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11 OPINION maltatoday | SUNDAY • 19 OCTOBER 2025 JP Fabri Economist The four-day mirage: Why Malta's real challenge is productivity, not time There's an old economic truth that rarely makes head- lines: Productivity, not hours worked, is what determines long-term prosperity. Yet, as public debate in Malta flirts with the idea of a four-day work week, it is worth pausing to ask whether we are address- ing the symptom or the cause. The recent debate is not unique to Malta. Across Eu- rope, the conversation about shorter working hours is gain- ing traction. Advocates argue that reduced hours can im- prove wellbeing, boost morale, and even enhance productivity. In some countries, pilot pro- jects have yielded promising results. But there's a key dif- ference between countries that experiment with reduced hours and those that can afford them. The former are testing; the lat- ter are performing. And Malta, by all metrics, still belongs to the first group. The latest National Produc- tivity Report paints a sobering picture. Real labour productiv- ity per hour worked has bare- ly grown in the past decade, lagging behind the EU aver- age. Malta's output growth continues to depend primar- ily on rising employment and population expansion, not on efficiency improvements. Be- tween 2012 and 2023, GDP per hour worked increased by less than 5% in real terms, while the EU average rose by more than double that rate. This gap may appear small, but it compounds over time; translating into slower income growth, weaker competitiveness, and fewer re- sources to fund social services. Malta's productivity puzzle has multiple layers. The econ- omy's structure has shifted to- ward sectors that are high in employment but relatively low in productivity. Even within sectors, there are striking pro- ductivity differences between firms at the frontier and those lagging behind. Most Maltese enterprises are micro in scale, which limits their capacity to invest in technology, R&D, and management practices that drive productivity forward. The European Commission's competitiveness report led by Mario Draghi echoes a similar warning for Europe as a whole: The continent's growth model is faltering, and productivity, not fiscal stimulus or labour expansion, is the only sustain- able driver of higher living standards. For small econo- mies like Malta, this warning is amplified. Our economic resil- ience is strong, but it rests on fragile foundations. This is why the four-day week debate risks missing the point. Reducing hours without rais- ing productivity would not make life better, it would make it harder to sustain current liv- ing standards. The real conver- sation Malta needs is not about working less, but about work- ing better. A productivity revolution starts with mindset, not meas- ures. Productivity is not just about output per hour; it is about how a society organises work, values skills, and uses technology. It requires educa- tion systems that nurture prob- lem-solvers, not rote learners. It requires businesses that re- ward innovation, not compli- ance. And it requires govern- ments that measure value by outcomes, not expenditure. Three levers stand out. First, human capital. Mal- ta's education-to-employment pipeline remains weak. While employers struggle to fill va- cancies, we need to ensure that future workers have the right skills. Reskilling and upskilling must become national priori- ties, not policy footnotes. Pro- ductivity grows when workers have both the tools and au- tonomy to innovate, not when they simply execute. Second, innovation and tech- nology diffusion. Bridging the digital gap requires targeted incentives, technical support, and better links between aca- demia, start-ups, and industry. Malta's National Productivity Board has repeatedly called for aligning digital transformation with human capital develop- ment, that recommendation now needs to become a con- crete national mission. Third, institutional effective- ness. Productivity does not flourish in red tape. Business formation, permitting, and public procurement processes remain slow and unpredicta- ble. Public administration itself must become more data-driv- en, agile, and accountable. A productive economy needs a productive state. Only once productivity growth becomes the norm can Malta afford to experiment with shorter working weeks. Otherwise, the risk is to con- fuse comfort with progress. A four-day week may sound modern and humane, but un- less output per hour increas- es, it would mean either lower wages, higher costs, or greater fiscal pressure. And this is not just an eco- nomic argument. Productivity is the foundation of fairness. It determines whether rising costs of living can be matched by rising incomes, whether we can afford quality public ser- vices, and whether younger generations can expect a better life. As the Draghi report re- minded Europe, without pro- ductivity growth, societies are forced into trade-offs between competitiveness and equity, between welfare and sustaina- bility. Malta must act before it reaches that point. What Malta truly needs is a productivity pact; a new social compact that ties wage growth to efficiency, links public spending to measurable out- comes, and aligns education, technology, and innovation under one national strategy. Employers, unions, and gov- ernment must come together not to divide hours, but to mul- tiply value. If productivity growth accel- erates, a four-day week may well become realistic, not through decree, but through progress. But for now, Malta's priority must be clear: Build a smarter, more efficient, and more innovative economy first. Then, and only then, can we af- ford the luxury of time. The choice before us is sim- ple. We can continue chasing comfort or start building ca- pacity. The former flatters us in the short term. The latter secures us in the long run. A four-day week may sound modern and humane, but unless output per hour increases, it would mean either lower wages, higher costs, or greater fiscal pressure File photo