A survey conducted by the Malta Employers Association of more than 400 employers in Malta, found that around four in every five Maltese companies are facing pressure to pay higher wages, as workers are often leaving for better paying jobs.
The survey found that 45% of all employers felt this sort of pressure across every employee.
The report of the survey, published by the Malta Employers Association on Monday states that there “is a strong indication that companies have been experiencing considerable wage inflation during the past three years.” To make it even worse, the report read that “They feared becoming unprofitable if they raised their wage bill any further.”
Furthermore, the survey also enquired about the possible causes of this inflation in wages, and 57% of the respondents answered that it was caused by shortages in the labour market.
The report also stated that “This is worrying as increases in wages that are not supported by profitability and competitiveness might not be sustainable, especially in vulnerable sectors.”
When asked about the extent of the wage increases, over a third of the employers stated that the average wage increase was more than 8%, with only 13% of the employers reporting increases of between 0-3%.
To highlight the extent of wage inflation, only 4% of employers had stuck to only providing the statutory wage increase.
This growth in wages does not seem to be stopping anytime soon, with three of every four Maltese employers anticipating even higher wages increases in 2020.
According to the Malta Employers Association, this wage inflation is “a result of labour shortages due to increased labour demand, and in spite of an increased labour supply due to foreign workers, stronger female participation and higher participation among the retired segment of the population.”
The main reason described by employers as to why employees are leaving their jobs is that employees are often switching to better-paid jobs, since they were afraid of possibly becoming unprofitable if they increased the amount of wages any more.
A trend in the labour market that did not help employers at all was that not only is 30% of the work force in Malta foreign, but many of those foreigners would simply stay in Malta for only a couple of years, with some only staying for a year or even less.
Apart from this, the reasons for employees leaving include poor work ethic, with several workers opting not to work weekend shifts.
This increase in wages has led to employers recruiting foreign workers in order to make up for the lack of Maltese workers, with 58% of employers claiming that they are doing so.
What is even more surprising is that only 13% of the employers stated that they are taking on this challenge of an increasing wage bill by shifting towards labour-saving technology.
Others tried to hold on to their employees by introducing flexibility and work-life balance measures, yet these only amounted to a third of the employers.