‘Malta has reached or maybe even surpassed its carrying capacity’ – Tony Zahra

While the tourism, financial services, and manufacturing sectors have acted as key drivers behind Malta’s strong economic performance post-COVID, the country’s reliance on low-skilled labour, the strain on infrastructure, and the rapid pace of construction require a shift in strategy.

In the seventh iteration of a seven-part series, first featured on Business Now magazine, we explore the insights of Tony Zahra, President of the Malta Hotels and Restaurants Association (MHRA), the major association within Malta’s tourism sector.

“Given the very serious challenges over the last years, particularly COVID-19, Malta’s economic performance can be best described as successful,” begins Tony, underlining the main drivers for this success as the tourism industry, financial services, and manufacturing.

Sharing his thoughts on Malta’s current workforce composition and its impact on the economy, the MHRA President acknowledges the “massive inflow of low-skilled or semi-skilled personnel, which has had a significant impact on our GDP but has also produced a low level of productivity given that these new entrants to the market have very little or no skills.”

Affirming that “Malta has reached or maybe even surpassed its carrying capacity,” he believes that the country “now needs to ensure that new entrants to the market are highly skilled individuals or professionals that can add much more per individual to the GDP than those that were attracted over the last few years.”

Moreover, the President affirms that construction has been one of the main drivers of the economy, fuelled by the rapid increase in tourism and population growth, yet, “clearly the pace at which the industry has been working over the past years is not sustainable and we shall probably see a slowdown of activity, and maybe also a pause in price increases of real estate, if not a correction.”

With tourism setting consistent records in Malta, Tony is adamant that it cannot continue to grow in numbers, affirming, “we have reached saturation – the infrastructure and the size of the island has limitations and we have reached the limit of arrivals, but we can get more out of each arrival provided we can change our offer, which would attract the higher-income higher-spender to Malta.”

Still, he continues, “this cannot be done in one year. It has to be done over a period of years. If we don’t, our island will suffer the consequences in years to come.”

Looking ahead, Tony believes that for our island to be ready to withstand unknown shocks, we need to have a resilient economy that is built on the pillars of tourism, manufacturing, financial services, and agriculture.

Acknowledging that “agriculture might sound unreal for most,” he posits, “if we are to maintain some semblance of a countryside and have some form of food security, we must have agriculture as a strategic segment. Manufacturing must reach at least 30,000 employees, and financial services need to maintain their progress.”

This interview was first carried in the 2024 edition of Business Now Magazine, the sister brand to BusinessNow.mt and produced by Content House Group