Can Malta Do Without Foreign Workers?

Malta’s debate over foreign workers is often framed as a question of preference. Increasingly, it is a question of economic arithmetic. Several economically important sectors rely heavily on foreign labour.

The structure of employment has changed markedly over the past decade. Between 2011–15 and 2021–25, the share of local workers in construction fell from 87% to 49%; in accommodation and food services, it dropped from 80% to around 41%, and the professional, scientific, technical, administrative and support services recorded a similar shift, with the local share declining from 80% to 57%. Data from Jobsplus also reveals an important structural change, with much of the more recent increase coming from third-country nationals rather than EU workers.

There are reasons for this. Sustained economic growth over the years has generated vacancies faster than Malta’s domestic labour supply has been able to fill them. At the same time, falling birth rates constrain the future pool of workers. Vertical labour mobility also matters, with Maltese workers becoming more educated and moving towards higher-skilled occupations, leading to vacancies emerging further down the occupational ladder. Unless there is a shift towards capital-intensive production, these jobs do not disappear merely because local workers prefer not to take them.

However, an economy cannot assume that an ever-expanding foreign workforce is costless. Rapid labour-force growth increases demand for housing, transport and public services, while abundant labour may reduce firms’ incentive to invest in automation, improve productivity and pay higher wages. But abruptly reducing foreign labour would itself carry costs. In sectors where foreigners now represent a substantial portion of employment, substitution cannot occur overnight. A sudden shock would reduce output, increase labour costs, and raise the cost of some services.

The more useful question is whether the present migration policy is supporting productivity-enhancing growth or merely labour-intensive expansion. A managed transition towards a more productive economic model, rather than an abrupt reduction in foreign labour, is envisioned. The Government should intensify schemes, such as those proposed in the 2025 budget, that incentivise firms to replace repetitive, labour-intensive processes with technologies such as AI, robotics and automation to build more efficient systems. This would ease the pressure on existing labour-migration policies, which could, in turn, prioritise genuine shortages and required skills, while regularly reviewing sectors that remain dependent on low-productivity employment. The objective should not be to eliminate foreign workers, but to reduce the number of additional workers required per unit of economic growth, especially in low-value-added industries.