MaltaEU-27 
 
  
 
FAIRNESS 
ANNEX 10: LABOUR MARKET 

and 

high 

including 

disabilities 

Malta’s  labour  market  is  performing  well, 
with 
low 
employment 
unemployment,  driven  by  thriving  sectors 
such  as  tourism  and  financial  services. 
However,  challenges  persist, 
those 
relating to the employment of women and persons 
from 
benefiting 
with 
employment  growth.  Pressing 
include 
labour shortages, a reliance on foreign workers to 
meet  demand,  and  high  turnover  of  staff.  The 
including  workplace  safety, 
quality  of 
remains a concern, exacerbated by limited labour-
inspection  capacity.  Weak  social  dialogue  further 
hampers  efforts  to  address  these  issues.  While 
efforts are needed to respond to these challenges, 
the country is on track to reach its 2030 national 
employment target. 

equally 
issues 

jobs, 

Graph A10.1: Gender and disability employment 
gaps in the EU and Malta (pps) 

Source: Eurostat [tesem060], EU SILC and [tepsr_sp200], EU 
LFS. 

Malta's labour market has performed well in 
recent  years.  This  has  been  underpinned  by 
robust activity in key sectors such as tourism and 
hospitality,  financial  services,  iGaming,  and  the 
maritime  and  logistics  industries (146).  In  2024, 
Malta had one of the highest employment rates in 
the  EU,  at  83%  (75.8%  in  the  EU),  reflecting 
steady  progress  towards  its  2030  national  target 

of  84.6%.  Youth  employment  rates  (15-29)  were 
also  high,  at  70.6%  (49.6%  in  the  EU),  while  the 
proportion  of  young  people  not  in  employment, 
education  or  training  (NEETs)  fell  to  7.2% (11.0% 
in  the  EU).  These  outcomes  reflect  a  steady 
upward  trend  in  labour  market  participation  over 
recent  years,  up  from  76%  in  2020  to  82.1%  in 
2024  (15-64),  driven  by  both  rising  domestic 
employment and sustained immigration flows. This 
improvement  has  been  further  supported  by 
falling  unemployment  (15-74),  down  to  3.1%  in 
2024,  which  is  among  the  lowest  rates  in  the  EU 
(5.9%),  continuing  a  long-term  downward  trend 
since  2009.  Long-term  unemployment  was  0.7%, 
also  among  the  lowest  rates  in  Europe.  Labour 
market  slack  (147)  decreased  from  4.8%  in  Q3-
2023  to  4.2%  in  Q3-2024,  mainly  due  to  fewer 
unemployed  workers.  This  remains  significantly 
(10.9%),  highlighting 
below  the  EU  average 
Malta’s low levels of unmet employment needs.  

Challenges  facing  the  integration  of  women 
in  the  labour  market  continue  to  hinder 
performance, but Malta has made significant 
progress.  Since  2009,  the  gender  employment 
gap  narrowed  from  37.5  percentage  points  (pps) 
to 13.3 pps in 2022, the strongest improvement in 
the EU (see Graph 10A8.1). The gap is only slightly 
wider  at  13.44 pps in  2024,  mainly due to  faster 
employment  growth  among  men,  particularly 
foreign male workers. Younger age groups (20–29) 
now have narrower gender-employment gaps than 
the  EU  average,  reflecting  changes  in  the  labour 
market,  while  older  women  (55–64)  have  also 
seen significant progress. However, women remain 
underrepresented 
such  as 
manufacturing,  construction,  transport  and  ICT, 
with nearly 92% of them working in services (e.g. 
retail  and 
education,  health, 
wholesale) (148). 
migrant 
Women 
backgrounds, those with lower levels of education, 
and older women (50–64) face additional barriers. 
The  gap  widens  with  age,  contributing  to  one  of 
the  widest  pension  gaps  for  women  aged  65+  in 
the  EU  (40.3%  vs  24.7%).  Another  barrier  is  the 
non-universal  character  of  early  education  and 

social  work, 

sectors 

from 

key 

in 

(147) Labour market slack refers to all unmet needs for 

employment, namely it represents the extent to which labour 
supply exceeds labour demand in the short run. 

(146) Malta Today. (2024, August 21). Taking a deeper look at 

(148) Central Bank of Malta. (2023). Women in the labour market: 

Malta’s leading sectors. 

An analysis of trends and challenges. 

69 

0.5.10.15.20.25.30.35.40.45.2015201620172018201920202021202220232024% of population 20-64Gender employment gap MaltaDisability employment gap MaltaGender employment gap EUDisability employment gap EU 
 
 
  
 
 
 
 
care. On a positive note, Malta’s gender pay gap is 
below the EU average (10.2% vs 12.7% in 2023). 
To  address  these  challenges,  the  ESF+  will  invest 
EUR  3 million  in  promoting  gender-balanced  work 
and equal working conditions. 

rates  of 

this  section  of 

Persons with disabilities still face significant 
barriers  to  entering  the 
labour  market. 
Persons  with  disabilities  in  Malta  face  a  wider 
employment gap than the EU average, highlighting 
systemic  barriers  to  inclusion.  Although  the  gap 
has gradually narrowed in recent years, it remains 
wider than the EU average (25.3 pps vs 24.0 pps). 
For  women,  the  disparity  is  even  greater,  with  a 
gap  of  24.4 pps  compared  to  220 pps  for  men. 
These challenges are also reflected in labour force 
the 
participation 
population, at 53.5% in Malta compared to 54.3% 
in  the  EU (149).  In  2022,  32.9%  of  young  persons 
with  disabilities  were  NEETs  (27.3%  in  the  EU).  A 
relatively  large  proportion  (58.3%  in  2023)  of 
persons  with  disabilities  have  low  skill  levels, 
which places them at a disadvantage in the labour 
market  compared  to  persons  without  disabilities 
when  looking  for  work.  At  the  same  time,  certain 
sectors  such  as 
tourism,  construction  and 
technology,  are  often  not  accessible  to  some  of 
them.  To  address  these  challenges,  the  ESF+ 
in  funding, 
supports 
offering  tailored  services  such  as  training,  work 
exposure, job coaching and mentoring for persons 
with disabilities. Malta has set a target of a 15 pps 
increase  in  the  employment  rate  of  persons  with 
disabilities by 2030 (150). 

the  VASTE  programme 

Demographic changes in Malta are marked by 
population  growth, 
increased  population 
density  and  a  rising  proportion  of  foreign 
residents.  Between  2003  and  2024,  Malta  had 
the largest population increase in the EU, growing 
by 34% to reach 563 443 inhabitants. This growth 
has  been  largely  driven  by  a  sharp  rise  in  the 
foreign-resident population, from 5.5% in 2013 to 
28.1%  of  the  total  in  2024.  In  contrast  with  the 
EU's  generally  ageing  workforce,  Malta  has  a 
young population, with 31% under the age of 30. 
In 2024, the country’s population density  was the 
highest  in  the  EU,  with  1 693  people  per  square 

(149)  European comparative data on persons with disabilities - 

data 2022 - European Commission 

kilometre,  contributing 
challenges. 

to  significant  housing 

lower  wages  and 

Workers in Malta from countries outside the 
EU  tend  to  have  low-quality  jobs.  Over  the 
past decade, the number of non-EU nationals and 
non-Maltese  EU  workers  grew  substantially,  by 
around  84  500  and  37 300  respectively  (20-64-
year-olds,  2024;  see  Graph  10A8.2).  Combined, 
they account for 39% of the workforce, with non-
EU  nationals  alone  making  up  27.4%.  They  often 
face  poorer  working  conditions  than  EU-born 
workers,  including  precarious  posts  with  physical 
hazards, 
safety 
measures (151).  Often  not  unionised,  non-EU 
nationals have limited collective bargaining power 
and face a ‘glass ceiling’, offering little chance for 
career  advancement  or  training.  Other  factors 
adding  to  their  vulnerability  include  long  working 
hours, limited leave and dependence on employers 
due  to  residence  status  tied  to  employment 
contracts. Many struggle to obtain decent housing, 
often 
recent 
measures),  substandard  living  conditions.  In-work 
poverty affects 16.4% of non-EU nationals, a rate 
that  has  fallen  since  2019  but  remains  nearly 
three  times  the  rate  among  Maltese  workers 
(5.5%) (see Annex 11). 

overcrowded 

(despite 

limited 

facing 

The  high  turnover  of  non-Maltese  workers, 
particularly  those  from  the  EU,  is  indicative 
of retention challenges. In 2023, half of foreign 
workers coming to Malta left within two years, and 
around  a  third  of  EU  nationals  terminated  their 
work within one year, either to pursue other jobs or 
to return home. Approximately 70% of termination 
forms  for  non-EU  nationals  were  submitted  by 
people  employed  for  less  than  12  months (152). 
Reasons  for  this  include,  among  others  rising 
rental costs, low wages, lack of access to banking 
and bank loans to buy  somewhere to live, lack of 
for  career  advancement,  and  an 
potential 

(151) Justice and Peace Commission. (2024). Beyond GDP II. Third 
Country Nationals in Malta: Sharing in our economic future or 
serving labour market interests?.; Government of Malta. 
(2025). Malta labour migration policy: January 2025; 
Debono, M. (2021). Migrants and the challenge of decent 
work in Malta. e-Revista Internacional de la Protección Social, 
6(2), 272–293. Universidad de Sevilla and Eurostat EU SILC 
[ilc_di15] (2023). 

(150)  This target was set by Malta on the basis of Jobplus 

(152)  Grech, A. G. (2023). The Extent of Labour Turnover in Malta. 

administrative data. 

Malta: Central Bank of Malta. 

70 

 
 
 
local 

environment (153). 

unfavourable 
The 
government  is  currently  discussing  a  new  draft 
labour  migration  policy  aimed  at  addressing  high 
turnover  by  stabilising 
labour  market, 
protecting  workers’  rights,  aligning  migration  with 
national needs and prioritising skilled workers. The 
policy should also seek to protect employee rights 
and enhance working conditions. (154). 

the 

Graph A10.2: Foreign workers in Malta (thousands, 
20-64) 

(1) Break in the series in 2021. 
Source: Eurostat [lfsa_egan], EU LFS. 

an 

are 

shortages 

Labour 
increasing 
challenge,  driven  by  skills  mismatches  and 
demographic changes. Efforts to attract foreign 
workers  and  improve  workforce  skills  have  partly 
addressed  the  problem  of  labour  shortages,  but 
the demand for skilled labour still outpaces supply. 
In  Q4-2024,  the  job-vacancy  rate  was  2.9%,  one 
of  the  highest  in  the  EU  and  exceeding  its  pre-
pandemic  level  (2.2%).  Shortages  are  particularly 
acute 
ICT,  arts,  entertainment  and 
recreation,  construction  sectors,  parts  of  the 
service  sector  and  among  health  and  long-term 
care professionals and teachers (see Annex 12).  

the 

in 

In  Q1  2025,  68.5%  of  employers  in  Malta’s 
services  sector  reported  labour  shortages 
limiting  their  production,  the  second  highest 
in  the  EU,  compared  to  24.1%  at  EU  level. 
Similarly,  in  manufacturing  and  construction,  this 
proportion  was  41.6%  and  36.2%  respectively, 
significantly above the EU averages of 18.6% and 
28% (155).  In  2024,  the  most  commonly  sought 
occupations include office associates, office clerks, 
sales workers, personal service workers, and metal 
and machinery workers (156), reflecting widespread 
levels (157).  These 
needs  across  various  skill 
persistent shortages underscore the importance of 
improving  the  match  between  jobseekers  and 
employers,  while  improving  skills  and  working 
conditions.  Competition  among  employers 
to 
attract  and  retain  skilled  workers,  especially  in 
high-demand  sectors  could  drive  up  wages  and 
improve working conditions. However, this dynamic 
may also harm productivity and competitiveness if 
imbalances  are  not 
underlying 
addressed. 

labour-market 

is 

labour  market 

indicating  significant 

Malta's 
transitioning 
towards a greener and more digital economy, 
which  presents  both  opportunities  and 
challenges.  Growth  is  evident  in  green  jobs 
requiring  advanced  digital  skills,  such  as  those  in 
iGaming  and  financial  services.  However,  many 
firms  have  yet  to  adopt  green  roles:  almost  43% 
of  companies  reported  having  no  employees  in 
room  for 
green  posts, 
expansion.  Additionally,  64%  of  firms  believe  the 
local  labour  force  is  not  adequately  prepared  for 
the  transition  to  carbon  neutrality,  with  only  16% 
readiness (158). 
expressing 
According to the latest available data, employment 
in Malta's environmental goods and services sector 
amounted to only 1.5% of total employment, while 
energy-intensive  industries  contributed  only  1.1% 
and  ICT  4.7%.  To  ensure  a  fair  transition,  useful 
measures  include  continued 
in  in 
education and training programmes that align with 
learning, 
market  needs,  promoting 
collaboration  between  government, 
fostering 

investment 

confidence 

lifelong 

its 

in 

(153)  Justice and Peace Commission. (2024). Beyond GDP II. Third 
Country Nationals in Malta: Sharing in our economic future or 
serving labour market interests?. Housing Authority (2023). 
The private rental market in Malta: A holistic assessment 
based on registered contracts.  

(154)  Government of Malta. (2025). Malta labour migration policy. 

(155) ECFIN, European Business and Consumer Surveys. 

(156) CEDEFOP, Countries and occupations. 

(157) Schengen News. (2025, January 15). Malta in need of 
foreign workers: These are the top in-demand jobs. 

(158) Central Bank of Malta, The Impact of Mitigating Climate 
Change on Maltese Firms’ Employment Plans, 2024. 

71 

0.020.040.060.080.0100.0120.0140.0201320142015201620172018201920202021202220232024thousand persons, 20-64EU nationals (non-Maltese)Non-EUForeign country 
  
 
 
industry  and  educational  institutions  and  teacher 
training with transition skills.  

Workplace safety and the shortage of labour 
inspectors  are  critical  aspects  of  working 
conditions.  In  2022,  workplace  fatalities  rose 
from  9  to  15,  with  60%  occurring  in  construction 
and related fields and 20% in transportation. Over 
the  past  20  years,  nearly  30%  of  fatal  accidents 
have involved foreign workers, although they tend 
to  be  a  small  proportion  of  the  labour  force (159), 
which  illustrates  their  overrepresentation  in  more 
hazardous  roles.  In  2021,  Malta  had  the  third-
highest rate of fatal workplace accidents in the EU, 
with  3.34  per  100 000  workers  (1.76  in  the  EU). 
Although 
the  overall  number  of  non-fatal 
accidents  was  relatively  stable  in  recent  years, 
they  are  more  frequent  in  construction  (15.2%), 
manufacturing (17.8%), and transport (14%).  

labour 

A  key  issue  in  the  construction  industry  is 
poor  occupational  safety  and  health  culture, 
including  aspects  such  as  enforcement  and 
the  training  of  project  supervisors.  This 
situation  is  exacerbated  by  Malta’s  critically  low 
number  of 
inspectors,  with  only  0.3 
inspectors  per  10 000  workers  in  2023,  which  is 
far  below  the  ILO  recommendation  of  1  per 
10 000 (160).  This 
lack  of  adequate  oversight 
increases  the  risk  of  workplace  accidents  and 
exploitation  of  workers,  especially  among  non-EU 
resilience  plan 
recovery  and 
nationals.  The 
addresses  workplace  safety  through  training  and 
certifying  construction  professionals  and  setting 
up a Building and Construction Authority.  

Wage  growth  and  productivity 
increases 
offer potential for improving job quality and 
working  conditions.  Real  wages  began 
to 
recover  in  2024,  growing  faster  than  the  EU 
average  at  3.5%,  but  have  not  fully  offset  the 
sharp  declines  of  0.8%  in  2022  and  3%  in  2023. 
Nominal  wage  growth  reached  5.9%  in 2024  and 
is expected to grow by 4.1% in 2025, both above 
the  euro-area  and  EU  averages,  after  2.3%  in 
2023 (161). Real wages are expected to increase by 

1.8%  in  2025,  above  the  EU  average.  These 
improvements  reflect  a  combination  of  lower 
inflation  and  higher  nominal  wage  growth. 
However,  this  recovery  will  still  fall  short  of  fully 
recouping earlier losses. 

labour 

boosting 

Looking  ahead,  sustaining  wage  growth  will 
require 
productivity, 
particularly  in  sectors  beyond  tourism  and 
services. The relatively low wage growth over the 
past  decade  has  supported  gains 
in  cost 
competitiveness,  reflected  in  rising  export  market 
imbalances. 
reduced  economic 
shares  and 
However, it has also remained below expectations 
based  on  the  usual  macroeconomic  drivers  (e.g. 
inflation,  productivity,  trade  balance  and  the 
unemployment rate). Over recent years, unit labour 
costs  (ULCs)  have  increased  less  in  Malta  than  in 
most  euro-area  countries,  with  growth  of  2.3% in 
2023, forecast to rise to 5% in 2024, and then fall 
in  2025.  Labour  productivity 
back  to  3.1% 
challenges,  particularly 
in  non-service  sectors, 
continue to hinder the potential for sustained and 
substantial  wage  growth.  Lastly,  the  statutory 
minimum  wage  increased  by  21.3%  between 
January 2022 and January 2025, an approximate 
7.6%  rise  in  real  terms.  In  2024,  the  minimum 
wage was still only 46.5% of average earnings. 

Social  dialogue  in  Malta  faces  structural 
challenges  but  also  opportunities 
for 
enhancement.  It  remains  largely  focused  on 
information-sharing  rather  than  engagement  (see 
Annex  6).  Trade  union  membership  has  steadily 
fallen  to  41.9%  in  2023 (162),  partly  due  to 
difficulties  in  unionising  non-EU  nationals  (whose 
share  of  the  workforce  is  rising),  and  engaging 
construction and hospitality workers. Collaboration 
is restricted by the dominance of two major trade 
unions  and  fragmented  representation  among 
smaller ones. Most collective bargaining occurs at 
company  level,  reducing  collective  impact.  The 
Malta  Council 
Social 
Development  serves  as  the  main  social-dialogue 
platform, but there are concerns over transparency 
and  the  dominance  of  a  small  group  in  national 
discussions (163).  Women  and  vulnerable  groups, 

Economic 

and 

for 

(159)  Fiorini et al., Occupational accidents in Malta and the role of 
the occupational health and safety authority: A twenty-year 
analysis. 

2024 and 2025 are based on the European Commission 
Spring 2025 economic forecast. 

(162) ILOSTAT, Trade union density rate. 

(160)  ILOSTAT, Inspectors per 10 000 employed persons. 

(163) Zammit, E. L. (2019). Social dialogue and competence 

(161)  For nominal wage growth, pay per employee is considered. 
For real gross wages, the deflator used is HICP. Data for 

development: the role of Malta’s social partners. Centre for 
Labour Studies : Biennial Report: 2017-2018. 

72 

 
 
 
 
including  non-EU  nationals  and 
low-skilled 
in  union 
remain  underrepresented 
workers, 
leadership and social-dialogue forums, highlighting 
barriers to inclusivity. Social dialogue is weakened 
by short consultation timelines, limited training on 
green  and  digital  transitions,  and  reliance  on 
individual 
organisational 
representation (164).  To  address  these  issues,  the 
ESF+  supports  capacity  building,  training  and 
initiatives,  which  would  otherwise 
networking 
remain limited due to low resources. 

rather 

than 

(164)  Servizzi Ewropej f’Malta (SEM) (2021). Promoting Improved 

Social Dialogue in Malta. Misco. 

73 

 
 
ANNEX 11: SOCIAL POLICIES 

to 

and 

developments 

relatively  stable 

Malta’s  social  situation  is  a  dynamic  mix  of 
persistent 
positive 
challenges. Overall, poverty rates are comparable 
to EU averages, and strong economic performance 
living 
has  contributed 
standards.  However,  persistent  poverty  and 
disparities  among  vulnerable  groups,  including 
children,  older  people,  and  non-EU  nationals, 
remain  significant.  The  impact  of  social  transfers 
on poverty reduction is relatively low, and income 
inequality  is  above  average.  Housing  access  and 
affordability  are  concerns,  with  increased  costs 
low-income 
disproportionately 
households  and  non-EU  nationals.  In  addition, 
despite increasing over the years, relatively limited 
social 
LTC 
expenditure  stood in  2022  at  1.2%  of  GDP  vs  EU 
1.7%)  hinders  progress  in  reducing  poverty  and 
these  challenges  will 
inequality.  Addressing 
contribute 
and 
growth 
to 
competitiveness. 

expenditure 

protection 

affecting 

inclusive 

(public 

Graph A11.1: At-risk-of-poverty or social exclusion 
(AROPE) rate, age groups 

Source: Eurostat [ilc_peps01n], EU-SILC 

Malta’s  overall  poverty  levels  remain  below 
the  EU  average.  In  2024,  after  three  years  of 
slow  decline,  the  at-risk-of-poverty  and  social 
exclusion  rate  (AROPE)  was  19.7%,  consistently 
below  the  EU  average  of  21.0%.  However,  while 
the percentage decreases, the absolute number of 
people  at-risk-of-poverty  or  social  exclusion  is 
increasing  in  the  country,  alongside  a  rising 
population.  Addressing  these  challenges  is  key  to 
achieving Malta’s 2030 poverty reduction target of 
reducing the share of people at risk of poverty or 

74 

through 

strategy, 

developed 

social  exclusion  by  3.1 pps  compared  to  2019.  In 
October  2024,  Malta  published  a  comprehensive 
poverty 
a 
participatory,  evidence-based  approach (165).  The 
strategy  addresses  key  challenges,  such  as 
housing and the socioeconomic integration of non-
EU  nationals. 
It  provides  a  wide  range  of 
recommendations  across  critical  areas,  including 
education,  social  protection,  and  healthcare, 
offering  a  comprehensive  framework  to  tackle 
poverty.  

Some groups face higher risks of poverty and 
social exclusion. Non-EU-born people experience 
such  risks  significantly  more  often  as  Maltese 
nationals  (22.5%  vs  17.7%),  driven  by low  wages 
the 
incomes,  high  housing  costs,  and 
and 
insecurity  of  relying  on  their  working  situation  to 
stay  in  Malta,  leaving  them  less  leverage to  push 
for  better  working  conditions (166).  People  with  a 
low-level of education are also at greater risk than 
people with a higher-level of education (29.1% vs 
8.4%).  Persons  with  disabilities 
face  stark 
disparities too, with 33.7% being at risk of poverty 
and  social  exclusion  compared  to  16.3%  among 
those  without  disabilities,  closely  related  to  their 
difficult  employment  situation  (see  Annex  10). 
Older  people  are  particularly  vulnerable,  with 
people  at-risk-of-poverty  or  social  exclusion  rates 
at  31.7%  for  those  aged  sixty-five  or  over, 
significantly higher than the EU average of 19.4%, 
partly due to declining pension replacement rates. 
Older  women  face  even  higher  at-risk-of-poverty 
or  social  exclusion  rate  than  men  (35.0%  vs 
28.2%),  and  the  gender  pension  gap  remains 
among the widest  in the EU  (40.3% vs 24.7% EU 
average).  There  are  higher  concentrations  of 
people  at-risk-of-poverty  or  social  exclusion  in 
Gozo, Comino, and the northern and western parts 
of  Malta.  Plus,  the  persistent  risk  of  poverty  rose 
steeply  to  24.1%  in  2024,  well  above  EU  levels 
recently  (21.3%  vs  10.3%  in  2023;  15.4%  vs 
11.9%  in  2022).  The  European  Social  Fund  Plus 
(ESF+) allocates 26% of its total budget to support 
the socioeconomic integration of non-EU nationals 

(165) Ministry for Social Policy and Children’s Rights. (2024). 

National strategy for poverty reduction and social inclusion 
2025–2035. Government of Malta. 

(166) Housing Authority. (2023). The private rental market in 

Malta: A holistic assessment based on registered contracts. 
Housing Authority.; Debono, M. (2021). Migrants and the 
challenge of decent work in Malta. e-Revista Internacional de 
la Protección Social, 6(2), 272-293. Universidad de Sevilla 
and Eurostat EU SILC [ilc_di15] (2023). 

051015202530352015201620172018201920202021202220232024% of populationChildren (<18y)Working age (18-64)Older people (65+) 
 
   
 
 
 
and  other  disadvantaged  groups.  It  also  funds 
the  most  vulnerable 
food  distributions 
households, 
combat  material 
to 
deprivation and improve living standards. 

helping 

to 

Child poverty has shown a worsening trend in 
recent years. In 2022, 23.1% of children in Malta 
were at risk of poverty or social exclusion, rising to 
25.2%  in  2023  and  further  to  25.9%  in  2024, 
exceeding the EU rate of 24.2%, for the third time 
since  2015.  In  absolute  terms,  the  number  of 
children at risk of poverty or social  exclusion also 
rose from about 19 000 in 2022 to about 21 000 
in  2023  and  2024,  alongside  population  growth. 
By  2030,  Malta  aims  to  reduce  their  share  by 
6 pps compared to 2019. Several  factors strongly 
influence  the  risk  of  child  poverty,  with  parental 
education  level  being  one  of  the most  significant. 
In  2024,  58.3%  of  children  with  low-educated 
parents  were  at  risk  of  poverty,  a  rate  that  has 
steadily  increased  in  recent  years  and  raises 
concerns  given  Malta’s  high  proportion  of  low-
skilled  adults.  Household  composition  is  another 
critical  factor:  46.2%  of  single-parent  households 
with dependent children were at risk of poverty in 
2024.  Citizenship  also  plays  a  role,  25.4%  of 
children  of  non-Maltese  citizens  compared  to 
19.4%  of  those  Maltese.  Supported  by  ESF+,  the 
European  Child  Guarantee  (ECG)  follows  Malta’s 
2022 
plan,  with  115  measures 
implemented as of 2024. These include initiatives 
in  social  protection,  education,  healthcare,  and 
adequate  housing,  with  70%  of  the  measures 
planned for 2022-2027 ongoing. 

action 

Malta  faces  limited  effectiveness  of  social 
transfers  in  reducing  poverty,  coupled  with 
high and rising levels of income inequality. In 
2024, social transfers reduced the poverty rate by 
only 26.0%, substantially below the EU average of 
34.4%. This situation is concerning as regards the 
functioning  of  the  social  safety  net  and  social 
protection  system.  Strong  economic  performance, 
levels  of  gross  disposable 
including  high 
household income (GDHI) (152.78 vs 111.02 in the 
EU)  in  tandem  with  high  employment  rates  seem 
to  effectively  keep  overall  poverty  levels  low  and 
aligned with the EU. Yet, those in greatest need do 
not  equally  profit  from  this  positive  outturn. 
and 
Moreover, 
progressivity  of  the  tax  system  are 
limited 
compared  to  the  EU.  Labour  income  taxation  is 
less  progressive  and  the  country  lacks  wealth, 
inheritance,  estate,  or  gift  taxes,  although  stamp 
duties may apply to certain inherited assets. These 

redistributive 

effect 

the 

factors  further  limit  the  role  of  fiscal  policy  in 
addressing income disparities (see Annex 15). As a 
result, income inequality is on the rise, the richest 
quintile earning 4.87 times more than the poorest 
one in 2023, exceeding the EU average of 4.66. 

Graph A11.2: Impact of social transfers (other 
than pensions) on poverty reduction (%) 

Note: Break in series for the EU in 2020 and for Malta in 
2022 
Source: Eurostat [tespm050], EU-SILC  

This 

translated 

of  27.98%. 

Social  protection  spending  is  relatively  low 
and unevenly distributed. On a downward trend, 
in  2022,  social  protection  spending  amounted  to 
14.21%  of  GDP,  significantly  below  the  EU 
average 
to 
EUR  4 955.29 per inhabitant, compared to the EU 
average of EUR 10 062.91. Malta’s social spending 
is heavily focused on old age (43.1% in 2023) and 
sickness/healthcare 
together 
accounted  for  78.2%  of  total  spending  in  2022. 
Consequently,  expenditure  on  family  and  child 
support (6.3%) is relatively low. Similarly, minimal 
investment  in  housing  (1.1%)  and  unemployment 
(0.9%) provides limited assistance for low-income 
households 
Persons  with 
disabilities  (4.0%)  and  people  that  suffer  from 
social  exclusion 
(2.3%)  also  receive  modest 
funding,  raising  concerns  about  the  inclusiveness 
and fairness of Malta’s social protection system. 

(35.1%),  which 

jobseekers. 

and 

Challenges regarding unemployment benefits 
and  in-work  poverty  reveal  gaps  in  social 
protection  and  labour  market  resilience.  The 
duration  of  unemployment  benefits  in  Malta  is 
among  the  shortest  in  the  EU,  placing  financial 

75 

0.5.10.15.20.25.30.35.40.201020112012201320142015201620172018201920202021202220232024EUMalta 
   
to 

strain  on  people  unable 
secure  new 
employment  within  the  limited  timeframe  (26 
weeks,  after  which  a  person  is  re-directed  to  a 
non-contributory  unemployment  assistance).  The 
benefit  has  an  activation  component,  as  it  links 
access  to  benefits  with  active  job  seeking  and 
participation  in  employment  services.  In  January 
2024,  Malta  reformed  its  unemployment  benefits 
system to better align replacement rates with the 
recipient’s  last  salary,  taking  into  account  the 
national  minimum  wage.  However,  access  to 
unemployment  benefits  remains  restrictive,  with 
eligibility  criteria  excluding  certain  individuals  and 
types  of  employment  contracts.  As  part  of  its 
recovery  and  resilience  plan  (RRP),  Malta  has 
introduced  reforms  to  assess  and  monitor  the 
coverage  of  unemployment 
adequacy  and 
benefits,  aiming 
labour  market 
to 
resilience,  incentivise  work,  and  promote  gender 
equality.  At  the  same  time, 
in-work  poverty 
remains  an issue.  In  2024,  7.8%  of  workers  were 
at  risk  of  in-work  poverty,  lower  than  the  EU 
average  of  8.2%  but  steadily  rising  over  the  past 
decade. Non-EU nationals face significantly higher 
rates  of  in-work  poverty  compared  to  Maltese 
nationals (15.0% vs 5.7%). 

improve 

fiscal 

Progress  in  early  childhood  education  and 
care  and  long-term  care  systems  have  seen 
improvements,  but  face  challenges  in  terms 
of 
sustainability  and  achieving 
universal  coverage.  Progress  in  early  childhood 
education and care (ECEC) for children under three 
has  been  notable,  with  participation  rates  for 
children increasing from 19.1% in 2015 to 51% in 
2023. However, the participation rate decreased to 
44.1%  in  2024,  and  gaps  remain,  particularly  for 
children whose parents are not in employment, as 
Malta  continues  to  strive  for  universal  ECEC 
access.  At  the  same  time,  the  ageing  population 
drives increased demand for long-term care (LTC) 
services,  with  the  old-age  dependency  ratio 
projected  to  rise  from  31,1  in  2025  to  37.0  in 
2050.  This  increased  demand  for  LTC  will  require 
attention 
fiscal 
sustainability in the long-term (see Annex 14). This 
ongoing  demographic  shift  has  already  boosted 
the  demand  for  LTC  workers,  often  filled  by  non-
EU nationals (see Annex 10). To improve coverage, 
successive governments have entered into private-
public  partnerships.  In  addition,  older  people  at 
like  home  help, 
home  can  access  support 
community  nursing,  free  geriatric  and  telecare 
service,  and  various  carer  benefits,  which  have 
increased in recent years. 

to  access,  adequacy  and 

House  prices  have  increased  in  the  last 
decade.  House  prices  have  increased  by  more 
than  50%  since  2015  in  nominal  terms.  They 
increased  by  6.2%  in  2023,  6.7%  in  2022  and 
5.1%  in  2021.  They  have  increased  further  in 
2024 (+6.9% year-on-year in 2024-Q3). However, 
house  prices  still  do  not  show  signs  of 
overvaluation. 

The  affordability  of  housing  has  remained 
broadly stable over the last decade for home 
buyers but worsened for renters. The evolution 
of  house  prices  has  been  broadly  in  line  with 
households’  income  over  the  past  years  and  the 
standardised house price-to-income ratio has been 
broadly  stable  since  2015 
(-3%).  However, 
considering  the  cost  of  mortgages,  the  borrowing 
capacity of households improved significantly over 
the past decade. While the rental market is rather 
small,  the  ratio  of  new  rents  to  incomes  sharply 
rose over the last decade. 

The  affordability  of  housing is an  increasing 
challenge  for  vulnerable  groups  in  Malta. 
While the housing cost overburden rate was  5.8% 
in 2024, below the EU average of 8.2%, disparities 
remain stark. Two particularly affected groups are 
non-EU  nationals  and  people  in  poverty,  often 
overlapping.  Among  those  in  poverty,  25.1%  face 
housing  cost  overburden  compared  to  1.8%  of 
those  not  in  poverty.  Certain  groups  of  people  in 
poverty  are  especially  vulnerable,  such  as  young 
(41.6%)  and  older  people  (12.5%).  Similarly, 
17.0%  of  non-EU  nationals  experience  housing 
cost  overburden,  compared  to  just  1.2%  of  the 
Maltese  population.  The  overcrowding  rate,  too, 
was  very  high  at  16.8%  among  non-EU  nationals 
compared  to  3.6%  among  Maltese  nationals.  In 
2023,  8.1%  of  Malta’s  population 
rented 
accommodation  at  reduced  market  prices  or  for 
free,  below  the  EU  average  of  10.2%.  The  Malta 
Housing  Authority  provides  social  housing  to 
support  low-income  individuals  and  recent  legal 
amendments  to  Malta’s  Private  Residential  Lease 
Laws wish to prevent overcrowding, but challenges 
persist  in  addressing  the  growing  affordability 
crisis. 

Energy  affordability  and  transport  access 
have  significant  social  and  sustainability 
implications.  In  2024,  7.8%  of  the  population 
were  unable  to  keep  their  homes  sufficiently 
warm,  below  the  EU  average  of  9.2%  across  the 
EU. However, this rate doubled among those at risk 
of  poverty  (AROP),  reaching  14.9%.  The  share  of 

76 

 
population who could not afford a car was 1.8% in 
2024, significantly below the EU average of 5.6%. 
Similarly,  the  share  of  people  at  risk  of  poverty 
who  cannot  afford  a  car  was  7.7%  in  2024, 
substantially  below  the  EU  average  (15.9%). 
Overall,  Malta  demonstrates  strong  affordability 
for  car  ownership,  even  among  lower-income 
groups.  However,  the  continued  dominance  of 
private cars and the stagnation in public transport 
use  highlight  challenges  in  promoting  sustainable 
and  inclusive  transportation  systems.  Universal 
energy  benefits  have  a  stronger 
impact  on 
reducing  poverty  and  inequality  compared  to 
targeted  benefits  but  are  costly.  Analysis  of 
income distribution by deciles, inequality indicators 
(e.g.  S20/S80  ratio),  and  at-risk-of-poverty  rates 
suggests  that  while  universal  measures  benefit 
the most vulnerable groups, their overall impact is 
limited.  Conversely, 
targeted  benefits  often 
provide  insufficient  support,  which  limits  their 
effectiveness (167).  To  address  these  challenges,  it 
would  be  beneficial  if  Malta  designed  efficient, 
well-targeted  measures 
support 
vulnerable  groups  while  gradually  phasing  out 
long-term 
that 
universal  benefits 
financial sustainability. 

to  better 

threaten 

(167) Evidence based on a study by the European Commission 
Joint Research Centre, using the EUROMOD model. 

77 

 
 
ANNEX 12: EDUCATION AND SKILLS 

limited 

Malta’s competitiveness is hindered by skills 
mismatches  and  shortages  caused  by  low 
basic 
low 
skills  among  15-year-olds, 
educational  attainment  for  adults  and 
limited  participation  in  vocational  education 
and  training  (VET)  and  adult  learning.  Skills 
development  challenges  start  in  early  childhood 
education and care (ECEC), where there are quality 
participation  among 
concerns  and 
disadvantaged  children.  By  the  age  of  15,  basic 
skills shortages reach a concerning level as around 
one  in  three  students  lacks  fundamental  skills  in 
mathematics, reading and science, and one in two 
lacks  digital  skills.  This  poses  a  serious  challenge 
to  acquiring  more  complex  skills  and participating 
meaningfully  in  society  and  highlights  challenges 
in  ten 
with  teaching  quality.  Moreover,  one 
students  leaves  education  or  training  early.  Low 
enrolment  in  VET  and  adult  learning  reflects 
challenges  in  addressing  skills  gaps,  compounded 
by  limited  access  to  flexible  training  and  low 
participation 
learning  Moreover, 
education  and  training  systems,  including  VET, 
adult  learning  and  higher  education,  often  fail  to 
leading  to 
align  with 
labour  market  needs, 
widespread  skills  mismatches  and 
increasing 
labour 
(see  Annex  10).  These 
shortcomings  in  skills  development  hinder  Malta’s 
competitiveness and economic potential. 

shortages 

lifelong 

in 

Graph A12.1: Underachievement rate in 
mathematics, reading and science by students' 
socio-economic background in Malta, PISA 2022 
(%) 

the  EU  average 

Despite progress, challenges with the quality 
low  participation  among 
of  ECEC  and 
disadvantaged  children  remain  barriers  to 
successful foundational learning in the early 
years.  Among  children  aged  three  to  the  start  of 
compulsory education, 93.2% participated in ECEC 
in 2023 (EU: 94.6%). Among children under three, 
the  overall  participation  rate  was  44.1%  in  2024, 
(39.2%).  However, 
above 
participation  in  this  age  group  among  children  at 
risk  of  poverty  or  social  exclusion  (AROPE)  is 
considerably  lower  at  24.3% (168),  compared  to 
48.5% for their peers not at risk. This 24.2 pps gap 
is one of the widest in the EU. Although extending 
the  free  childcare  scheme  to  children  whose 
parents  are  neither 
in 
in  several 
employment  has  been  envisaged 
strategic  policy  documents,  no  detailed  plan  or 
funds have been made available yet. 

in  education  nor 

of 

basic 

skills 

remains 

The  share  of  students  with  an  insufficient 
level 
high, 
undermining  human  capital  development. 
According  to  the  2022  OECD  Programme  for 
International  Student  Assessment  (PISA),  around 
one  out  of  three  15-year-old  students  lacks 
sufficient  basic  skills  in  mathematics  (32.6%;  EU: 
29.5%),  reading  (36.3%;  EU:  26.2%)  and  science 
(30.3%;  EU:  24.2%) (169).  The  situation  is  even 
more concerning among students from the bottom 
quartile  of  the  socio-economic  distribution  (see 
Graph  A12.1),  with  47.7%  not  reaching  minimum 
standards  in  mathematics,  51.5%  in  reading  and 
46%  in  science.  Underachievement  is  widespread 
across  the  entire  socio-economic  distribution  with 
17.2%  of  advantaged  students  underachieving  in 
mathematics  (EU:  10.9%),  19.9%  in  reading  (EU: 
10.6%)  and  14.2%  in  science  (EU:  8.9%).  The 
underachievement  rate  in  mathematics  is  highest 
in  state  schools  (40.6%),  followed  by  church-run 
(25.5%)  and  independent  schools  (16.7%).  This 
reflects  the  unequal  distribution  of  students  from 
different  backgrounds  across  schools,  with  a 
concentration  of  disadvantaged  students  in  state 
schools, which points to a stratified school system 
with  systemic  challenges.  The  national  education 
strategy  2024–2030  commits  to  prioritise  equity 
and inclusion, comprising a revision of the National 
Curriculum  Framework,  a  mathematical  literacy 

Source: OECD (2023).  

(168)  The value is flagged as unreliable. 

(169)  OECD (2023). PISA 2022 Results (Volume I): The State of 

Learning and Equity in Education. 

78 

0.010.020.030.040.050.0MathematicsReadingScienceAdvantaged studentsDisadvantaged studentsTotal 
 
   
 
 
 
strategy,  and  by  strengthening  literacy  skills. 
Furthermore,  Malta  has  recently  launched  an 
Action  Plan  on  Addressing  2022  Pisa  Challenges, 
to be reviewed jointly with the OECD. Early leaving 
from  education  and  training  (ELET)  decreased  by 
7.4 pps  between  2014  and  2024.  However,  still 
9.6%  of  young  people between  the  age  of  18-24 
leave  education  with  at  most  a  lower  secondary 
qualification (EU:  9.3%),  and  this is  higher  among 
young people with disabilities (33% vs EU: 18% in 
2022) (170).  Driven  by 
is 
strengthening  its  ELET  monitoring  system  with  a 
data  warehouse  that  aims  to  identify  students  at 
risk. The European Social Find Plus (ESF+) national 
programme  prioritises 
reducing  early  school 
leaving  by:  (i)  promoting  VET;  (ii)  implementing 
preventive  and  active  measures;  (iii)  providing 
innovative  teaching  and  learning  tools  (such  as 
digital  technologies);  (iv)  building  education  and 
training professionals’ capacity; and (iv) developing 
inclusive  education  pathways  for  children  with 
special education needs. 

the  RRP,  Malta 

and 
has 
science 
since  2015  with 

The  share  of  top-performing  students  is 
shrinking,  hindering  the  country’s  innovation 
potential.  The  share  of  top  performers 
in 
decreased 
mathematics 
substantially 
significant 
differences across school types. The share of top-
performing  students  in  mathematics  is  highest  in 
independent  schools  (17.1%)  and  considerably 
lower  in  church-run  (7.1%)  and  state  schools 
(5.0%),  highlighting  unequal  opportunities 
to 
succeed in a stratified school system. Only 48% of 
eighth  grade  students  had  at  least  a  basic 
(EU: 
computer  and 
57%) (171).  A  decreasing  rate  of  top  performance 
and a high share of students without an adequate 
level  of  basic  and  digital skills  point  to  an  overall 
skills 
challenge 
development in these areas. This raises questions 
about  the  overall  teaching  quality  and  highlights 
the need for better school monitoring. To respond 
to these challenges, the Maltese ESF+ programme 
has  allocated  43%  of  its  budget  to  promoting 
inclusive  education,  training  and 
quality  and 
lifelong 
the 
country’s  RRP  aims  to  improve  basic  skills  and 
literacy, track early school leavers, improve online 

learning.  To  complement  these, 

information 

supporting 

students’ 

literacy 

level 

in 

(170) European comparative data on persons with disabilities - 

Publications Office of the EU. 

(171)  European Commission (2024). International Computer and 
Information Literacy Study (ICILS) in Europe – 2023. Main 
Findings and Educational Policy Implications. 

79 

training,  and  adapt  educational  infrastructure  for 
students with disabilities. 

Teacher  shortages  and  challenges  with 
teachers’  preparedness  could  harm  the 
quality  of  education.  To  mitigate  teacher 
shortages  at  primary  and  secondary 
level, 
substitute  teachers  are  being  employed,  counting 
for 12.5% of the teaching workforce in 2022 (172). 
Given  that  the  qualification  requirements  for 
substitute teachers are different or lower than for 
fully qualified teachers, this might have a negative 
impact  on  teaching  and  learning  quality.  In  2022, 
41.4%  (EU:  53.4%)  of  students  attended  schools 
whose principal reported that the school’s capacity 
to  provide  instruction  was  hindered  by  a  lack  of 
teaching staff, and 19.1% (EU: 27.4%) of students 
attended  schools  with  reported  inadequate  or 
poorly qualified teaching staff. Working conditions, 
a  rigid  salary  scale  system  and  limited  career 
identified  among  the 
progression  have  been 
drivers  behind  the  limited  attractiveness  of  the 
profession  and  teacher  retention (173).  Moreover, 
since  2015,  Malta  has  registered  the  largest 
increase  in  the  share  of  foreign-born  students  in 
the  EU  (5.4 pps).  To  respond  to  a  rapidly  evolving 
environment,  students’  learning  should  be  better 
considered in classrooms. This could be facilitated 
by  improving  teachers’  preparedness  through  a 
revision  of  the  initial  teacher  education  curricula; 
institutions; 
strengthening 
opportunities; 
improving 
monitoring  working  conditions;  and  strengthening 
teacher communities and the current induction and 
mentoring policy.  

practical 

learning 

training 

teacher 

There is scope to improve green skills among 
both  students  and  educators.  While  students 
can  understand  fundamental  principles  and  broad 
concepts  underpinning  sustainable  development, 
they 
lack  specific  knowledge,  and  systemic 
understanding  or  a  critical  perspective  of  the 
area (174).  Despite 
increasing  opportunities  for 
teachers to implement sustainability-topics in their 
practice,  only  one  in  two  reported  participating  in 

(172)  Ministry 

for  Education,  Sport,  Youth,  Research  and 

Innovation.  

(173) Kutsyuruba, B. & Bezzina, C. (2024). Teacher Induction and 
Mentoring in Malta: A Review of the Literature; Attard Tonna, 
M.  &  Calleja,  J.  (2021):  An investigation of  the  professional 
behaviour, status, career and identities of teachers in Malta. 
(174)  2022  International  Civic  and  Citizenship  Study  (ICCS);  IEA 
International  Civic  and  Citizenship  Education  Study  2022 
International Report (Revised Edition). 

 
 
 
training  on  the  environment  and  sustainability 
during pre- or in-service training (or both). 

Far  less  students  in  Malta  are  enrolled  in 
upper-secondary  vocational  programmes 
than in the rest of the EU. Despite the very high 
employment  rates  of  recent  VET  graduates,  in 
2023,  28.8%  of  upper-secondary  students  were 
enrolled in vocational programmes, well below the 
EU  average  of  49.1%.  The  share  of  20-34-year-
old  VET  graduates  (ISCED  3-4)  exposed  to  work-
based  learning  remains  below  the  EU  average 
(51.9%  vs  65.3%  in  2024)  and  the  EU  target  for 
2025  (60%).  Challenges  with  the  perception, 
attractiveness 
VET 
programmes  persist,  reflecting  broader  concerns 
relevance  of  VET 
about 
qualifications. This misalignment with the needs of 
both  adult 
labour  market 
exacerbates  existing  skills  mismatches  and 
contributes to high skills shortages in the country.  

learners  and  the 

the  value  and 

accessibility 

and 

of 

Malta  has  developed  several  policy  actions 
to tackle education and skills challenges.  For 
instance,  Malta’s  new  education  strategy  2024-
2030  improves  synergies  between  education  and 
industry  through:  (i)  partnerships;  (ii)  professional 
development for VET educators; (iii) national basic 
skills  guidelines;  (iv)  entrepreneurship  promotion; 
(v)  industry  involvement  in  designing  vocational 
review  of  funding 
(vi)  a 
programmes;  and 
learning. 
support 
to 
opportunities 
lifelong 
Moreover,  MCAST,  Malta’s 
leading  vocational 
education institution, provides training aligned with 
industry  needs.  With  its  2022-2027  strategy, 
to  boost  vocational  and 
MCAST 
professional  education  by:  (i)  developing  modern 
infrastructure;  (ii)  expanding  work-based  learning; 
promoting 
research; 
(iii) 
industry 
(v)  strengthening 
sustainability;  and 
partnerships. 
comprehensive 
a 
assessment of these measures is still needed. 

is  aiming 

advancing 

However, 

(iv) 

While  tertiary  attainment  rate  increases, 
enrolment in science, technology, engineering 
and  mathematics  (STEM)  fields  remains  low, 
despite labour market demand. In 2024, 46.9% 
of  25-34-year-olds  had  a  tertiary  qualification 
(EU:  44.2%),  having  increased  by  15.6  pps  since 
2014.  However,  the  share  of  tertiary  students 
enrolled  in  STEM  subjects  is  one  of  the  lowest  in 
the  EU,  at  13.9%  (EU:  26.7%),  with  only  5.1%  of 
all  tertiary  enrolments  in an  ICT  subject.  At  upper 
secondary  VET,  33.1%  of  students  in  Malta  were 
enrolled  in  STEM  fields  in  2023,  below  the  EU 

80 

average of 38.9%. The area of ICT attracts a very 
low  share  of  female  students.  Only  1.5%  of 
women  enrolled  in  tertiary  education  study  ICT, 
against  10.0%  of  all  male  tertiary  students,  and 
only 17.4% of students enrolled in ICT are female. 
The current supply of ICT graduates falls short of 
the  labour  market  demand (175).  To  encourage 
students  to  pursue  studies  in  areas  with  growing 
industry  demand,  the  national  education  strategy 
2024-2030 proposes a stipend system and higher 
investments  in  the  current  scholarship  scheme. 
These  initiatives  are  targeted  at  students  who 
study in STEM fields or in the area of green skills, 
and  scholarships  in  niche  ICT  fields  are  also 
provided  under  the  RRP.  Furthermore,  institutions 
like  MCAST  and  the  University  of  Malta  have 
expanded  their  educational  offer  in  ICT  and 
engineering.  As  part  of  the  digital  education 
strategy 2024-2030, Malta recognises the gender 
differences  in  computer  science  and  supports 
initiatives to offer female role models to girls and 
promote 
industry  partnerships  to  bridge  the 
existing gender gap. 

Bottlenecks  to  enter  STEM  fields  in  higher 
education  are  already  present  at  earlier 
stages  of  students’  education.  At  each 
educational  level,  the  pool  of  potential  students 
pursuing  STEM  careers  decreases.  At  secondary 
level,  around  half  of  students  fail  to  pass  their 
school  leaving  exam  in  mathematics  or  physics 
and  only  a  limited  number  take  exams  in  biology 
or  chemistry (176).  The  pool  decreases  further  at 
post-secondary level, with only a small number of 
students  taking  advanced  level  examinations  in 
STEM-related subjects (177), a pre-requisite in most 
STEM-related fields to enter university. 

Malta  is  making  efforts  to  develop  digital 
skills  further.  Self-reported  data  indicate  that 
the share of the overall population in Malta with at 
least  a  basic  level  of  digital  skills  is  63.0%,  well 
above  the  EU  average  (55.6%).  Malta  is  actively 
developing  policies  to  strengthen  digital  literacy. 
The 2023-2030 Digital Decade strategic roadmap 
includes a dedicated section on digital skills. More 
recently, the 2025-2030 digital education strategy 
prioritises digital literacy in education at all levels. 

(175)  European  Commission  (2024),  Digital  Decade  2024  – 

Country Report: Malta. 
(176)  SEC Statistical Report 2023 
(177)  MC Statistical Report. 

 
 
and 

to  high 

contributing 

competitiveness. 

remain  a  pressing 
Skills  mismatches 
skills 
challenge, 
the  country’s 
shortages  and  hindering 
resilience 
The 
macroeconomic  skills  mismatch (178)  decreased 
further  slightly 
in  2024,  by  approximately 
0.7 percentage  point  compared  to  the  previous 
year,  to  18.8%,  somewhat  below  the  EU  average 
of  19.2%.  The  Malta  Skills  Survey  (2022  and 
2023)  highlights  vertical  mismatches 
(skills 
misaligned with qualification levels) and horizontal 
mismatches 
fields), 
alongside  shortages  in  transversal  skills,  such  as 
soft and digital skills.  

(skills  misaligned  with 

Graph A12.2: Participation in education and 
training (during the past 12 months), by 
educational attainment level for 2016 and 2022 

(1) Excluding guided-on-the-job training. 
Source: Eurostat, AES, special extraction excluding guided-on-
the-job training, available on CIRCABC. 

Overqualification  remains  a  structural  issue. 
21.7%  of  workers  with  higher  education 
qualifications  are  employed  in  jobs  not  requiring 
that  level  of  qualification,  a  figure  nevertheless 
consistent  with  the  EU  average.  Certain  sectors 
exhibit  particularly  high  overqualification  rates 
compared  to  the  EU,  such  as  transportation  and 
(49.0%),  wholesale  and  retail  trade 
storage 
(50.0%),  accommodation  and 
service 
(53.2%),  and  manufacturing  (30.1%).  Aligning 

food 

(178) The macroeconomic skills mismatch indicator measures the 
dispersion  of  employment  rates  across  skill  groups  (proxied 
by qualification levels, with ISCED 0-2 low; 3-4 medium and 
5-7 high). 

81 

workforce  skills  with  market  needs  is  critical  for 
resilience  and 
improving  Malta’s  economic 
maximising the workforce’s potential. 

Malta  has  an  above-EU  average  share  of 
adults  with  lower  levels  of  education,  but 
their  participation  in  adult  learning  remains 
particularly  low.  In  2024,  29.3%  of  Malta’s 
population had lower secondary education or lower 
(levels 0-2), significantly above the EU average of 
24.2%.  Despite  recent  progress,  participation  in 
adult  learning,  especially  among  people  with  low 
educational  attainment,  remains  a  challenge. 
Participation  in  education  and  training  in  the  last 
12  months  increased  from  32.8%  in  2016  to 
39.9%  in  2022.  It  is  now  in  line  with  the  EU 
average but far from the 2030 national target of 
57.6%.  Moreover,  significant  disparities  not  only 
persist  but  have  increased  over  time.  Highly 
educated  adults  are  far  more  likely  to  participate 
in  education  and  training  than  those  with  lower 
qualifications  (65.9%  vs  16.3%,  respectively  in 
2022), and this difference has only increased since 
2016  (61.3%  vs  20.7%,  respectively  –  see  Graph 
A12.2).  Consequently,  the  people  that  would 
benefit the most from these learning opportunities 
are  those  less  likely  to  access  them.  Therefore, 
substantial  efforts  are  needed  to  meet  Malta’s 
2030  skills  target  and  support  the  country’s 
competitiveness. 

Supported  by  EU  funds,  efforts  to  address 
skill mismatches and promote adult learning 
are  under  way.  The  ESF+ 
is  supporting 
investments  to  upskill  and  reskill  the  workforce, 
particularly  in  green  and  digital  fields,  while  also 
addressing  skills  gaps 
in  emerging  sectors. 
Initiatives  aim  to  support  vulnerable  groups  by 
providing training in basic and digital skills, second 
chance  education,  and  active  inclusion  for  people 
with  disabilities.  The  ESF+  also  contributes  to 
improving  healthcare  and  long-term  care  services 
through  training  for  health  and  care  workers, 
health  prevention  campaigns  and  research  (see 
Annex 
planned 
Additionally, 
implementation  of  individual  learning  accounts  is 
expected  to  encourage  greater  participation  in 
adult  education  by  giving  financial  incentives  to 
close  skills  gaps  and  foster  personal  and 
professional  development.  Thanks  to  RRP  support, 
Malta  launched  the  e-College,  an  online  learning 
platform  offering  digital  and  flexible  courses  to 
support  upskilling,  lifelong  learning,  and  a  more 
resilient workforce. The initiative aims to attract at 
least 4 800 learners, including low-skilled people.  

14). 

the 

1020304050607020072008200920102011201220132014201520162017201820192020202120222030% of people aged 25-64EU TotalMT TotalMT with low educationMT with high educationMT 2030 target 
   
 
ANNEX 13: SOCIAL SCOREBOARD 

Table A13.1:Social Scoreboard for Malta 

(1) Update of 5 May 2025. Members States are categorised based on the Social Scoreboard according to a methodology agreed 
with the EMCO and SPC Committees. Please consult the Annex of the Joint Employment Report 2025 for details on the 
methodology (https://employment-social-affairs.ec.europa.eu/joint-employment-report-2025-0). 
Source: Eurostat 

82 

39,99,663,07,213,44,8783,03,10,7152,819,725,926,025,35,844,10,3Critical situationTo watchWeak but improvingGood but to monitorOn averageAdult participation in learning (during the last 12 months, excl. guided on the job training, % of the population aged 25-64, 2022)Equal opportunities and access to the labour marketSocial Scoreboard for MaltaBest performersBetter than averageEarly leavers from education and training(% of  the population aged 18-24, 2024)Young people not in employment, education or training(% of the population aged 15-29, 2024)Gender employment gap(percentage points, population aged 20-64, 2024)Income quintile ratio (S80/S20, 2024)Dynamic labour markets and fair working conditionsSocial protection and inclusionShare of individuals who have basic or above basic overall digital skills(% of the population aged 16-74, 2023)Impact of social transfers (other than pensions) on poverty reduction(% reduction of AROP, 2024)Children aged less than 3 years in formal childcare (% of the under 3-years-old population, 2024)Self-reported unmet need for medical care (% of the population aged 16+, 2024)Disability employment gap (percentage points, population aged 20-64, 2024)Housing cost overburden (% of the total population, 2024)At risk of poverty or social exclusion (AROPE) rate (% of the total population, 2024)Employment rate(% of the population aged 20-64, 2024)Unemployment rate(% of the active population aged 15-74, 2024)Long term unemployment(% of the active population aged 15-74, 2024)Gross disposable household income (GDHI) per capita growth(index, 2008=100, 2023)At risk of poverty or social exclusion (AROPE) rate for children(% of the population aged 0-17, 2024) 
 
 
 
  
 
 
ANNEX 14: HEALTH AND HEALTH SYSTEMS 

boosting 

fairness,  while 

Malta’s  health  system  faces  challenges  that 
need  to  be  addressed  if  the  country  is  to 
improve  the  health  of  its  population  and 
social 
the 
competitiveness  of  its  economy.  The  main 
challenges are increasing demand for services due 
to population growth, high out-of-pocket payments 
for  healthcare,  and  a  high  prevalence  of 
overweight  and  obesity.  These  challenges  are 
mainly  due  to:  (i)  insufficient  funding;  (ii)  health 
workforce  shortages;  (iii)  limited  spending  on 
prevention;  and 
the 
effectiveness of current preventive measures.    

shortcomings 

(iv) 

in 

Life  expectancy  at  birth  in  Malta  rebounded 
above its pre-COVID-19 level and was one of 
the  highest  in  the  EU  in  2023.  Women  can 
expect to live 3.6 years longer than men, but only 
around  a  fifth  of  a  year  more  in  good  health. 
Treatable  mortality  is  lower  than  the  EU  average, 
suggesting  that  the  health  system  is  relatively 
effective. Diseases  of 
the  circulatory  system 
(‘cardiovascular  diseases’)  and  cancer  are  the 
leading  causes  of  death,  but  with  mortality  rates 
lower  than  the  EU  average.   Mental  health  is  a 
priority 
in  Malta's  national  health  strategy 
framework  for  2020-2030,  supported  by  the 
2020-2030  mental  health  strategy.  The  strategy 
focuses 
(ii) 
social 
transforming  service  delivery; 
(iii)  supporting 
individuals  and  their  networks;  and  (iv)  enhancing 
investment  and 
integration, 
services 
innovation.  A  key  milestone  was  the  launch  of  a 
24/7  mental  health  hotline  in  late  2022.  Malta 
participates  in  several  EU4Health-funded  joint 
actions,  which  aim  to  reduce  the  burden  of 
cardiovascular  diseases,  cancer,  diabetes  and 
respiratory  diseases,  and  to 
improve  mental 
health. 

determinants; 

through 

on: 

(i) 

Graph A14.1: Life expectancy at birth, years 

Source: Eurostat (demo_mlexpec) 

83 

Graph A14.2: Treatable mortality 

Age-standardised death rate (mortality that could be 
avoided through optimal quality healthcare) 
Source: Eurostat (hlth_cd_apr) 

Health expenditure in Malta is lower than the 
EU  average,  as  is  the  share  of  health 
spending  covered  by public  funds.  In  2022, 
health  spending  per 
inhabitant  (adjusted  for 
differences  in  purchasing  power)  was  lower  than 
the  EU  average,  and  only  67%  of  it  was  publicly 
funded.  The  largest  share  of  health  expenditure, 
above  the  EU  average,  was  for  outpatient  care. 
This,  together  with  a  relatively  low  number  of 
hospital  beds  (335  per  100 000  population  in 
2022 vs an EU average of 444), points to Malta’s 
organisational focus on primary care. This matches 
a  health  system  reform  trend  observed  in  other 
countries. Public spending as a proportion of total 
health expenditure in Malta was among the lowest 
in the EU in 2022. This translated into one of the 
highest proportions of out-of-pocket payments for 
healthcare  in  the  EU  (30%  in  2022,  more  than 
twice  the  EU  average)  (179).  The  largest  share  of 
out-of-pocket  payments  went  towards  outpatient 
care,  followed  by  retail  medical  goods,  inpatient 
and  dental  care.  Despite  the  high  out-of-pocket 
payments for healthcare, Malta continues to report 
one  of  the  lowest  levels  of  self-reported  unmet 
needs  for  medical  care  in  the  EU,  at  0.3%  of  the 
population in 2024 compared to 2.5% EU average.  
At  the  same  time,  due  to  ageing,  the  projected 
increase in public healthcare spending raises fiscal 
sustainability concerns for Malta (see Annex 1). In 
2022, investments in health capital formation as a 
share of total health expenditure were among the 
lowest in the EU (180). This may be reflected by the 
scarcity  of  key  diagnostic  technologies  (medical 
imaging), however the situation is improving in this 

(179) OECD/European Commission (2024), Health at a Glance: 

Europe 2024 - State of Health in the EU Cycle, pp.186-187.  

(180)  See Health at a Glance Europe 2018, 2020, 2022 and 

2024. 

82.782.182.382.483.481.380.480.180.681.420192020202120222023MaltaEU91.885.089.381.886.091.389.291.793.389.720182019202020212022per 100 000 populationMaltaEU 
 
        
 
        
 
 
 
Table A14.1:Key health indicators 

*The EU average is weighted for all indicators except for doctors and nurses per 1 000 population, for which the EU simple 
average is used based on 2022 (or latest 2021) data except for Luxembourg (2017). Doctors’ density data refer to practising 
doctors in all countries except Greece, Portugal (licensed to practise) and Slovakia (professionally active). Density of nurses: data 
refer to practising nurses (EU recognised qualification) in most countries except France and Slovakia (professionally active) and 
Greece (hospital only). **‘Available hospital beds’ covers somatic care, not psychiatric care. ***The EU median is used for patents. 
Source:  Eurostat database; European Patent Office; ****European Centre for Disease Prevention and Control (ECDC) for 2023. 

respect. Malta invests EUR 36.7 million through its 
recovery  and  resilience  plan  (RRP),  and  EUR  155 
million  (181)  from  the  cohesion  policy  funds  to 
the  accessibility,  effectiveness  and 
improve 
resilience of the health system.  

As  regards  public  health,  Malta  places  a 
modest focus on disease prevention.  In 2022, 
spending  on  prevention  in  Malta  accounted  for 
1.2% of total spending on health, much lower than 
the  EU  average  of  5.5%.  This  share  has  been 
decreasing in recent years, contrary to the EU-wide 
trend, driven by exceptional expenditure related to 
COVID-19.  More  than  one  third  of  all  deaths  in 
Malta  are  driven  by  behavioural  risk  factors. 
Dietary  risks  and  smoking  are  major  contributors 
to  mortality.  The  proportion  of  the  population 
reporting daily consumption of vegetables in 2022 
was  among  the  lowest  in  the  EU,  as  was  the 
frequency  of  physical  activity  outside  working 
time. These factors contribute to the country’s high 
prevalence  of  overweight  and  obesity,  which  in 
turn  drive  its  comparatively  high  mortality  rates 
from  diabetes  and  ischaemic  heart  disease.  Lung 
cancer  is  the  second  main  cause  of  preventable 
mortality  in  Malta,  which  may  be  linked  to  high 
smoking rates.  

The  Maltese  government  is  carrying  out  targeted 
actions  to  combat  chronic  conditions  like  obesity, 
diabetes  and  cancer  through  the  2023-2030 
national  health  systems  strategy.  Key  initiatives 
include:  (i)  enhancing  healthcare  services;  (ii) 
stepping  up  physical  activity  programmes;  (iii) 

(181) The EU cohesion policy data reflect the status as of 

13 May 2024. 

84 

expanding  remote  patient  monitoring;  and  (iv) 
opportunistic  screening  services  in  the  community 
for various common non-communicable diseases. 

screening 

programmes, 

A  national  framework  aims  to  prevent  non-
communicable  diseases,  by  addressing  systemic 
challenges  within  the  health  system  and  priority 
areas targeting major risk factors or determinants 
include 
of  health.  Cancer  prevention  efforts 
expanding 
genetic 
services,  and  home-based  treatments  under  new 
initiatives  following  on  from  previous  national 
cancer  plans.  The  Maltese  RRP  also  tackles  these 
issues  by  setting  out  a  prevention-focused 
strategic  framework  and  revising  legal  structures 
to  support  a  blood,  tissue  and  cell  centre. 
Investments include diagnostic enhancements and 
procuring  radiotherapy  equipment.  Malta  has  also 
set  up  a  newborn  hearing-testing  programme  to 
identify  hearing  problems  as  early  as  possible. 
Finally, a report on obesity prevalence among 4–5-
year-olds  in  Malta  highlights  trends,  risk  factors 
and  intervention  impacts,  aiming  to  guide  policy, 
raise awareness and identify health disparities. 

Malta  has  implemented  several  reforms  to 
tackle  its  shortage  of  health  workers.  Malta 
has more doctors than the EU average (4.5 vs 4.2 
per  1 000 population  in  2022),  while  the  number 
of  nurses  is  close  to  the  EU  average  (see  Annex 
10).  As  a  small  country,  Malta  faces  unique 
challenges  in  attracting  and  retaining  specialised 
health professionals. Key issues include the 'brain 
drain,'  where  local  medical  staff  migrates  to 
employment 
countries 
opportunities  and  exposure  to  a  wider  range  of 
medical  cases. 
In  the  past,  shortages  were 
worsened  by  an  increasing  number  of  nurses 

offering 

better 

20192020202120222023EU average* (latest year) Cancer mortality per 100 000 population203.5212.5198.3209.5n.a.234.7 (2022)Mortality due to circulatory diseases per 100 000 population 298.9 286.0 271.8 273.8n.a.336.4 (2022)Current expenditure on health, purchasing power standards, per capita2 9573 0273 3913 427n.a.3 684.6 (2022)Public share of health expenditure, % of current health expenditure 62.5 66.7 67.4 67.0n.a.81.3 (2022)Spending on prevention, % of current health expenditure 1.51.51.21.2n.a.5.5 (2022)Available hospital beds per 100 000 population** 321 349 343 335n.a.444 (2022)Doctors per 1 000 population*4.04.24.34.5n.a.4.2 (2022)*Nurses per 1 000 population* 7.7 8.0 8.0 7.8n.a.7.6 (2022)*Mortality at working age (20-64 years), % of total mortality13.114.113.813.412.214.3 (2023)Number of patents (pharma / biotech / medical technology)21791729 (2023)***Total consumption of antibacterials for systemic use,                    daily defined dose per 1 000 inhabitants****20.716.615.824.022.920.0 (2023) 
 
 
        
 
Key 

areas 

addressed 

roadmap  aims  to  guide  the  integration  of  digital 
the  national  healthcare 
technologies  within 
ecosystem  up  to  2030.  It  focuses  on  enhancing 
patient-centred care, achieving system integration, 
and  ensuring  continuity  across  the  healthcare 
include 
system. 
interoperability  between  healthcare  IT  systems, 
governance  structures,  and  opportunities  for 
innovation  in  healthcare.  Significant  investments 
under  the  RRP  and  cohesion  policy  aim  to  boost 
the digital transformation of the healthcare sector 
in  Malta.  Measures  focus  on  building  and 
improving  digital  health  tools,  e-health  services 
and  applications.  In  addition,  Malta  participates  in 
joint  actions  and  receives  direct  grants  under 
EU4Health,  aimed  at  improving  the  semantic 
interoperability  of  health data  and  facilitating the 
implementation  of  the  European  Health  Data 
Space. 

leaving  Malta  to  work  in  other  (English-speaking) 
countries  with  more  attractive  working  conditions 
(182).  To  address  these  challenges  and  mitigate 
their  impact  on  the  health  system  and  patient 
care,  Malta  has  improved  remuneration  packages 
for specialists to better compete with other EU and 
UK  markets.  Malta  is  fairly  reliant  on  foreign 
nurses,  especially  in  hospitals.  Malta  is  also 
expected  to  be  more  affected  by  demographic 
change  than  most  other  EU  countries  (183).  To 
address  workforce  shortages,  Malta  launched  its 
first  national  health  workforce  strategy  in  2022. 
The  strategy’s  main  goals  are  to:  (i)  attract, 
develop,  retain  and  manage  an  inclusive  and 
effective 
resilient  workforce; 
(ii) 
management 
support 
practices; 
professional growth in response to societal needs. 
includes  a  human  resource  planning  and 
It 
forecasting 
enhance  workforce 
sustainability. The Maltese RRP also supports these 
aims  by  focusing  on  workforce  planning  and 
retention measures. 

promote 
(iii) 
and 

tool 

to 

innovation  and 

The  Maltese  health  system’s  potential  to 
industrial 
foster 
drive 
development 
in  the  EU  medical  sector 
remains  largely  untapped.  Malta  is  among  the 
EU countries that report the lowest public spending 
on  health  research  and  development,  in  part 
reflecting  the  modest  size  of  the  country  and  its 
health system. This is reflected in the low number 
of European patents generated: 17 in 2023 in the 
combined 
pharmaceuticals, 
biotechnologies  and  medical  devices  (vs  an  EU-
level median of 29) (184).  

areas 

of 

Malta  aims  to  scale  up  the  digitalisation  of 
its  health  system,  with  support  from  EU 
programmes. The share of people accessing their 
personal  health  records  online  in  Malta  is  higher 
than  the  EU  average  (41.6  in  2024  vs  27.6). 
However,  the  use  of  online  health  services 
(excluding 
in-person 
consultations  was  much  lower.  The  digitalisation 
of  health  services  and  remote  care  options  are 
becoming  more  widespread.  Malta  has  adopted  a 
strategic roadmap  for digital  health as part of its 
2023-2030 national health systems strategy. This 

instead 

phone) 

of 

(182) Malta is facing exodus of nurses to the UK  

(timesofmalta.com). 

(183)  Source: https://economy-

finance.ec.europa.eu/system/files/2021-10/ip148_en.pdf 

(184)  European Patent Office, Data to download | epo.org.  

85 

 
 
 
HORIZONTAL 
ANNEX 15: SUSTAINABLE DEVELOPMENT GOALS 

dimensions 

This Annex assesses Malta’s progress on the 
Sustainable Development Goals (SDGs) along 
competitiveness, 
of 
the 
and 
fairness 
social 
sustainability, 
macroeconomic stability. The 17 SDGs and their 
related  indicators  provide  a  policy  framework 
under  the  UN’s  2030  Agenda  for  Sustainable 
Development.  The  aim  is  to  end  all  forms  of 
inequalities  and  tackle  climate 
poverty,  fight 
change  and 
the  environmental  crisis,  while 
ensuring that no one is left behind. The EU and its 
Member  States  are  committed  to  this  historic 
global  framework  agreement  and  to  playing  an 
active  role  in  maximising  progress  on  the  SDGs. 
The graph below is based on the EU SDG indicator 
set developed to monitor progress on the SDGs in 
the EU. 

On  SDGs  related  to  competitiveness,  Malta 
performs  well  on  decent  work  and  economic 
growth  (SDG 8)  but,  though  improving,  it 
needs  to  catch  up  with  the  EU  average  on 

Graph A15.1: Progress towards the SDGs in Malta 

However, 

(Industry, 

innovation 

respectively). 

SDG 9 
and 
infrastructure)  as  well  as  quality  education 
(SDG 4).  Malta  steadily  increased  its  tertiary 
education  rate  from  41%  in  2019  to  46.9%  in 
2024  (against  44.2%  for  the  EU;  SDG 4).  In 
addition, both adult participation in learning in the 
past  four  weeks  (18.4%)  and  the  percentage  of 
adults  with  at  least  basic  digital  skills  (SDG 4; 
63%)  are  above  the  EU  average  (13.3%  and 
55.6%, 
regarding 
innovation  (SDG 9),  the  Maltese  research  and 
innovation  system  suffers  from  underinvestment 
as  shown  by  the  indicator  on  gross  domestic 
expenditure  on  R&D  (0.64%  of  GDP  in  2023 
compared  to  the  EU  average  of  2.24%)  and  the 
share  of  R&D  personnel  (0.74%  of  the  active 
population in 2023 compared to the EU average of 
1.56%).  Complementing  the  Cohesion  Funds,  the 
targets 
resilience  plan 
recovery  and 
digitalisation  bottlenecks  to  improve  progress  on 
meeting 
and 
(Industry, 
infrastructure).  Cohesion  Policy  also  supports, 
amongst others, R&I infrastructure and equipment, 

innovation 

SDG 9 

(RRP) 

For detailed datasets on the various SDGs, see the annual Eurostat report ‘Sustainable development in the European Union’; for 
details on extensive country-specific data on the short-term progress of Member States: Key findings – Sustainable development 
indicators - Eurostat (europa.eu). A high status does not mean that a country is close to reaching a specific SDG, but signals that it 
is doing better than the EU on average. The progress score is an absolute measure based on the indicator trends over the past 
five years. The calculation does not take into account any target values, as most EU policy targets are only valid for the aggregate 
EU level. Depending on data availability for each goal, not all 17 SDGs are shown for each country. 
Source:  Eurostat, latest update of 28 April 2025. Data refer mainly to the period 2018-2023 or 2019-2024. Data on SDGs may 
vary across the report and its annexes due to different cut-off dates. 

86 

 
 
 
 
 
 
 
and  the  development  of  a  business  incubation 
the  competitiveness  of 
centre  strengthening 
Malta’s economy. 

energy 

(15.1%) 

consumption 

While  Malta  is  improving  on  several  SDGs 
related  to  sustainability  (SDGs 2,  9,  11,  12, 
13,  15),  their  status  remains  below  the  EU 
average.  Malta  performs  well  on  SDG 7 
(Affordable  and  clean  energy)  and  SDG 14 
(Life  below  water).  Although  Malta’s  energy 
consumption  per  capita  is  below  the  EU  average 
(SDG 7),  the  share  of  renewable  energy  in  gross 
though 
final 
improving,  remains  far  below  the  EU  average 
(24.6%  in  2023;  SDG 13).  As  for  affordable 
energy,  the  percentage  of  the  Maltese  population 
unable  to  keep  their  homes  adequately  warm 
(6.8%  in  2023)  is  below  the  EU  average  (10.6%). 
Waste  generation  per  capita  is  on  a  downwards 
trend  but  remains  higher  than  the  EU  average  in 
(MT:  5 004 kg  against  EU:  4 991 kg) 
2022 
(SDG 12),  and  the  rate  of  recycling  for  municipal 
waste is around a third of the EU average (17.3% 
against  48.2%  for  the  EU  in  2023;  SDG 11).  Only 
7.4% of the Maltese population were connected to 
at least secondary wastewater treatment in 2022 
compared to 80.9% at EU level (SDG 11). Various 
measures  in  Malta’s  recovery  and  resilience  plan 
(RRP) aim to contribute to better energy efficiency, 
clean energy, sustainable transport, and a circular 
economy.  Examples 
include  energy-efficiency 
renovations  of  private  and  public  buildings, 
investments  and  reforms  to  increase  renewable 
sustainable 
energy 
transport, 
in  waste 
management  and  measures  to  increase  recycling 
and  reuse,  including  in  the  construction  and 
demolition industries. Alongside the RRF, Cohesion 
Policy  also  supports  multimodal  solutions  to 
improve mobility (e.g. pedestrian pathways, cycling 
lanes)  and  investment  in  an  organic  processing 
plant to reduce the amount of organic waste that 
goes to landfill. 

capacity,  promotion  of 
improvements 

and 

Malta  performs  well  on  decent  work  and 
economic growth (SDG 8) and affordable and 
clean energy (SDG 7) and, though still below 
the EU average, it is improving on education 
and  gender  equality  (SDGs 4,  5).  However,  it 
is moving away from several SDGs related to 
social  fairness,  including  those  addressing 
poverty  and  inequalities  (SDGs 1,  3,  10). 
Malta  has  very  low  self-reported  unmet  medical 
needs (0.1% in 2023 against 2.4% for the EU), but 

87 

the  obesity  rate  is  above  the  EU  average  and 
increasing  while  healthy  life  expectancy  at  birth, 
though  still  above  the  EU  average,  is  decreasing 
(SDG 3).  Fatal  accidents  at  work  have  increased 
significantly to 5.28 per 100 000 workers in 2022 
and  are  now  far  above  the  EU  average  (1.66  per 
100 000  workers)  (SDG 3).  On  SDG 4  (Quality 
education),  Malta  has  significantly  decreased  its 
share of early leavers from education and training, 
which  fell  from  14.2%  (2019)  to  9.6%  in  2024, 
although  it  remains  slightly  higher  than  the  EU 
average (9.3%). There is room for improvement in 
increasing  basic  skills  levels  (32.6%  of  low-
achieving  15-year-olds  in  mathematics  against 
29.5%  for  the  EU  in  the  OECD  Programme  for 
International  Student  Assessment  (PISA)  2022). 
The share of children over three in early childhood 
education  stood  at  93.2%  in  2023,  slightly  below 
the  EU  average  (94.6%).  Furthermore,  the  gender 
employment  gap 
improving, 
(SDG 5), 
remains  wide  in  Malta  (13.4  percentage  points 
(pps) against 10 pps for the EU in 2024). Although 
the  share  of  people  at  risk  of  poverty  or  social 
exclusion  (SDG 1)  remains  below  the  EU  average 
(MT:  19.8%  vs  EU:  21.3%  in  2023),  there  is  a 
significant urban-rural gap (SDG 10). Reforms and 
investments  in  the  Maltese  RRP  are  helping  to 
strengthen  the  health  system,  provide  quality 
inclusive  education  and  training,  and  promote 
female labour market participation. 

though 

EU 

and 

(11%) 

average 

Malta  performs  well  on  SDGs  related  to 
macroeconomic  stability  (SDGs 8,  16,  17). 
Regarding  decent  work  and  economic  growth 
(SDG 8),  Malta  further  increased  its  employment 
rate from 75.6% in 2019 to 83% in 2024, which is 
very  high  compared  to  the  EU  average  (75.8%  in 
2024). At 7.2% in 2024, the share of young people 
not in employment, education or training is below 
long-term 
the 
unemployment is very low (0.7% against 1.9% for 
the  EU  in  2024).  General  government  gross  debt, 
at  47.4%  of  GDP,  is  far  below  the  EU  average 
(81%  of  GDP in  2024)  (SDG 17).  Although  overall 
Malta performs above the EU average on SDG 16 
(Peace,  justice,  and  strong  institutions),  Malta 
scores  worse  than  the  EU  in  the  Corruption 
Perceptions Index (46 compared to 62 in the EU in 
2024,  with  0  being  highly  corrupt  and  100  very 
clean).  The  RRP  includes  reforms  to  address 
several 
institutional  challenges 
relating  to  justice  as  well  as  to  the  fight  against 
corruption and money laundering. 

long-standing 

 
As the SDGs form an overarching framework, any 
links  to  relevant  SDGs  are  either  explained  or 
depicted with icons in the other Annexes. 

88 

 
ANNEX 16: CSR PROGRESS AND EU FUNDS IMPLEMENTATION 

policy  programmes  has  accelerated  and 
advanced.  

is 

The  Maltese  RRP  contains  16  investments 
and  31  reforms  to  stimulate  sustainable 
growth,  help  speed  up  the  green  and  digital 
transitions  and  make  the  economy  and 
society more resilient. A year before the end of 
the  RRF  timespan,  implementation  is  on  its  way, 
with  51%  of  the  funds  disbursed.  Malta  has 
fulfilled 39 % of the milestones and targets in its 
RRP  (189).  Efforts  should  continue  to  ensure 
completion  of  all  RRP  measures  by  31 August 
2026. 

Malta  also  receives  funding  from  several 
other  EU  instruments,  including  those  listed 
in  Table  A16.1.  Most  notably,  the  common 
agricultural policy (CAP) provides Malta with an EU 
contribution  of  EUR 122.3  million  under  the  CAP 
further 
strategic  plan  2023-2027 
EUR 107.2 million are available under the Asylum, 
Migration  and  Integration  Fund  (AMIF),  together 
with the border management and visa instrument 
(BMVI)  and  internal  security  funds.  Operations 
amounting  to  EUR  50  million  (191)  have  been 
signed  under  the  InvestEU  instrument  backed  by 
the  EU  guarantee,  improving  access  to  financing 
for riskier operations in Malta. 

(190).  A 

Malta  faces  structural  challenges  in  a  wide 
range  of  policy  areas,  as  identified  in  the 
country-specific 
(CSRs) 
addressed  to  the  country  as  part  of  the 
European  Semester.  They  refer,  among  other 
things,  to  tax  avoidance,  skills  and  education, 
transport, energy and environmental policy. 

recommendations 

The Commission has assessed the 2019-2024 
CSRs  considering  the  policy  action  taken  by 
Malta  to  date  and  the  commitments  in  its 
recovery  and  resilience  plan  (RRP).  At  this 
stage, Malta has made at least ‘some progress’ on 
44  %  of  the  CSRs  (185),  and  ‘limited  progress’  on  
40 % (Table A16.2). 

by 

to  Malta 

competitiveness, 

EU funding instruments provide considerable 
resources 
supporting 
investments  and  structural  reforms  to 
environmental 
increase 
sustainability  and  social  fairness,  while 
helping  to  address  challenges  identified  in 
the  CSRs.  In  addition  to  the  EUR 328  million 
funding  from  the  Recovery  and  Resilience  Facility 
(RRF) in 2021-2026, EU cohesion policy funds (186) 
are  providing  EUR 772.8  million 
to  Malta 
(amounting  to  EUR 1.2  billion  with  national  co-
to  boost 
financing) 
competitiveness  and  growth.  Support  from  these 
instruments  combined  represents  around  5.4%  of 
these 
2024  GDP 
is 
instruments  to  different  policy  objectives 
outlined 
in  Graphs  A16.1  and  A16.2.  This 
substantial  support  comes  on  top  of  financing 
provided 
the  2014-2020 
multiannual  financial  framework,  which  financed 
projects  until  2023  and  has  had  significant 
benefits  for  the  economy  and  Maltese  society. 
Project  selection  under  the  2021-2027  cohesion 

(188).  The  contribution  of 

to  Malta  under 

for  2021-2027 

(187) 

(185)  10 % of the 2019-2024 CSRs have been fully implemented, 
4 % substantially implemented, and some progress has been 
made on 44 %. 

(186)  In 2021-2027, cohesion policy funds include the European 

Regional Development Fund, the Cohesion Fund, the 
European Social Fund Plus and the Just Transition Fund. . The 
information on cohesion policy included in this annex is 
based on adopted programmes with the cut-off date of 5 
May 2025. 

(187) European territorial cooperation (ETC) programmes are 

excluded from the figure. 

(188) RRF funding includes both grants and loans, where 

(189)  As of mid-May 2025, Malta has submitted 3 payment 

requests, the last one being under assessment. 

(190)  An overview of Malta’s formally approved strategy to 

implement the EU’s common agricultural policy nationally 
can be found at: https://agriculture.ec.europa.eu/cap-my-
country/cap-strategic-plans/malta_en  

applicable. GDP figures are based on Eurostat data for 2024. 

(191) Data reflect the situation on 31.12.2024. 

89 

 
 
 
 
 
 
Graph A16.1: Distribution of RRF funding in Malta 
by policy field 

vocational  education  and  training,  and  support 
lifelong  learning,  emphasising  digital  and  green 
skills. Specifically, 53 000 adults will participate in 
learning  opportunities  in  nearly  700  small  and 
medium-sized  enterprises  (SMEs),  while  12 000 
in  employment 
young  people  will  take  part 
measures  (Youth  Guarantee,  Aim-Learn-Master-
Achieve). 

contributing 

are 
in  Malta,  for 

to 
funds 
Other 
competitiveness 
instance 
through  open  calls.  The  Connecting  Europe 
investments 
financed  strategic 
Facility  has 
focusing  on  road  transport,  contributing  to  the 
development  of  alternative  fuel  infrastructure;  as 
the  modernisation  of  maritime 
well  as  on 
infrastructure.  Horizon  Europe  has 
transport 
supported research and innovation, from scientific 
breakthroughs  to  scaling  up  innovations,  with 
widening  participation  and  spreading  excellence 
and European innovation as top priorities in Malta. 
The  Technical  Support  Instrument  (TSI)  in  2024  
supported  Malta 
tax 
administration  reforms;  to  build  capacity  to  fight 
aggressive  tax  planning;  to  increase  financial 
literacy;  to  enhance  access  to  justice  through  the 
application of a people-centre justice approach; to 
shape  a  national  skills  strategy  targeting  the 
the  health 
maritime  sector; 
technology  assessment  and  to  promote  mental 
health  of  youth  by  addressing  the  risks  of  online 
gambling  and  gaming.  The  TSI  is  also  helping 
Malta  to  implement  specific  reforms  linked  to  its 
RRP. 

to  enhance  strategic 

implement 

to 

to 

the 

contains  ambitious 
Malta’s  RRP  also 
measures 
business 
improve 
environment  and  competitiveness.  Among  the 
measures  completed  or  under  implementation  in 
the past year, Malta has increased the powers and 
staff  of  the  Asset  Recovery  Bureau  to  strengthen 
the  fight  against  money  laundering  and  financial 
crime  and  is  implementing  the  national  anti-
money  laundering/combating  terrorist  financing 
strategy  and  action  plan  for  2021-2023.  In  the 
construction  industry,  the  governance  framework 
has been improved by the creation of a Regulator 
for  Buildings,  and  training  has  been  provided  to 
professionals 
industry.  Malta’s  digital 
strategy  2022-2027  is  being  implemented  to 
reduce the digital divide and promote digital skills. 
This  includes  providing  laptops,  internet  vouchers 
and  training  to low-income  individuals.  Significant 
investment  in  digitalisation  is  also  being  carried 

in  the 

(1) Each RRP measure helps achieve the aims of two of the 
six policy pillars of the RRF. The primary contribution is shown 
in the outer circle, while the secondary contribution is shown 
in the inner circle. Each circle represents 100% of the RRF 
funds. Therefore, the total contribution to all pillars displayed 
on this chart amounts to 200% of the RRF funds allocated. 
Source: European Commission 

Graph A16.2: Distribution of cohesion policy 
funding across policy objectives in Malta 

Source: European Commission 

Cohesion  policy  funds  aim  to  increase  the 
productivity  and  competitiveness  of  Maltese 
firms and improve the business environment. 
The  European  Regional  Development  Fund  (ERDF) 
is  helping  to  foster  competitiveness  in  Malta,  for 
example,  by  funding  a  large  incubation  centre  for 
innovative  businesses 
(the  Ħal  Far  Business 
Incubation  Centre),  investing  a  total  of  EUR 25 
million.  The  European  Social  Fund  Plus  (ESF+) 
allocates  19.5%  of 
its  budget  to  enhancing 
employment  and  the  social  economy  in  Malta, 
focusing  on  getting  young  people  into  work, 
incentives for job creation, and skills development 
in  green  and  digital  skills.  EUR 3  million  of  EU 
contribution  will  go  towards  increasing  women’s 
through  targeted 
labour  market  participation 
information  campaigns  and  skills  development. 
Education  and  training  receive  43%  of  the  ESF+ 
budget  to  target  early  school  leaving,  promote 

90 

Green transitionDigital transformationSmart, sustainable andinclusive growthSocial & territorial cohesionHealth & resilienceNext generationSmarter EuropeGreener EuropeConnected EuropeSocial EuropeEurope closer to citizensJTF specific objective 
     
 
      
with  a  disability  and  1 200  nationals  of  non-EU 
countries.  In  addition,  the  AMIF  supports  the 
reception  capacity  (through  the  provision  of  basic 
services  and  material  aid  to  migrants);  the 
efficiency and effectiveness of asylum procedures; 
the integration of third country nationals (through 
the  provision  of  services  such  language  learning, 
cultural  mediation  and  facilitating  access  to 
education and the labour market); and returns. 

Malta’s  RRP  contains  several  reforms  and 
investments  related  to  fairness  and  social 
policies. Among the measures completed or under 
implementation in the past year, Malta is building 
a  blood,  tissue  and  cell  centre  that  will  alleviate 
Malta’s  dependency  on  other  countries  for  blood, 
tissue and cell therapies. Malta is speeding up the 
digitalisation  of  its  healthcare  system,  using  new 
technologies to improve the quality of patient care 
and reduce waiting times. Numerous measures are 
being put in place to prevent early school leaving. 
To  expand  upskilling  and  reskilling  opportunities 
for adults, with particular focus on the low skilled, 
an  e--college  offering  comprehensive  online 
courses has been set up, and measures are being 
taken to develop a guidance system and network. 

out  to  implement  secure  digital  tools  to  support 
the justice system. 

EU  funds  are  playing  a  significant  role  in 
promoting  environmental  sustainability  in 
Malta  during  the  current  seven-year  EU 
budget  (multiannual  financial  framework). 
For  instance,  the  ERDF  is  funding  30 km  of 
new/upgraded  pipes  in  the  public  network  for  the 
collection  of  waste  water,  benefiting  a  total 
population  of  over  100 000  people.  Malta’s  CAP 
strategic  plan  allocates  EUR 38  million  (48%  of 
rural  development  funding)  to  environmental  and 
climate  objectives  and  more  than  EUR 10  million 
(25%  of  direct  payments) 
to  eco-schemes 
supporting  animal  welfare,  biodiversity  or 
integrated  pest  management.  Malta  also  aims  to 
substantially increase its share of organic farming. 
Moreover,  considering  the  scarcity  of  water,  the 
plan  also  supports  investments  in,  among  others, 
modern  water  capture,  storage  and  distribution 
systems. 

in 

including 

the  past  year,  Malta 

Malta’s  RRP, 
the  REPowerEU 
chapter, has a comprehensive set of reforms 
and  investments  for  the  green  transition. 
the  measures  completed  or  under 
Among 
is 
implementation 
renovating  two  public  schools    to  improve  energy 
efficiency and building a pilot near-carbon-neutral 
school. Private-sector uptake of electric vehicles is 
being  promoted  by  the  award  of  grants  to 
purchase  such  vehicles.  Waste  management  is 
being  strengthened  by  applying  the  extended 
producer 
to  new  sectors  and 
implementing a construction and demolition waste 
strategy. 

responsibility 

Promoting  fairness  and  social  cohesion  by 
improving  access  to  basic  services  are 
among  the  key  priorities  of  EU  funding  in 
Malta.  The  ERDF  is  adding  classroom  capacity  in 
education  facilities  for  1 200  pupils.  The  ESF+  in 
Malta  dedicates  26.1%  of  its  budget  to  social 
inclusion,  including  training  for  vulnerable  groups, 
skills development and active inclusion for persons 
with  a  disability.  It  also  prioritises  disadvantaged 
children via the Child Guarantee and supports anti-
discrimination  and  socio-economic  integration  for 
nationals  of  non-EU  countries.  Additionally,  the 
programme strengthens healthcare and long-term 
care  systems  by  investing  in  workforce  training 
and  prevention  campaigns,  aiming  to  improve 
service  access  for  6 500  participants.  Social 
inclusion  actions  should  benefit  1 500  persons 

91 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Table A16.1:Selected EU funds with adopted allocations - summary data (million EUR) 

1) The cut-off date for data on disbursements under the RRF is 31 May 2025. 
(2) Cohesion policy 2014-2020 allocations include REACT-EU appropriations committed in 2021-2022. 
(3) These amounts relate only to disbursements made from 2021 onwards and do not include payments made to the Member 
State before 2021.  Hence the figures do not comprise the totality of payments corresponding to the 2014-2020 allocation. The 
cut-off date for data on disbursements under EMFAF and EMFF is 29 April 2025.  The cut-off date for data on disbursements 
under cohesion policy funds, AMIF, BMVI and ISF is 5 May 2025. 
(4) AMIF - Asylum, Migration and Integration Fund; BMVI - Border Management and Visa Instrument; ISF - Internal Security Fund. 
(5) Expenditure outside the CAP strategic plan is not included. 
(6) The cut-off date for data on EARDF disbursements is 5 May 2025. The information on EAGF disbursements is based on the 
Member State declarations until March 2025.  Disbursements for the Direct Payments (EAGF) started in 2024. 
Source: European Commission 

92 

Instrument/policyDisbursed since 2021   (1)             RRF grants (including the RepowerEU allocation)166,4RRF loans0 Instrument/policyAllocation 2014-2020 (2)Allocation 2021-2027 Disbursed since 2021 (3)    (covering total payments to the Member State on commitments originating from both 2014-2020 and 2021-2027 programming periods) Cohesion policy (total) 830,3 772,8 519,9European Regional Development Fund (ERDF) 379,5 459,9 201,6Cohesion Fund (CF) 205,0 165,2 108,9European Social Fund (ESF, ESF+) 245,8 124,4 202,3Just Transition Fund (JTF) 23,3 7,2European Maritime, Fisheries and Aquaculture Fund (EMFAF) and the European Maritime and Fisheries Fund (EMFF) 22,6 21,811,1Migration, border management and internal security - AMIF, BMVI and ISF (4) 118,8 107,258,4The common agricultural policy under the CAP strategic plan (5)Disbursements under the CAP Strategic Plan (6)Total under the CAP strategic plan14,2European Agricultural Guarantee Fund (EAGF)9,5European Fund for Agricultural Development (EAFRD)4,7Allocation 2023-2027122,343,079,3Allocation 2021-2026 328,20FisheriesMigration and home affairs 
 
 
 
 
 
 
 
 
 
 
 
   
 
Table A16.2:Summary table on 2019-2024 CSRs 

(Continued on the next page) 

93 

MaltaAssessment in May 2025Relevant SDGs2019 CSR 1Some progressEnsure the fiscal sustainability of the healthcare and pension systems, including by restricting early retirement and adjusting the statutory retirement age in view of expected gains in life expectancy.Some progressSDGs 3,82019 CSR 2Some progressAddress features of the tax system that may facilitate aggressive tax planning by individuals and multinationals, in particular by means of outbound payments. Some progressSDGs 8, 16Strengthen the overall governance framework, including by continuing efforts to detect and prosecute corruption. Some progressSDG 16Continue the ongoing progress made on strengthening the anti-money-laundering framework, in particular with regard to enforcements. Full implementationSDGs 8, 16Strengthen the independence of the judiciary, in particular the safeguards for judicial appointments and dismissals, and establish a separate prosecution service.Some progressSDG 162019 CSR 3Some progressFocus investment-related economic policy on research and innovation, Limited progressSDG 9natural resources management, Limited progressSDGs 6, 12, 15resource and energy efficiency, Some progressSDGs 7, 9, 13sustainable transport, reducing traffic congestion and Limited progressSDG 11inclusive education and training.Some progressSDGs 4, 8, 102020 CSR 1Some progressTakeallnecessarymeasures,inlinewiththegeneralescapeclauseoftheStabilityandGrowthPact,toeffectivelyaddresstheCOVID-19pandemic,sustaintheeconomyandsupporttheensuingrecovery.Wheneconomicconditionsallow,pursuefiscalpoliciesaimedatachievingprudentmedium-termfiscalpositionsandensuringdebtsustainability,while enhancing investment. No longer relevantSDGs 8, 16Strengthentheresilienceofthehealthsystemwithregardtothehealthworkforce,criticalmedical products and primary care.Some progressSDG 32020 CSR 2Some progressConsolidate short-time work arrangements and ensure the adequacy of unemployment protection for all workers. Some progressSDGs 1, 2, 8, 10Strengthen the quality and inclusiveness of education and skills development.Some progressSDGs 4, 8, 102020 CSR 3Some progressEnsureeffectiveimplementationofliquiditysupporttoaffectedbusinesses,includingtheself-employed. Full implementationSDGs 8, 9Frontload mature public investment projects Substantial progressSDGs 8, 16and promote private investment to foster the economic recovery.Some progressSDGs 8, 9Focusinvestmentonthegreenanddigitaltransition,inparticularoncleanandefficientproduction and use of energy, Some progressSDGs 7, 9, 13sustainable transportSome progressSDG 11waste management,Some progressSDG 11research and innovation.Limited progressSDGs 6, 12, 152020 CSR 4Some progressCompletereformsaddressingcurrentshortcomingsininstitutionalcapacityandgovernance to enhance judicial independence. Some progressSDG 16Continueeffortstoadequatelyassessandmitigatemoney-launderingrisksandtoensureeffective enforcement of the anti-money-laundering framework. Full implementationSDGs 8, 16Stepupactiontoaddressfeaturesofthetaxsystemthatfacilitateaggressivetaxplanningby individuals and multinationals.Some progressSDGs 8, 16 
 
 
  
 
Table (continued) 

(Continued on the next page) 

94 

2021 CSR 1No longer relevantIn2022,maintainasupportivefiscalstance,includingtheimpulseprovidedbytheRecovery and Resilience Facility, and preserve nationally financed investment.No longer relevantSDGs 8, 16Wheneconomicconditionsallow,pursueafiscalpolicyaimedatachievingprudentmedium-term fiscal positions and ensuring fiscal sustainability in the medium term.No longer relevant SDGs 8, 16At the same time, enhance investment to boost growth potential.Payparticularattentiontothecompositionofpublicfinances,onboththerevenueandexpendituresidesofthenationalbudget,andtothequalityofbudgetarymeasuresinordertoensureasustainableandinclusiverecovery.Prioritisesustainableandgrowth-enhancing investment, in particular investment supporting the green and digital transition.No longer relevant SDGs 8, 16Giveprioritytofiscalstructuralreformsthatwillhelpprovidefinancingforpublicpolicyprioritiesandcontributetothelong-termsustainabilityofpublicfinances,including,whererelevant,bystrengtheningthecoverage,adequacyandsustainabilityofhealthandsocialprotection systems for all.No longer relevant SDGs 8, 162022 CSR 1No longer relevantIn2023,ensurethatthegrowthofnationallyfinancedprimarycurrentexpenditureisinlinewithanoverallneutralpolicystance,takingintoaccountcontinuedtemporaryandtargetedsupporttohouseholdsandfirmsmostvulnerabletoenergypricehikesandtopeoplefleeing Ukraine. Stand ready to adjust current spending to the evolving situation.No longer relevantSDGs 8, 16Expandpublicinvestmentforthegreenanddigitaltransitions,andforenergysecuritytakingintoaccounttheREPowerEUinitiative,includingbymakinguseoftheRecoveryand Resilience Facility and other Union funds.No longer relevantSDGs 8, 16Fortheperiodbeyond2023,pursueafiscalpolicyaimedatachievingprudentmedium-term fiscal positions.No longer relevantSDGs 8, 162022 CSR 2Proceedwiththeimplementationofitsrecoveryandresilienceplan,inlinewiththemilestones and targets included in the Council Implementing Decision of 5 October 2021.Submitthe2021-2027cohesionpolicyprogrammingdocumentswithaviewtofinalisingtheir negotiations with the Commission and subsequently starting their implementation.2022 CSR 3Limited progressTakeactiontoeffectivelyaddressfeaturesofthetaxsystemthatmayfacilitateaggressivetaxplanningbyindividualsandmultinationalcompanies,includingbyensuringsufficienttaxationofoutboundpaymentsofinterests,royalties,anddividends,andamendingtherules for non-domiciled companies.Limited progressSDGs 8, 162022 CSR 4Limited progressReduce overall reliance on fossil fuels.Limited progressSDGs 7, 9, 13Acceleratethedeploymentofrenewables,promotingandenablinginvestmentsinwindand solar energy, including in floating offshore energy,Limited progressSDGs 7, 9, 13furtherupgradingMalta’selectricitytransmissionanddistributiongrids,andcreatingincentives for electricity storage to supply firm, flexible and fast-responding energy.Some progressSDGs 7, 9, 13Reduceenergydemandthroughimprovedenergyefficiency,particularlyinresidentialbuildings.Limited progressSDG 7Reduceemissionsfromroadtransportbyaddressingtrafficcongestionthroughimprovedservicequalityinpublictransport,intelligenttransportsystemsandinvestinginsoftmobility infrastructure.Limited progressSDG 112023 CSR 1Some progressWinddowntheemergencyenergysupportmeasuresinforce,usingtherelatedsavingstoreducethegovernmentdeficit,assoonaspossiblein2023and2024.Shouldrenewedenergypriceincreasesnecessitateneworcontinuedsupportmeasures,ensurethatthesearetargetedatprotectingvulnerablehouseholdsandfirms,fiscallyaffordable,andpreserve incentives for energy savings.Limited progressSDGs 8, 16Ensureprudentfiscalpolicy,inparticularbylimitingthenominalincreaseinnationallyfinanced net primary expenditure in 2024 to not more than 5.9% .No progressSDGs 8, 16PreservenationallyfinancedpublicinvestmentandensuretheeffectiveabsorptionofRRFgrants and other EU funds, in particular to foster the green and digital transitions.Full implementationSDGs 8, 16Fortheperiodbeyond2024,continuetopursueamedium-termfiscalstrategyofgradualandsustainableconsolidation,combinedwithinvestmentsandreformsconducivetohigher sustainable growth, to achieve a prudent medium-term fiscal position.Substantial progressSDGs 8, 162023 CSR 2Continuethesteadyimplementationofitsrecoveryandresilienceplanand,followingtherecentsubmissionoftheaddendum,includingtheREPowerEUchapter,rapidlystarttheimplementationoftherelatedmeasures.Proceedwiththespeedyimplementationofcohesionpolicyprogrammes,inclosecomplementarityandsynergywiththerecoveryandresilience plan.RRP implementation is monitored by assessing RRP payment requests and analysing reports published twice a year on the achievement of the milestones and targets. These are to be reflected in the country reports. Progress on the cohesion policy programming documents is monitored under the EU cohesion policy.RRP implementation is monitored through the assessment of RRP payment requests and analysis of the bi-annual reporting on the achievement of the milestones and targets, to be reflected in the country reports. Progress with the cohesion policy programming is monitored in the context of the Cohesion Policy of the European Union. 
 
 
  
 
Table (continued) 

Source: European Commission 

95 

2023 CSR 3Limited progressEffectivelyaddressfeaturesofthetaxsystemthatmayfacilitateaggressivetaxplanningbyindividualsandmultinationals,includingbyensuringsufficienttaxationofoutboundpaymentsofinterest,royaltiesanddividends,andamendtherulesfornon-domiciledcompanies.Limited progressSDGs 8, 162023 CSR 4Limited progressReduce reliance on fossil fuelsLimited progressSDGs 7, 9, 13byacceleratingthedeploymentofrenewablesenergies,includingoffshorewindandsolarenergy,Limited progressSDGs 7, 9, 13andupgradeandexpandthecapacityoftheelectricitygridsystem,includingtransmission,distribution and battery storage.Some progressSDGs 7, 9, 13Reduceenergydemandthroughimprovedenergyefficiency,particularlyinresidentialbuildings.Limited progressSDG 7Reduceemissionsfromroadtransportbyaddressingtrafficcongestionthroughimprovedservicequalityinpublictransport,intelligenttransportsystemsandinvestingin‘softmobility’ infrastructure.Limited progressSDG 11Stepuppolicyeffortsaimedattheprovisionandacquisitionofskillsandcompetencesneeded for the green transition.Some progressSDG 42024 CSR 1Some progressSubmit the medium-term fiscal-structural plan in a timely manner.Full implementationSDGs 8, 16InlinewiththerequirementsofthereformedStabilityandGrowthPact,limitthegrowthinnetexpenditurein2025toarateconsistentwithinteralia,reducingthegeneralgovernmentdeficittowardsthe3%ofGDPTreatyreferencevalueandkeepingthegeneral government debt at a prudent level over the medium term.Some progressSDGs 8, 16Wind down the emergency energy support measures by the 2024/2025 winter.Limited progress SDGs 8, 16 Toaddressremainingaggressivetaxplanningrisks,introduceawithholdingtaxonoutboundpaymentsorequivalentdefensivemeasures,andamendrulesonnon-domiciledcompanies.Limited progress SDGs 8, 162024 CSR 2Continuewiththeswiftandeffectiveimplementationoftherecoveryandresilienceplan,includingtheREPowerEUchapter,ensuringcompletionofreformsandinvestmentsbyAugust2026.Acceleratetheimplementationofcohesionpolicyprogrammes.Inthecontextoftheirmid-termreview,continuefocusingontheagreedpriorities,whileconsideringtheopportunitiesprovidedbytheStrategicTechnologiesforEuropePlatforminitiative to improve competitiveness.2024 CSR 3Some progressStrengthenthequalityandlabourmarketrelevanceofeducationandtrainingtoaddresslow educational outcomes as well as the severe shortage and mismatch of skills,Some progressSDG 4inparticularbyfosteringbasicskillsofstudentsandtheprofessionaldevelopmentofteachers.Some progressSDG 42024 CSR 4Limited progress Acceleratethedeploymentofrenewableenergythroughlarge-scaleprojectsaswellassmall-scale investments in direct energy production and consumption.Limited progress SDGs 7, 9, 13Addresstrafficcongestionbyimprovedqualityandefficiencyofpublictransportandstepup investments in ‘soft mobility’ infrastructure.Limited progress SDG 11RRP implementation is monitored through the assessment of RRP payment requests and analysis of the bi-annual reporting on the achievement of the milestones and targets. Progress with the cohesion policy programming is monitored in the context of the Cohesion Policy of the European Union. 
 
  
 
ANNEX 17: COMPETITIVE REGIONS 

Malta continues to catch up with the rest of 
the  EU,  but  the  benefits  of  sustained 
economic  growth  are  not  equally  spread 
across  its  territory,  creating  challenges  and 
opportunities  in  terms  of  competitiveness, 
fairness and sustainability at local level. 

Malta’s  economy  continues 
its  path  of 
sustained growth, but with differences in the 
country. Between 2014 and 2023, annual growth 
in GDP reached 6.5% on average (compared to the 
EU  average  of  1.7%),  and  Malta  is  expected  to 
maintain  this  growth  momentum  over  the  2025-
2026 forecast period. Compared to 2022, GDP per 
capita  in  purchasing  power  standard  (PPS)  grew 
from 108 to 111 in mainland Malta, and recovered 
from  a  dip  in  2021,  to  a  slight  increase  in  Gozo 
and Comino, from 57 to 62. 

In  a  context  of  significant  population  and 
economic  growth,  it  would  be  beneficial  to 
to  ensure  sustainable 
increase  efforts 
growth.  During 
from 
the  20-year  period 
to  1 January  2023,  Malta 
1 January  2003 
recorded  the  second  largest  relative  population 
increase in the EU at 36% (EU 4%) and the highest 
population  density  in  2022  at  1 693  people  per 
km² (EU 109 people per km²) (192). Between 2014 
and  2023,  both  mainland  Malta,  and  Gozo  and 
Comino had a very high average annual change of 
more  than  25  per  1 000  residents.  In  the  face  of 
these  demographic  trends,  it  would  be  beneficial 
to  balance 
strong  economic  growth  with 
environmental  considerations,  ensuring  adequate 
investment  in  sustainable  energy,  transport  and 
water management. 

Graph A17.1: Average annual GDP growth (2014-
2023) vs GDP per head (2023) 

Competitiveness 

by 

There  is  scope  to  improve  research  and 
increasing 
innovation 
performance 
expenditure 
in  R&D  and  continuing  to 
facilitate  university-industry  collaboration. 
According  to  the  European  Innovation  Scoreboard 
(2024)  (193),  Malta 
is  a  moderate  innovator, 
ranking 21st out of 27 EU Member States. Despite 
significant  employment 
in  knowledge-intensive 
services,  at  49.6%  (EU  41.5%),  weak  public 
expenditure  and  the  limited  availability  of  human 
resources  in  research  and  innovation  are  a  major 
concern.  In  2022,  R&D  expenditure  accounted  for 
only  0.6%  of  GDP  (EU  average  2.3%),  down  from 
0.7% in 2021. In addition, R&D expenditure in the 
business enterprise sector is only 0.4% of GDP (EU 
average 1.5%). This indicates that more measures 
to encourage R&D would be useful and that there 
is  potential  for  R&D  to  contribute  further  to 
Malta’s competitiveness. For more details on these 
topics, please see Annex 3 Innovation to Business. 

In the 2022 edition of the European Regional 
Competitiveness  Index  2.0,  Malta  is  below 
the EU average, particularly in its ‘efficiency’ 

(192) Source: Eurostat – Demography of Europe 2024 edition. 

(193)  Source:  European  Innovation  Scoreboard  2024  –  Country 
profile Malta. Web page:  European Innovation Scoreboard 2024 
– Country profile Malta. 

Units: GDP: GDP per head (PPS, Index EU-27 = 100) 
Productivity: GDP per employed (PPS, index EU-27 = 
100) 
Real GDP growth: average annual % change (2014-
2023) 
Source: ARDECO (JRC) 

Gaps in labour productivity are still relevant 
in  Malta,  despite  the  country’s  convergence 
towards  the  EU  average.  In  recent  years, 
Malta’s  overall  productivity  measured  in  gross 
value  added  (in  PPS)  per  person  employed  has 
steadily improved, climbing to 94% in 2023, driven 
by 
too,  however, 
mainland  Malta,  as  the  economic  hub  of  the 
country,  continues  to  significantly  outperform 
Gozo  and  Comino  in  terms  of  productivity  levels, 
with  GDP  (in  PPS)  per  hour  worked  accounting 
respectively for 83% and 65% of the EU  average 
in 2023. 

the  services  sector.  Here 

96 

01234567020406080100120EU-27Malta(National)Malta (NUTS 3)Gozo andComino (NUTS3)%Index EU-27 =100GDP  - left axisProductivity per employed - left axisReal GDP growth - right axis 
 
   
 
 
 
Table A17.1:Selection of indicators at regional level (NUTS 3) in Malta 

Source: Eurostat and JRC 

relate 

sub-index  (194).  Although  Malta  is  above  the  EU 
average  in  participation  in  lifelong  learning,  the 
gaps  mainly 
to  higher  educational 
attainment and early school leaving, as well as the 
small  market  size.  Improving  the  educational 
attainment  of 
the  population  aged  25-64, 
continuing  to  support  initiatives  to  prevent  early 
school 
further  exploring  new 
opportunities  for  potential  market  expansion, 
including  via  digital 
technologies,  would  be 
beneficial  to  increase  opportunities  for  growth  in 
the country. 

leaving  and 

Social fairness 

is 

becoming 

affordability 

Housing 
a 
significant  challenge,  especially  in  mainland 
Malta,  where  demand  for  housing  is  high, 
driving up prices and rental costs. In 2024, the 
housing  cost  overburden  rate  (195)  affected  5.8% 
of the population (EU 8.2%). In addition, the risk of 
poverty or social exclusion remained high in 2023, 
at  19.7%  of  the  total  population  (EU  21.0%). 
According to the EU statistics on income and living 
conditions, in 2023 approximately 3.5% of people 
aged  16  or  over  reported  experiencing  housing 
difficulties  in  their  lifetime  (EU  4.9%),  rising  to 
5.5%  for  people  at  risk  of  poverty  or  social 

(EU  8.5%) 

(196).  Considering 

the 
exclusion 
significant  population  growth  and  the  fact  that 
Malta  is  a  very  tourism-intense  country,  with 
domestic  and  international  guests  spending  18 
nights  at  tourist  accommodation  establishments 
per inhabitant in 2023, innovative and sustainable 
solutions 
for  affordable  housing  would  be 
beneficial to ensure that no one is left behind. 

Sustainability 

Greenhouse gas (GHG) emissions in Malta are 
below  the  EU  average,  but  Malta  is  among 
the  EU  countries  with  the  highest  GHG 
emissions from the energy sector. In 2023, the 
energy sector in Malta accounted for 31% of total 
GHG  emissions,  as  renewables  still  play  a  very 
limited  role  in  Malta’s  energy  mix.  Improving  the 
roll-out  of  renewables,  coupled  with  investments 
in energy efficiency, would help to increase energy 
security  in  Malta,  also  in  view  of  demographic 
trends, while enabling more sustainable growth. 

Improving  the  carbon  footprint  of  the 
transport  sector,  including  through  more 
sustainable  multimodal  options,  would  be 
important. The stock of licensed motor vehicles in 
Malta continued to increase, reaching 445 711 at 
the  end  of  2024,  with  passenger  cars  accounting 

(194)  Source:  European  Regional  Competitiveness  Index  2.0  – 
2022.  Web  page:  European Regional  Competitiveness  Index 
2.0 – 2022 – Malta. 

(195)  The  housing  cost  overburden  rate  is  the  percentage  of  the 
population living in households where the total housing costs 
(‘net’  of  housing  allowances)  represent  more  than  40%  of 
disposable income (‘net’ of housing allowances’). 

(196)  Source:  Eurostat,  EU-SILC  module  2023  on  housing 
difficulties.  Web  page:  Persons  having  experienced  housing 
difficulties in their lifetime by sex and current risk of poverty 
or social exclusion situation. 

97 

GDP per head (PPS)Productivity - GDP per person employed (PPS)Productivity - GDP per hour worked (PPS)Real productivity growth (per hour worked)R&D expenditure in business enterprise sector (BERD)Employment in knowledge-intensive servicesEmployment in high-technology sectorsEmployment rate 20-64Unemploy-ment rateIndex EU-27 = 100Index EU-27 = 100Index EU-27 = 100Average annual % change% of GDP% of total employment% of total employment% of population aged 20-64% of labour force2023202320222013-202220222024202420242024European Union (27 MS)1001001000.91.541.55.275.85.9Malta (National)10794822.00.449.66.283.03.1Malta (NUTS 3)11195832.0Gozo and Comino/Għawdex u Kemmuna6275651.8 
 
 
 
   
 
for 74.1% of total licensed motor vehicles (197). Of 
these,  motor  vehicles  with  an  alternative  motor 
drive  type  amounted  to  only  4%  of  the  total 
number  of  licensed  motor  vehicles.  Considering 
significant traffic congestion and its impact on air 
quality, it would be useful to step up electrification 
of  the  transport  sector  by  improving  access  to 
alternative 
infrastructure,  while  making 
multimodal  and  collective  transport  a  more 
efficient and sustainable solution. 

fuel 

country  undergoing 

Malta is likely to face increased challenges in 
managing  its  water  sources.  As  Malta  is  a 
water-scarce 
significant 
population  growth,  with  a  high  population  density 
and  seasonally  acute  water  shortages, 
is 
essential to safeguard the availability and security 
of water. Malta’s natural  resources such as water 
are under high strain, which is further exacerbated 
by  the  expansion  of  tourism.  Investments  to 
sustainable  water  management, 
improved 
including  by  promoting  a  circular  approach  to 
water, would be helpful in alleviating the stresses 
placed on water resources. 

it 

(197)  Source:  NSO  -  Transport  Statistics  2024  Web  page:  NSO 

Malta | Motor Vehicles: Q4/2024 - NSO Malta. 

98