How can Malta reverse its declining fertility rate?

Malta’s fertility rates are some of the lowest in the EU, and with an ageing population – the island nation will have a workforce composed of 70 per cent foreign workers by 2050. 

“These two forces are not unique for Malta but are common to all EU countries. Indeed, the decline in the fertility rate is a global phenomenon that has been going on for decades, driven primarily by high-income countries,” Brian Micallef, Executive Head of the Housing Authority tells BusinessNow.mt.

“Given these factors, the increase in the foreign workforce was crucial to satisfy the demand for labour in Malta.”

These changes are best illustrated by looking at the changes in Malta’s population pyramid, which the chart below plots for 2010 and 2021. 

“The chart illustrates the sharp contribution of the foreign workforce, which tend to be of prime age (20 – 49 years). But the pyramid also shows the gradual impact of low fertility, with a decline in the youngest cohort and an increase in older population, especially those over 70 years of age.”

Brian Micallef, Economist, Head of Housing Authority

A recent study by the Central Bank of Malta provides a good overview of labour market trends over the past decade. 

“This study finds that in addition to the inflow of foreign workers, structural reforms in the labour market were behind the rise in employment amongst Maltese working age individuals. This study mentions the changes in the pension age policy (so that older workers can remain longer in the workforce), the tapering of benefits and active labour market policies targeting women as crucial in helping to offset the demographic impact of ageing.”

Some sectors of our economy, such as gaming, professional and administrative support services, construction and tourism, have become increasingly reliant on the foreign workforce. 

Source: Central Bank Malta

But there are also composition changes in the labour market. The above-mentioned study showed that Maltese workers have mostly flowed out of traditional sectors, such as manufacturing, construction, tourism, catering and retail, and instead new entrants have moved into remote gaming, IT, financial and professional services, public administration, health, and education. Most of these sectors tend to offer better salaries and are more in line with the higher education levels of the younger workforce.

Contemporary societies in Europe have also increasingly prioritised career advancement, personal fulfilment, and financial stability over early parenthood, which has led to lower fertility rates in the Occidental world.

Changing gender roles and declining rates of marriage also lead to smaller families and declined childbearing.  Changing gender roles and declining marriage rates have further contributed to the trend of delayed childbearing and smaller families, according to economist Stephanie Fabri. 

“Malta is no exception to these societal changes, as many young adults opt to focus on professional aspirations before considering parenthood,” Dr Fabri says.

Several EU countries, including Malta, have introduced policies aimed at supporting families. The island could take notes from its European counterparts when taking the issue. 

Stephanie Fabri, economist

“France has been one of the most successful in implementing pro-natalist policies, offering generous child allowances, tax benefits, and childcare subsidies. The French Government provides direct financial aid to families, along with incentives for working parents and financial bonuses for families with multiple children. 

In Malta, the Government has introduced financial incentives to encourage childbirth. 

Dr Fabri mentioned that the 2025 National Budget included an increase in children’s allowances, providing an additional €250 per child annually to benefit approximately 10,500 families. Birth and adoption bonuses have also been adjusted, with families receiving €500 for the first child, €1,000 for the second, and €1,500 for the third and beyond. Additionally, a new tax rate has been proposed for parents with multiple children as part of a broader strategy to combat declining fertility rates.

However, these measures will just begin to chip at the problem. 

While the foreign worker surge has provided needed stability and growth for Malta, more policies need to be in place. Malta’s history is deeply tied to migration – both inwards and outwards and policy needs to reflect that as soon as possible. 

“Foreign workers will outnumber Maltese nationals in the labour market by 2050. If they remain politically and socially excluded, this could fuel resentment, unrest, and a sense of disenfranchisement,” Konnekt CEO Josef Said tells BusinessNow.mt.

Konnekt CEO Josef Said

“Due to lack of clear path to citizenship, many foreign workers see Malta as a temporary stop before moving to other European countries,” he explains.

Tackling the sloping fertility rate will be not easy feat, and will be expensive, multi-faceted and a marathon more than a sprint. However, it’s clear that embraces open policies towards migration and better family planning policies will be a solid starting point.