Unemployment rate stable at historic low of 2.5%

The unemployment rate for July 2023 stood at 2.5 per cent, at par with the previous month and decreasing by 0.4 percentage points from the same month last year, the National Statistics Office shared in its latest news release.

This is a historic low for unemployment in Malta and comes as no surprise as employers continue to face wage inflation stemming from a tight local workforce. The figures also raise questions about the Government’s efforts to limit the island’s rapid population growth, as revealed by the Times of Malta when it quoted Home Affairs minister Byron Camilleri.

While often considered a positive indicator, a low level of unemployment leads to its own set of challenges. A tight labour market leads to worker shortages since employers would be searching for potential staff in a ever-shrinking pool of workers.

Since employers would be focused on filling in the gaps in operations, it leads to a skills mismatch, since new employees would not necessarily be qualified to fulfil their jobs, leading to underemployment.

Lastly, it contributes to upward wage pressures since employers are led to compete among each other to attract workers. This potentially leads to poaching and reduced competitiveness.

During July 2023, the number of unemployed persons was 7,610, with males and the 25 to 74 age group being the major contributors to the overall level of unemployment.

The seasonally adjusted number of unemployed youths amounted to 2,005, whereas the number of unemployed individuals aged between 25 and 74 years stood at 5,605.