Malta’s SMEs Concerns Over Economy
The third quarter of 2023 has brought forth concerning sentiments among Malta’s Small and Medium-sized Enterprises (SMEs). According to the latest SME Barometer results presented by The Malta Chamber of SMEs, a staggering 80% of these businesses believe that Malta is heading in the wrong direction. This marks a significant 16% increase when compared to the sentiments expressed in the second quarter of the same year. In this comprehensive report, we delve into the survey’s findings and what they mean for Malta’s economic landscape.
Understanding the SME Barometer
The SME Barometer is a quarterly survey that provides valuable insights into economic trends, business sentiment, and the state of small and medium-sized enterprises in Malta. It is conducted by the Malta Chamber of SMEs in collaboration with MISCO, and the results are eagerly awaited by business leaders and policymakers alike. The third-quarter results were unveiled during a press conference addressed by key figures in the SME community.
The survey, conducted between October 11 and October 20, 2023, garnered responses from 423 businesses, with a margin of error of 4.9%. These businesses spanned various sectors and sizes, offering a comprehensive view of the sentiments prevailing in Malta’s SME landscape.
Diverse Business Sizes and Sectors
The participating businesses were of diverse sizes, with the majority falling within the micro-enterprise category, employing fewer than 10 individuals. Businesses with 10-49 employees constituted 33.81% of the respondents, while firms with workforces ranging from 50 to 249 employees made up 13.95%. Larger companies, employing over 249 individuals, represented 1.89% of the survey respondents. This distribution reflects the predominance of small businesses in Malta.
Various industries contributed to the survey, with retail, import, distribution, and wholesale making up 34% of the respondents. Other significant sectors included manufacturing, construction, machinery & production (12%), professional services (12%), and transport (12%). The wellness & personal care and food & beverage sectors each accounted for 10%, while entertainment, marketing & events comprised 9%. Other services and tourism services made up 18% and 6%, respectively. Education, training & schools, and household & office products constituted 6% and 5% of the respondents, respectively.
Top Concerns for Businesses
The survey asked respondents to identify the two most significant issues their businesses currently face. Across all business sizes and sectors, the most pressing issues were identified as:
- Employee Shortage
- Increase in Inflation
- Unfair Competition
- Traffic Congestion
The shortage of employees, as highlighted by MISCO Director Lawrence Zammit, extends beyond recruitment challenges; it also encompasses concerns about the quality and skills of available employees. SME Chamber President Paul Abela emphasized the necessity of addressing this issue by considering foreign labor to bridge the gap.
New Concerns Emerge
Lower client demand emerged as a new concern for this quarter, signifying challenges in attracting customers. Additionally, businesses raised concerns about overpopulation, indicating that the issue is linked to the abuse of foreign workers and crowded living conditions.
Across all sectors, the key concerns regarding the national situation included:
- Level of Corruption
- Lack of Good Governance
- Increase in Inflation
These concerns mirror those recorded in the previous quarter, highlighting their persistence and significance. The introduction of overpopulation as a concern underscores the need to address associated challenges.
Malta's Economic Direction
The SME Barometer’s most striking finding is the increasing pessimism regarding Malta’s economic direction. A significant 80% of businesses believe the country is moving in the wrong direction, marking a substantial increase compared to the previous quarter. The number of businesses that perceive Malta as moving in the right direction decreased significantly, highlighting a growing discomfort among the business community.
SME Chamber President Paul Abela pointed out that this sentiment aligns with data from the EU Barometer, which also revealed concerns within various business sectors.
When asked if they believed the next 12 months would be a good time to invest, 54.50% of businesses expressed uncertainty. This hesitancy to invest, despite an appetite to do so, underscores the prevailing uncertainty that is holding businesses back. It also indicates a shift towards caution in investment decisions.
Concerns About Support Services
Deputy President of the SME Chamber, Philip Fenech, emphasized that while support services in the country have improved, they still fall short of meeting demand. Issues related to traffic management, cleaning, and waste management were raised, reflecting the need for more effective governance in these areas.
Causes of Inflation
The survey explored the main contributors to inflation within businesses. The key factors identified were:
- Employee Wage and Salary Costs
- Costs of Products from Abroad
- Rent Costs
- Transport Costs
Notably, transport costs, including freight from abroad, have seen significant increases. Abela highlighted the need for more competition in freight costs to lower prices. Additionally, the country’s inflation rate, higher than that of the Eurozone, underscores the urgency of maintaining business competitiveness.
The SME Barometer for the third quarter of 2023 paints a picture of growing concern among Malta’s SMEs. The overarching sentiment is that the country is moving in the wrong direction, accompanied by uncertainty about investment. The shortage of employees, inflation, and unfair competition are among the top concerns. The government and policymakers must heed these signals and take action to address these challenges and restore business confidence.
What is the SME Barometer?
The SME Barometer is a quarterly survey that provides insights into economic trends, business sentiment, and the state of small and medium-sized enterprises in Malta.
What are the key concerns for businesses in Malta?
The top concerns for businesses in Malta include employee shortage, inflation, unfair competition, and traffic congestion.
What are the prevailing concerns regarding the national situation in Malta?
Businesses in Malta are primarily concerned about the level of corruption, lack of good governance, increase in inflation, and overpopulation.
What is the sentiment among businesses regarding Malta’s economic direction?
A significant 80% of businesses believe that Malta is moving in the wrong direction, a substantial increase compared to the previous quarter.
How do businesses view investment in the next 12 months?
A majority of businesses (54.50%) are uncertain about whether it would be a good time to invest in the next 12 months.
What are the main contributors to inflation within businesses in Malta?
The main contributors to inflation within businesses in Malta are employee wage and salary costs, costs of products from abroad, rent costs, and transport costs.
What issues related to support services were raised by businesses?
Businesses highlighted concerns about traffic management, cleaning, and waste management, indicating the need for more effective governance in these areas.
How does overpopulation affect businesses in Malta?
Overpopulation is linked to issues such as the abuse of foreign workers and crowded living conditions, posing a significant concern for businesses.
Why is there hesitancy among businesses to invest in Malta?
Despite an appetite to invest, many businesses are uncertain about investing in Malta, reflecting a growing sense of caution in their investment decisions.
What sectors dominate the SME landscape in Malta?
The majority of SMEs in Malta fall within the micro-enterprise category, with the retail, import, distribution, and wholesale sectors dominating at 34%.