Malta’s youth population down by 15,000 in 10 years: What does this mean for the labour market?

Malta’s workforce is facing mounting pressure from a demographic shift, as official data shows that the number of Maltese youths has dropped by around 15,000 over the past decade.

This was revealed by the Minister for Finance, Clyde Caruana, in Parliament on 2nd July, relating to the number of Maltese youths aged 16-30. 

The reduction at first glance reflects deeper challenges that Malta’s labour market is likely to face in the coming years.

The labour force has so far avoided a steeper drop largely thanks to the significant increase in female participation. In fact, the number of Maltese women in employment has risen by around 13,000 over the same period.

In comments provided to BusinessNow.mt, The Malta Chamber of Commerce confirmed that younger workers today face “different pressures but also have different expectations compared to previous generations.”

“This presents a challenge to employers who must constantly see how to adapt their business to attract and retain talent effectively,” the Chamber noted.
With fewer young people entering the workforce, businesses face an even smaller talent pool to draw from.

One key difference is the heightened anxiety surrounding the rapid advancement of artificial intelligence (AI), which is shaping young workers’ career decisions in unprecedented ways. “Many young professionals worry about how fast AI is evolving, adding a layer of uncertainty to their career planning that older generations, such as Gen X or early millennials, didn’t face to the same extent,” it explained. This concern reflects the declining youth population, which limits the number of digital-native workers available to fill tech-related roles.

At the same time, younger workers appear to prioritise different values than those before them. Referencing findings from a recent survey carried out in collaboration with Willingness, the Chamber said that salary is no longer the top priority for many young employees. “Instead, there’s a growing emphasis on mental health, wellbeing, and work-life balance,” it noted. Employers may need to adapt faster to these shifting values to remain competitive.

Flexible working arrangements, supportive workplace cultures, and wellness-focused policies have now become critical expectations. These expectations are likely to carry even more weight in a labour market that is shrinking demographically.

Financial challenges also weigh heavily on the younger generation, particularly in relation to housing. “They are also facing financial pressures which are on the increase, particularly when it comes to buying their first home or renting out to live independently,” the Chamber said. This could affect both demand for housing and long-term economic growth.

Interestingly, job security is less of a concern for younger workers than it was for previous generations. “With a dynamic labour market and demand for diverse skills, they are more mobile and confident in changing roles than previous generations,” the Chamber explained. However, the shrinking number of young workers could lead to growing competition for those who are still willing to switch roles.

Malta’s education-to-work pipeline remains a persistent obstacle. “Systemic challenges remain – especially the persistent gap between education and industry,” it added. Referring to its Skills Rush project with the HSBC Malta Foundation, the Chamber said the mismatch between graduates’ skills and employers’ needs continues to pose problems. It reiterated calls for stronger investment in vocational education and closer collaboration between academic institutions and the business community.

When asked whether there is enough focus on job quality and stability for young Maltese workers in current labour policies, the Chamber was clear: “There is still not enough focus.”

“While recent labour policies in Malta have made progress in addressing workforce challenges, the challenge today goes beyond attracting talent – it’s about retaining it, both within individual workplaces and, more broadly, within the country,” it stated. A drop in Malta’s youth population threatens to exacerbate skills shortages.

The Chamber’s latest pre-budget proposals even called for five-year tax exemptions to encourage highly qualified Maltese professionals working abroad to return home, underscoring the national concern with brain drain. Such incentives may become a key tool in rebuilding the labour force.

But incentives alone won’t solve the problem, it stressed. “Labour policies must do more to ensure that quality and stability are embedded in local employment opportunities.” This is particularly vital at a time when demographic changes are reducing the supply of young workers available.

It pointed to a recent MISCO survey showing that 66 per cent of employers and 80 per cent of employees believe soft skills training is critical for retention, yet such investment remains limited. “Without strong support for soft skills and career progression, many young people continue to view their jobs as short-term stepping stones rather than stable, long-term careers,” the Chamber said. With a smaller youth population, failing to invest in soft skills could leave key sectors struggling even more to fill vacancies.

A growing mismatch between the jobs available and the career aspirations of young workers is also emerging. “Manual and low-skilled roles are becoming harder to fill, as younger generations increasingly seek knowledge-based and higher-skilled employment,” the Chamber observed.

“This shift in aspirations calls for labour policies that promote job enrichment, upskilling, and clear career development – particularly in sectors struggling to attract younger talent,” it said. With fewer youths entering the labour market, upskilling the existing workforce becomes an economic necessity.

Ultimately, the Chamber warned that Malta’s labour market must evolve to meet both its economic needs and the ambitions of its younger workforce. “Attracting highly skilled individuals is vital, but so is creating meaningful, stable opportunities at all levels. Without this balance, we risk further brain drain and continued dissatisfaction among the next generation of workers.”