Issue link: https://maltatoday.uberflip.com/i/1541835
15 OPINION maltatoday | SUNDAY • 7 DECEMBER 2025 JP Fabri Economist Let's stop blaming foreign workers and start fixing the system FOR years, Malta's labour mar- ket debate has been trapped in the wrong frame. The national conversation has hovered around overpopulation, congestion and foreign workers, as if the mere presence of people were the root of the problem. But as the Central Bank of Mal- ta's recent analysis makes clear, the story is far more complex and far more structural. The numbers do not point to a country over- whelmed by people. They point to a country overwhelmed by a sys- tem that has not kept pace with its economic transformation. Over the last decade, the Mal- tese labour force expanded by an unprecedented two thirds, driv- en overwhelmingly by foreign workers who filled gaps that the domestic labour supply could never have filled on its own. The working-age population of Mal- tese citizens actually shrank, yet the number of Maltese in em- ployment grew to its highest level ever. Older workers stayed in the labour market longer due to pen- sion reforms. Women entered in record numbers due to childcare reforms. But even these increas- es were nowhere near enough to support an economy that doubled in real terms. Foreign workers were not a policy accident. They were the only available solution to avoid economic stagnation. Without them, Malta would have faced acute shortages in construction, hospitality, ICT, care work, logis- tics, manufacturing and essential services. In reality, they kept the economy functioning, support- ed business expansion, and sus- tained the pay-as-you-go pension system. A PAYG model depends on contributors outnumbering retirees; without foreign labour, the gap between contributions and pensions would have wid- ened dramatically. The real issue, therefore, is not population growth. It is the ab- sence of a system capable of man- aging it. Economic transformation brought new demands. Informa- tion services quadrupled in size, remote gaming became a glob- al cluster, professional services exploded, and health, care and education all expanded. Maltese workers moved up the skills lad- der, as they should, leaving tens of thousands of vacancies in sec- tors that remain labour-intensive. Foreign workers filled those roles, keeping prices stable, supporting services, and enabling the country to grow at rates far above the Eu- ropean average. The system that did not modernise But while the economy modern- ised, the system around it did not. Planning remained short-term and reactive. Infrastructure did not expand with demand. Trans- port policy remained centred on private cars, not mobility. Hous- ing policy lagged behind demo- graphic reality. Urban planning was shaped by permits, not by purpose. Education modernised too slowly, leaving skills mis- matched to emerging sectors. The friction people feel today is not caused by population growth but by systemic under design. The question is not whether Malta should have grown. The question is why Malta grew with- out redesigning the architecture that supports growth. If Malta is serious about sus- taining prosperity, it must shift the conversation from numbers to systems. A small island will always feel pressure when expan- sion is not matched by redesign. Smart planning is not about limit- ing people but about shaping how people live, work, commute and participate. A forward-looking labour mar- ket model requires a set of struc- tural transitions. Design for density First, we must design for density rather than fear it. Density can be efficient, liveable and sustainable if it is planned rather than acci- dental. This means mixed-use development, transport-oriented planning, better public spaces, and a radically more compact ap- proach to mobility where the car is no longer the default. Second, mobility must be re- thought entirely. Malta cannot raise productivity if workers lose hours each week stuck in traffic. No level of foreign labour man- agement will fix this. We need be- havioural nudges and economic incentives that make daily private car use less attractive and alter- native modes more compelling. Congestion pricing, parking re- form, service frequency upgrades, integrated ticketing and safe ac- tive mobility networks are all part of a system that encourages peo- ple to move smarter. Third, education must be reor- iented away from curriculum in- ertia and closer to the future skills map of the economy. The sectors generating the highest value add- ed today are knowledge-intensive. To increase wages sustainably, we need to produce more graduates, technicians, creatives and prob- lem-solvers who can feed these sectors. A country of Malta's size cannot afford a skills mismatch, yet that is precisely what is un- folding. Fourth, productivity must be- come a national priority. An economy that relies on volume will always require more workers, more buildings, more roads. An economy driven by productivity requires better skills, better sys- tems and better technology. This is how wages rise sustainably and how quality of life improves for everyone. Fifth, labour market policy must be guided by long-term demo- graphic realities. Malta's popula- tion is ageing rapidly, and without higher productivity and a deeper skills base, the country will be- come increasingly dependent on foreign labour for essential roles. The solution is not to reduce for- eign workers but to reduce eco- nomic dependence on low-pro- ductivity sectors by raising value across the system. This is where policy maturity becomes essential. Cross-party alignment A small island-state cannot af- ford policy swings based on elec- toral cycles. The issues Malta faces today; ageing, productivity, talent shortages, infrastructure pres- sure, environmental constraints, are structural and long term. They require evidence-based solutions and a political culture willing to look beyond a five-year horizon. Malta needs a renewed maturity in economic debate. The country deserves a conversation grounded not in sentiment but in facts, not in fear but in strategy. We need cross-party alignment on the fun- damentals: productivity-driven growth, a skills-first transition, smarter planning, infrastructure modernisation, and a sustainable labour market model. This requires a layered vision; one that begins with national aspirations, identifies the great challenges ahead, translates them into missions, defines the values guiding our choices, and aligns the policies, incentives and in- vestments that give the country strategic direction. Only through such coherence can Malta shift from reacting to growth to shap- ing it. Foreign labour did not break Malta's system. It revealed the system's limits. The response cannot be to shrink but to re- design. If Malta wants to secure rising wages, better quality of life and long-term competitiveness, it must build the system that a modern economy requires. And it must do so with the discipline, courage and maturity that small states cannot survive without. Foreign workers were not a policy accident. They were the only available solution to avoid economic stagnation