Malta’s education spending is among EU’s lowest – but is spending more the answer?

Malta ranks third from bottom in the EU for public education spending as a share of GDP, but educators and business-sector voices say the headline figure only tells part of the story.

From deteriorating school infrastructure to a widening gap between classroom knowledge and workplace skills, the question may be as much about where the money goes as how much is spent.

Malta may be near the bottom of the EU rankings for public spending on education as a proportion of its economy, but increasing the education budget alone will not necessarily address the shortcomings facing students, educators and employers.

That is one point on which responses gathered by BusinessNow.mt from educator and ADPD Chairperson Sandra Gauci, youth entrepreneurship organisation JA Malta CEO Matthew Caruana and international business school GBSB broadly converge, even as they highlight very different weaknesses within Malta's education system.

The discussion follows the latest Eurostat figures where Malta stood at 3.4 per cent, the third-lowest proportion in the bloc.

A smaller share of a much bigger economy

A fall in education expenditure as a percentage of GDP does not necessarily mean that Government is spending fewer euros on education.

Malta's economy has expanded considerably over the past decade, meaning expenditure can rise in absolute terms while representing a smaller proportion of GDP.

GBSB Global Business School said this context is important when interpreting the Eurostat figures: “The Eurostat figures need some context. Malta's low ranking on education spending as a share of GDP partly reflects the fact that the economy itself has grown so fast, not that resources have actually been cut,” it said.

However, education has also declined as a share of overall Government expenditure, from 13.8 per cent in 2013 to around 11.5 per cent in 2023. Over the same period, total Government expenditure fell from 42.4 per cent to 36.5 per cent of GDP. This suggests Malta's economic growth explains only part of the decline in education spending relative to GDP.

For GBSB, the bigger concern is the relationship between resources and results. “The problem is that outcomes have not kept pace with that investment. That gap between spend and outcome is the real story.”

Educators still see shortcomings on the ground

That macroeconomic distinction, however, does not mean the effects of underinvestment are absent from classrooms.

Educator Sandra Gauci pointed to conditions which she said are directly affecting both teachers and students.

Asked where shortcomings are most visible, she highlighted educator quality and staffing, saying schools increasingly have to “make do with supply” teachers who are paid less.

She also described schools as being far from modern, pointing to unreliable internet, overcrowded classrooms, a lack of air conditioning and, in some instances, insufficient furniture.

Her priorities for additional investment are consequently heavily focused on the physical and support infrastructure surrounding students.

Ms Gauci said schools should be renovated, while more psychologists and professionals working in anti-bullying, security and discipline should be introduced.

Employers need students who can ‘do’, not simply ‘know’

For JA Malta CEO Matthew Caruana, one of the biggest weaknesses is not necessarily the amount of knowledge students possess when they leave school, but their ability to apply it.

“The gap isn't really about knowledge nowadays, as it's become more about the ability to put that knowledge into practice,” he said.

Students, he argued, often leave education with strong technical foundations and significant potential, but may have had relatively few opportunities to make decisions, communicate ideas or take responsibility for outcomes.

Mr Caruana identified initiative, adaptability, collaboration, critical thinking and independent problem-solving as among the capabilities young people need when entering the labour market.

“That's the gap we see most clearly, the transition from knowing to doing,” he said.

Students cannot learn resilience or entrepreneurial thinking entirely from a textbook, he argued. They need opportunities to take responsibility, make decisions and experience the consequences before arriving at their first workplace.

His assessment also points towards a common theme emerging from the three responses: Malta's education system is being asked to serve an economy that has changed extraordinarily quickly.

“Malta's economy has moved fast, arguably faster than our education system has been able to adapt,” Mr Caruana said.

While Malta has built what he described as a strong and diversified economy, he questioned whether the pipeline of work-ready and entrepreneurially minded young people has expanded at the same pace.

However, like GBSB, he does not view higher expenditure alone as the solution. Instead, he called for more strategic investment in career guidance, continuous development for educators, stronger collaboration between schools and employers, and assessment systems which reward problem-solving and practical application rather than predominantly recall and memorisation.

Education policy, he argued, should not simply respond to shortages after they emerge. “We need to look ahead to fill not only shortages that currently exist, but to anticipate the economy we want to build and equip our future labour force from today with the skills to lead it.”

Malta competitive ‘in pockets’

GBSB similarly sees a mixed picture when assessing Malta's ability to develop talent for its economy. The business school described the Maltese education and skills ecosystem as competitive “in pockets”, particularly where clusters of specialist economic activity have already developed.

It pointed towards digital gaming, iGaming, fintech, blockchain, tourism, real estate and pharmaceuticals as sectors where Malta's regulatory and economic environment has attracted significant expertise.

But it said that competitiveness does not yet extend consistently across the entire economy. “In areas like data analytics, AI skills and cross-border management, the talent pipeline still relies heavily on bringing in talent from abroad,” GBSB said.

Malta nevertheless has several structural advantages. Its English-speaking environment, international workforce, strong links with technology-driven industries and small size can, in theory, make collaboration between policymakers, educators and employers easier than in larger economies.

GBSB's argument is not that foreign workers should be removed from the equation. An international workforce, it said, will always be an asset to a small and open economy.

Instead, Malta should improve its capacity to develop specialised skills locally so that overseas expertise supplements, rather than compensates for, weaknesses in the domestic talent pipeline.

“Reducing reliance on overseas talent means raising what Malta can produce itself, not closing the door to outside talent,” it said.

Where should additional investment go then?

The answers differ in emphasis.

Ms Gauci's priorities begin at school level: Better infrastructure, stronger staffing and greater psychological, behavioural and anti-bullying support.

GBSB places greater emphasis on teaching quality, technology and responsiveness to industry. It called for better development and support for teachers and lecturers, faster introduction of new courses and specialisations, AI and data skills embedded across subjects, flexible lifelong learning and closer partnerships with employers.

Mr Caruana, meanwhile, would place financial capability and problem-solving near the top of the list.

His reasoning is that specific technologies can become outdated rapidly, while the ability to think critically, understand money and adapt to change remains useful irrespective of the tools in use.

“Give a young person strong financial literacy and problem-solving skills, and they can pick up any digital tool going forward,” he said.

Entrepreneurial education is another priority, but not because every student is expected to start a company.

Rather, Mr Caruana sees entrepreneurial thinking – identifying opportunities, taking initiative, managing resources and recovering from failure – as a set of increasingly valuable workplace skills regardless of sector.

AI could make the transition harder

Mr Caruana pointed to the possibility that AI will increasingly automate some entry-level roles which have traditionally served as training grounds for young workers.

Such jobs do more than provide an income. They allow people entering the labour market to understand workplace expectations, develop judgement, make mistakes and gradually build professional confidence.

If technology removes some of those positions, education may have to provide more of that practical experience before students graduate.

“If some of that learning ground disappears, it needs to be created elsewhere before they leave education,”  Mr Caruana said.

That could make the traditional distinction between education and employment increasingly difficult to sustain.

More money or better results?

Malta's 3.4 per cent figure therefore raises a legitimate question about the priority being given to education within an expanding economy, particularly when the EU average stands considerably higher.

But the responses suggest that simply setting a target to raise education spending as a percentage of GDP would leave another, equally important question unanswered: what should Malta expect to achieve with that money?

On the ground, Ms Gauci sees a need for better-resourced schools, stronger support systems and investment in the educators expected to deliver the country's future workforce.

For employers and organisations working with young people, the challenge is ensuring students leave education capable not only of passing examinations but of applying knowledge independently.

And from GBSB's perspective, Malta needs an education system agile enough to adjust to emerging sectors and skills requirements rather than permanently playing catch-up with its economy.