Businesses hire more workers rather than invest in productivity.

The minister is right about most of Malta’s businesses. Over the past decade they invested a lot, but almost all of it went into equipping extra workers rather than giving each worker more to work with. In construction, employment nearly doubled while the equipment behind each worker fell by more than a third and output per worker did not move.

No dataset records why a business hires instead of investing, so the motive cannot be checked. What can be checked is the result the claim predicts. If businesses choose people over machines, the amount of equipment behind each worker should stay flat or fall while the number of workers rises.

What “equipment per worker” means

Add up everything businesses and the state use to produce things: buildings, machines, vehicles, equipment and software. Leave out people’s homes. Divide by the number of people in work. Economists call this capital per worker. This fact check calls it equipment per worker for short. Eurostat publishes the figures for Malta at fixed 2020 prices, so inflation does not distort them.

The headline figure looks fine

In 2014 Malta had about €77,000 of equipment behind each worker. By 2024 it had about €81,400. That is a rise of 6%, during ten years in which the number of people in work rose by 64%.

On its own, 6% is not bad. Across the EU, equipment per worker fell by 1.4% between 2014 and 2023, as investment stayed weak after the financial crisis. On the headline figure, Malta did better than most of Europe.

Why the headline figure misleads

The national figure is an average, and an average can be pulled up by a small group.

Picture a street of ten houses. Nine families each give up a room to take in a lodger. The tenth family builds a mansion. The average house on the street is now bigger, even though nine out of ten got smaller.

That is roughly what happened in Malta. A small group of activities in finance, administrative services (which include renting and leasing out equipment) and real estate piled up equipment very quickly without hiring many people. The rest of the economy did the opposite.

Net fixed assets excluding dwellings, chain-linked 2020 euro, divided by persons employed. Source: Eurostat nama_10_nfa_st and nama_10_a64_e; Spunt calculations.

The small group’s equipment grew more than sixfold while it added fewer than 30,000 workers. Most of that came from administrative services, where equipment rose from €338 million to €3.6 billion. That one jump is enough to lift the national average.

In the rest of the economy, equipment grew by 45% while the workforce grew by 57%. Each worker ended up with less: €77,600 in 2024, against €84,000 in 2014, a fall of 8%. More than four in five jobs are in this part of the economy.

Against the rest of Europe

Compare like with like and Malta looks worse. The table runs to 2023, the latest year with figures for every country.

Same measure and sources as above, plus Eurostat nama_10_a10_e. Amounts are in euro at 2020 prices and are not adjusted for differences in price levels between countries.

Three things stand out.

Malta hired faster than anyone. Its workforce grew by 56% in nine years, five times the EU rate and the fastest of the 37 countries Eurostat covers.

Malta did invest. Its stock of equipment grew by about 5.5% a year, far faster than most of Europe. But almost all of that went into equipping the extra people.

Where most people work, Malta fell behind. Outside finance, administrative services and real estate, equipment per worker fell by 7.6%, against 1.5% across the EU. Cyprus, the EU country closest to Malta in the pace of hiring, fell further. Estonia shows the other path: slower hiring, and 16% more equipment per worker.

Malta also starts from a lower base. In 2023 it had about €82,000 of equipment per worker, against €114,000 across the EU.

No EU country hired as fast as Malta

Change in equipment per worker against growth in the number of workers, 2014–2023. Each dot is a country.

Whole economy Excluding finance, admin services, real estate

Show the data as a table

Country	Growth in workers	Equipment per worker, whole economy	Excluding finance, admin services, real estate	Equipment per worker, 2023
Malta	+56.2%	+6.3%	−7.6%	€82,000
Cyprus	+36.6%	−10.8%	−11.6%	€70,000
Ireland	+35.3%	+67.3%	+113.9%	€287,000
Luxembourg	+29.3%	−5.6%	−6.6%	€218,000
Spain	+18.9%	−10.2%	−10.9%	€124,000
Slovenia	+17.8%	−7.9%	−8.9%	€93,000
Netherlands	+17.0%	−2.7%	−5.9%	€139,000
Portugal	+15.9%	−7.8%	−7.2%	€68,000
Greece	+15.3%	−18.1%	−18.1%	€48,000
Hungary	+14.0%	+5.1%	+3.4%	€92,000
Sweden	+13.8%	+8.5%	+6.8%	€187,000
Estonia	+12.0%	+21.9%	+16.4%	€95,000
Belgium	+11.4%	+4.1%	+3.0%	€165,000
Lithuania	+11.4%	+21.9%	+20.2%	€78,000
Poland	+11.4%	+16.2%	+13.0%	€35,000
Austria	+10.9%	−1.1%	+0.1%	€186,000
EU	+10.7%	−1.4%	−1.5%	€114,000
France	+10.6%	−1.4%	−0.4%	€116,000
Slovakia	+9.5%	−13.5%	−15.4%	€87,000
Italy	+8.0%	−8.3%	−9.6%	€121,000
Germany	+7.4%	−3.2%	−2.0%	€125,000
Croatia	+6.6%	+17.3%	+20.7%	€121,000
Latvia	+5.2%	+15.8%	+12.8%	€73,000
Romania	−1.6%	+44.5%	+46.1%	€82,000

Sector by sector

Eurostat publishes Malta’s equipment figures for 18 sectors, the top level of the EU’s industry classification (NACE). That is the most detailed breakdown available for equipment. Jobs and output are published in more detail, and the next section uses that.

Equipment: net fixed assets excluding dwellings, chain-linked 2020 euro, per person employed. Output: gross value added per person employed, chain-linked 2020 euro. Source: Eurostat nama_10_nfa_st, nama_10_a64 and nama_10_a64_e; Spunt calculations. *Administrative and support includes equipment renting and leasing, which employs about 2,250 people. **Real estate output includes the imputed rent of owner-occupied homes. ***Energy and quarrying employ very few people and hold very large assets, so per-worker figures swing wildly.

Equipment per worker fell in eight sectors: wholesale and retail, health and social work, manufacturing, construction, transport, ICT, other services and agriculture. Together they hold half of all jobs.

Which sectors dragged the national figure down depends on two things: how far their own figure fell and how many people they employ. Weighting each sector’s change by its share of jobs, the four biggest drags were health and social work, transport, construction and manufacturing. Between them they pulled the national average down by about €6,500 per worker. It was pushed back up mainly by energy, administrative services (leasing), public administration and finance, which together employ just over one worker in five.

Is the problem in a small corner or a big part of the economy?

This matters. A problem confined to an industry that employs a few hundred people changes little. A problem in an industry that employs tens of thousands shapes the whole economy.

Malta’s is in a big part. Jobs and output are published for about 60 detailed industries, which shows where the new jobs actually went. The economy-wide average output per worker in 2024 was about €51,800 (excluding real estate). Industries producing less than 70% of that, under about €36,000 per worker, held 55% of all jobs in 2014. They still held 54% in 2024, and took 53% of the 127,000 new jobs. That is about 67,000 new jobs in the lowest-output part of the economy.

The twelve detailed industries that added the most jobs. Output is gross value added per person employed, chain-linked 2020 euro. Source: Eurostat nama_10_a64 and nama_10_a64_e; Spunt calculations.

Three findings follow.

The low-output half of the economy did not shrink. In an economy moving towards higher productivity, its share of jobs should fall over a decade. Malta’s barely moved, from 55% to 54%.

Within it, the fastest-growing parts got worse. Temping agencies more than tripled, from 1.8% to 4.2% of all jobs, and their output per worker fell by a fifth. Security, cleaning and office support grew from 4.9% to 5.8% of jobs. Construction grew from 5.4% to 6.0%, with output per worker flat for ten years.

There is one bright spot. Hotels and restaurants took a smaller share of jobs (9.3% to 8.1%) while output per worker rose by half and equipment per worker rose by 18%. That sector moved the way the minister wants.

One caution about temping agencies. People employed through an agency are counted in the agency’s industry, even when they work in a hotel, on a building site or in a care home. So the agency figures partly hide where the work is done, and the sectors using agency staff have even more workers per unit of equipment than their own figures show.

How sensitive is the result?

The size of the fall depends on which capital-heavy activities are set aside, but the direction does not change.

Same measure and sources as above. Section-level figures, which give slightly different totals from the whole-economy series.

The last row is the closest to “businesses” in the minister’s sense, since public administration carries roads and other state infrastructure. On that measure, equipment per worker fell by 11% while employment rose by more than half.

Workers got dearer, and firms hired anyway

One objection is that workers did not get cheaper. That is correct. Average pay in shops, transport, hotels and restaurants rose by 68% between 2014 and 2024, and in construction by 47%. The price of equipment rose by 33%. On those numbers, firms should have bought more machines.

They did not. The likeliest reason is that recruitment from abroad kept adding new workers, so firms could keep hiring at the going wage without bidding pay up further. Labour stayed cheap compared with what it would have cost without that supply. That comparison cannot be observed directly, so this part is an inference.

Evaluation

The minister said businesses choose workers over investment. For most of the economy the figures agree. Outside finance, administrative services and real estate, the equipment behind each worker fell by 8% in ten years while the workforce grew by 57%. Over the same period the fall in Malta was five times steeper than in the EU, while hiring ran five times faster.

The problem is not confined to a small corner. Industries producing well below the average hold more than half of all jobs, took more than half of the new ones, and their share did not shrink. The fastest growth was in temping agencies, cleaning and security, and construction.

The claim is less accurate in two ways. It does not hold for finance, professional services or information and communication, which added equipment or output per worker quickly. And “rather than invest” suggests businesses stopped investing, when Malta’s stock of equipment grew faster than most of Europe’s. Businesses did invest. They invested mainly to keep up with the number of people they were hiring, not to make each person more productive.