Employment growth set to halve to 3.2% in 2024 due to slowdown in economic activity – Central Bank

Malta’s labour force is set to expand by 3.2 per cent in 2024, a significantly slower rate than 2023, primarily due to a drop in economic activity, according to the Central Bank of Malta (CBM).

The figures were published in the CBM’s 2023 Annual Report, released on Friday, with the document including detailed financial statements, as well as an analysis of economic, monetary, and financial developments in Malta and abroad.

In the report, it was highlighted that Malta’s labour force grew by 5.1 per cent during the first nine months of 2023, a faster pace than the 4.3 per cent registered in the same period of 2022.

The activity rate – the ratio between the number of people in work and the total population – increased by 1.7 per cent during 2023 to 81.3 per cent, thus exceeding the euro area average of 75 per cent. This was driven by increases in both the male activity rate and female activity rate, increasing to 87.7 per cent and 74 per cent, respectively. Both rates exceeded those for the euro area.

Additionally, during the first three quarters of 2023, the number of actual weekly hours averaged 34.1, meaning it has remained at similar levels since 2021.

However, the CBM stated that while the labour market is expected to remain “robust” in 2024, activity is set to slow down from this year onwards, with employment growth dropping by almost half to 3.2 per cent. This is a reflection of the envisaged decrease in economic activity in line with potential growth, it added.

During 2023’s first three quarters, employment expanded at an average annual rate of 5.4 per cent, up from the five per cent increase recorded during the corresponding period of 2022. This corresponds to the strong rate of economic growth and increase in activity during the year. The rise in the number of employed persons was primarily driven by full-time jobs, going up by approximately 13,400, while part-time employment also increased by around 1,800. The largest increase was among people interested in jobs related to services and sales, and in craft and related trades.

This slowdown trend is set to continue in the coming years, with employment poised to expand by 2.5 per cent and 2.4 per cent in 2025 and 2026, respectively.

During the first three quarters of 2023, the unemployment rate stood at an average of 2.6 per cent, compared to the 2.9 per cent in the same period of 2022. For most of 2023, unemployment stood at or near historic lows, also remaining significantly lower than the 6.5 per cent registered in the euro area.

The unemployment rate is expected to remain stable at 2.6 per cent in 2024, before going up gradually to 2.9 per cent by 2026, the CBM stated.

During 2023, there was also a substantial increase in the number of foreign workers in Malta, and as at September 2023, the total stood at 111,030, up from the 89,549 registered in September 2022. This rise was reflected in all types of occupations, with the largest increases coming in elementary occupations and services and sales jobs, the two most prevalent job categories held by foreign employees.

CBM’s data also indicated that the number of foreign workers arriving in Malta increased “strongly” during 2023, going up by close to 8,600 workers to exceed 34,500 by September 2023. On the other hand, the outflow of foreign workers was also on the rise, but at a milder pace, going up by 2,200 persons to reach close to 13,000 by September 2023.