Budget 2022 proposals to help the labour shortage

The severe shortage across all economic sectors in finding workers has been on every employer’s lips over the last months as the perfect storm of factors came together to leave businesses without essential staff needed during the peak summer months. 

After chalking up the labour shortage to Malta’s ageing population amidst a general outcry across Malta’s business representation groups, Minister for Finance and Employment Clyde Caruana will have been under pressure to deliver. 

Here are all the measures impacting the labour force included in Budget 2022:

Student workers to retain stipend

Students who work a maximum of 25 hours each week will continue to get their stipend, a measure which can spur more students to continue part time work during the scholastic year, aiding the critical staff shortage being experienced by various industries across Malta – not least of which catering and hospitality.

Measure in favour of part-time workers with more than one job

In order to help today’s workers receive a better pension, they now have the opportunity to pay their social security contributions on more than one part-time job, up to a maximum of 40 hours per week.  

National Work Policy

The new National Employment Policy, unveiled last week, contains a plan by which the value of the work of the Maltese and Gozitan worker will increase. This will be done by improving skills, offering training opportunities, and incentivising employers and workers themselves to improve their skills.

Census of workers’ skills

In order to have a clear and broad picture of the skills of Maltese workers in Malta, a national workers census will be held early next year. This census, the first of its kind not only in Malta but also in Europe, will cost €2 million.

Training fund

The Government will launch a training fund with an initial allocation of €2 million, but increases will not be ruled out if necessary, so that the industry itself can train workers with programmes made by it. 

Work benefit for workers with atypical hours

A €150 in-work benefit per year will be given to those workers who have a basic wage that does not exceed €20,000, working atypical hours, such as in the evenings, on weekends and with the private shift in the following sectors: accommodation and food services, administrative and support services, manufacturing, transport and storage and wholesale and retail.

Workers must have worked for at least six months during the calendar year in these sectors. 

Around 40,000 workers are expected to gain a benefit equivalent to about 10 per cent of the income tax they pay.

Tax on overtime

From next year, those workers whose basic wage does not exceed €20,000 per year (and who do not hold a managerial position) will begin to be taxed at 15 per cent on the first €10,000 of overtime income, up from the first 100 hours.

Over 30,000 workers will benefit from this measure.

Tax relief adjustment for pensioners

In order to encourage pensioners to stay active and continue work after reaching retirement age, in a measure staggered over the next five years, pension income will not continue to be calculated as income for tax purposes.

Reduction in tax paid on part-time work

Income tax on part-time work will be reduced from 15 per cent to 10 per cent.

Increase in In-Work Benefit scheme

The In-Work Benefit, introduced in 2015, is credited with incentivising work and increasing household income. It is paid to working parents who have children under the age of 23. This will be extended and rates increased for all beneficiaries. 

• For couples where both work, the income threshold will be raised from €35,000 to €50,000 per year

• For couples where one parent works, the income limit will rise from €26,000 to €35,000 a year

• For working single parents, the income threshold will go up from €23,000 to €35,000 per year

The new minimum rates for the roughly 7,000 families will benefit from the widening of the limits will be €200 per year.

All existing rates will aslo increase by €100 per year.

Employees of contractors providing work to the public sector

Government will be paying double for the hours of work done on Sundays by workers who are employed with contractors providing work to the public sector.

Extension of free childcare service

Free childcare services will be extended to parents working evenings, weekends and on a shift basis. 

Parental leave

The Government will start discussions at MCESD level on the implementation of the EU directive on parental leave and work-life balance.

Minimum wage

The Government will continue to work with the MCESD and other stakeholders to find a common position for the country that is good for the workers as well as for businesses, keeping in mind the country’s competitivity.

The Minister noted that an increase in the minimum wage can be balanced with a decrease in company income tax. 

Reduced tax for artists

Artists will benefit from a new income tax rate of 7.5 per cent from the basis year 2022, Minister Caruana announced.

He added that the Government was introducing a package of measures to support and encourage artists, producers and promoters in the field of art and culture.

The Minister explained that regarding income tax for artists, a new mechanism will be introduced to establish their income over an average of three years.

In addition, a €1 million guarantee fund will be formed for artistic events in a bid to aid producers and promoters recover costs when unexpected restrictions are introduced.

A further €2 million are being allocated when seats cannot be sold because of restrictions imposed.

Finally, The Malta Arts Council will also get €2 million to assist artistic projects.

Click here to watch Minister Caruana deliver the speech in Parliament. Click here for measures specifically aimed at the business community, and here for those dedicated to the property sector.