Issue link: https://maltatoday.uberflip.com/i/1532272
7 NEWS maltatoday | SUNDAY • 9 FEBRUARY 2025 JAMES DEBONO jdebono@mediatoday.com.mt Letter of Intention - Dispersa Malta Limited Ian Larkin and Bryan Davies of Dispersa (Malta) Limited, declare their intention for the company to register for an Employment Agency license, as a temporary employment agency in accordance with, the Employment Agencies Regulation (L.N. 270 of 2023). The activities proposed to be carried out are the following: 1. Acting as the Employer of Record (EOR) for international and local clients in the capacity of a temporary employment agency; and 2. Employment under Dispersa (Malta) Limited of any worker (nationals, residents, and third-country nationals who may be eligible for SEI and KEI) identified by the client and assigning such workers to the client on fully remote basis. The Official Registered Address of the company is situated at Level 5, St. Julian's Business Centre, Elia Zammit Street, San Giljan, STJ 3153, Malta, while the buisness address is situated at Dragonara Business Centre, Dragonara Road - STJ 06 Triq Dragunara, San Ġiljan STJ 3141, Malta. Please reach out to the Dispersa (Malta) Limited solely at compliance@topsourceworldwide.com or via phone call +356 20341737 Company Registration Number: C 101558 THE share of Malta's nation- al income going to workers has declined significantly over the past three decades, with Malta now ranking among the lowest in the euro area, according to a new report by the Central Bank of Malta. The 'labour share' fell by 11.7 percentage points (p.p.) between 1995 and 2023, re- flecting a long-term shift as Malta's economy moved from being manufacturing-based to service-driven. The report suggests that while the decline was particularly pronounced between 2011 and 2015, it was partly reversed in 2020 during the pandemic. However, the downward trend continued over the next three years. The report, published in the Central Bank's quarterly re- view, concluded that although the decline is partly driven by increases in productivity and technological progress, which reflect "positive economic de- velopment," the drop in labour share may also be "indicative of higher income inequality." What is Labour share? The term 'labour share' refers to the proportion of a coun- try's economic output that is paid to workers in the form of wages, salaries, and social con- tributions. It is often expressed as a percentage of Gross Value Added (GVA), which measures the total value of goods and services produced in an econ- omy. A falling labour share means that wage growth is not keep- ing pace with overall produc- tivity, resulting in a larger por- tion of national income being retained by businesses and in- vestors, rather than being dis- tributed as wages. While the traditional meth- od of calculating labour share considers only employees' wag- es, the Central Bank's analysis is also based on an adjusted measure that includes the esti- mated earnings of the self-em- ployed. Both indicators show a clear downward trend over time. A Long-term decline The report revealed that Mal- ta's labour share has been on a downward trajectory since the late 1990s, with notable de- clines in the early 2000s, the years leading up to 2010, and again between 2011 and 2015. Although there was a brief recovery from 2018 to 2020, partly due to the government's job-retention schemes intro- duced during the COVID-19 pandemic, the labour share has declined again in recent years as these temporary measures were phased out. Compared to other euro-area countries, Malta's labour share has con- sistently been lower, and the gap has widened since 2010. While the euro area's average labour share has hovered be- tween 65% and 70%, Malta's share has remained well below this range, making it one of the lowest in the bloc. Explaining the decline The decline in labour share does not necessarily mean that individual wages have fall- en, but rather that a smaller portion of the economy's to- tal earnings is being allocated to workers. The report noted that this trend is partly due to changes in the structure of Malta's economy. As the coun- try has moved towards a more services-driven economy, sec- tors with traditionally lower labour shares, such as finan- cial services and professional services, have expanded, while higher-labour-share industries like manufacturing have de- clined. However, even within indi- vidual sectors, labour share has been falling, suggesting that workers are receiving a shrinking share of the profits generated in their industries. The report found that the larg- est declines in labour share have occurred in industry and certain services sectors, such as information and communi- cation, financial services, and professional activities. These are sectors that have become increasingly important to Malta's economy in recent decades, further reinforcing the trend. Implications A declining labour share has broader economic conse- quences, particularly in terms of inequality and household purchasing power. When a smaller proportion of nation- al income goes to workers, it can lead to weaker consumer spending, which in turn af- fects overall economic growth. The report highlighted that in many cases, workers tend to spend a larger share of their income compared to business owners and investors, meaning that a lower labour share could dampen domestic demand. The Central Bank report not- ed that factors such as automa- tion, globalisation, and chang- es in labour market policies are frequently cited as contributing to this trend globally. In Malta, further research is needed to determine the precise causes and potential measures to ad- dress the issue. However, since higher-skilled workers typical- ly enjoy higher labour income shares than workers with rela- tively lower skills, "continuous investment in the skill levels of Malta's workforce" could also be a crucial tool to broaden the sharing of productivity gains and enhance workers' welfare. Malta's workers getting smaller slice of the pie Malta's 'labour share' of Gross Value Added has fallen by almost 12 percentage points from 1995 to 2023, ref lecting a shift towards a service-based economy. The Central Bank report highlights the need for a more skilled workforce to address this decline