Did the Malta's accession to the EU cause the population boom?

Online debate this week revolved around the topic of whether Malta’s accession to the EU is causing a population boom is being driven by Brussels or by choices made at home. The truth is more nuanced than either side claims.

Partially yes, the EU rules created the economic environment in which rapid growth became possible, and they reward countries that expand output quickly. But the scale, timing and degree of reliance on foreign workers were shaped by Malta’s own decisions and structural issues in the labour market. 1. Labour shortages first, migration afterwards

The starting point is the sequence of events.

In the mid-2000s Malta’s unemployment rate fluctuated around 6 to 7 percent. Over the next decade it started to fall and by the late 2010s it was close to 3 percent, one of the lowest rates in the euro area. Recent Central Bank figures put unemployment around 3 percent in 2023 and 2024.

At the same time, population growth shifted from modest to very rapid. Before 2013 Malta’s population was rising by around 0.5 to 0.8 percent per year. From 2014 onward the annual growth rate often exceeded 2 percent and in some years touched about 4 percent. That step change in population is almost entirely driven by migration rather than births.

To understand why there was no similar migration boom between 2003 and 2013, it helps to look at the starting conditions. In those years Malta still had higher unemployment, large pools of inactive workers, especially among women and older people, and was adjusting to EU accession and the restructuring of older industries. Growth was positive but slower, and many of the export sectors that would later demand more workers were still small or only emerging. Employers could expand mainly by drawing on Maltese workers who were not yet in the labour market, and the state had not yet built the administrative systems or recruitment channels needed to bring in foreign workers at scale. In simple terms, there was more slack at home, fewer new jobs, and less capacity to import labour, so there was no economic or institutional basis for a migration surge of today’s magnitude.

The composition of the population confirms this. In 2014 there were 27,476 foreign residents in Malta, 6.4 percent of the population. By 2023 the foreign population had risen to 158,368, 28.1 percent of residents. By the end of 2024, foreign nationals numbered about 168,900, almost one in three people living in Malta.

A Central Bank discussion paper quantifies the link with employment: foreign workers account for around three quarters of the rise in employment since 2013. Over the same decade the working age Maltese population actually shrank by about 15,000, yet the number of Maltese in work still rose by 30,000, mainly due to higher participation by women and older workers.

Taken together, the data support a simple causal story. Malta experienced very strong job creation, squeezed unemployment toward 3 percent, and raised participation among locals. Once that reserve was exhausted, employers filled new vacancies with foreign workers. Migration followed the labour market squeeze rather than preceding it.

The narrative that Malta’s migration boom is primarily a response to shortages, and not to an EU-mandated migration policy, is broadly accurate. It is still incomplete. Whilst the Government did not deliberately choose “labour intensity” as a strategy, it did little to curb growth in these labour-intensive sectors to keep expanding even as population pressures were rising. Construction, tourism and low-margin services were all allowed to grow alongside higher-value, less labour-hungry activities. EU accession did not mean Brussels chose that sector mix but it did create the environment for them to grow. A more sustainable approach would have been to limit the expansion of the most labour-intensive sectors while continuing to grow those that scale mainly through capital, skills and technology, rather than letting all of them expand at once.

2. EU focus on GDP and fiscal rules

EU rules care about GDP because GDP is the denominator in the debt and deficit ratios. Under the Maastricht framework governments are expected to keep debt around 60 percent of GDP and deficits below 3 percent of GDP. The recent reform of the fiscal rules keeps these reference values and adds medium term plans that are meant to be “growth friendly”. In practice, this creates a strong bias in favour of policies that push up GDP quickly, because higher GDP makes all the fiscal indicators look better.

Prior to the economic boom, Malta’s debt to GDP was higher than 60% meaning Malta had every incentive, or rather the need to grow GDP quickly to then pursue its infrastructural and other project. Without this, government spending would have been rather limited. Today, Malta’s case, debt is well below the 60 percent threshold, meaning now the government has no incentive to pursue growth for growth’s sake. The European Commission has never instructed Malta to raise its population or import a particular number of workers. However, the combination of headline GDP targets and deficit surveillance makes it politically attractive to choose growth strategies that expand output as fast as possible, including by bringing in more workers.

So the EU framework does not dictate Malta’s migration model, but it does reward government choices that raise GDP through higher labour supply. Using foreign labour to expand output is still a Maltese decision, yet it is a decision taken inside EU rules that treat faster growth and a larger tax base as the easiest route to compliance.

3. Streamlining applications: national and EU roles

Both the EU and Malta have made it administratively easier for third-country nationals to work legally, but again the key distinction is between enabling and prescribing. At EU level, the Single Permit Directive of 2011 established a single application procedure for non-EU nationals to obtain a combined work and residence permit and guaranteed a common minimum set of rights for those legally residing in a member state. It did not set targets or quotas and left countries free to decide which workers to admit and on what conditions.

Malta implemented this system and built a large “single permit” channel for economic migrants. National employment policy documents make clear that economic migration is treated as a tool to address labour shortages. The National Employment Policy 2021–2030 calls for a review of labour migration so that it ensures a “sustainable flow of workers” into the country.

In other words, EU law simplified procedures and harmonised rights, while Maltese authorities used that flexibility to process large numbers of applications. Streamlining made the migration model easier to operate, but it did not dictate its scale.

In the last two years policy has started to tighten. Drafts of the Malta Labour Migration Policy propose higher salary thresholds for key schemes, stricter labour market tests, and closer monitoring of employers that rely heavily on TCN workers. This suggests that the earlier openness was mainly a domestic choice, since it is now being modified without any change in EU obligations.

4. Is this phenomenon happening across Europe, and is Malta different?

Malta is not an isolated case. Across the euro area foreign workers have become a central driver of labour force and GDP growth. A recent European Central Bank analysis finds that in the last three years foreigners accounted for about half of the labour force growth in the euro area, helping offset ageing and low birth rates.

Germany and Spain have seen particularly strong contributions from foreign workers. France and the Netherlands also rely on them, although to a lesser degree. Italy is an outlier, where a larger share of labour supply growth came from mobilising domestic workers rather than migration.

In Poland the post-2004 story is almost the opposite of Malta. When Poland joined the EU it had unemployment of about 18 percent in 2005 and over two million Poles left to work in richer member states, with long term emigrants abroad reaching around 2.3 million by 2007. Poland could grow for years by cutting this very high unemployment and later by drawing part of its own diaspora back as conditions at home improved. Foreign born residents therefore still make up only about 2.5 to 2.6 percent of Poland’s population, compared with roughly 28 to 29 percent in Malta, where foreign citizens are now close to one in three residents. Only recently, with Polish unemployment down to about 2.7 percent and ageing becoming a binding constraint, has the country begun to rely more on foreign workers, above all more than 1 million Ukrainians, of whom roughly two thirds are in work and who are estimated to have lifted GDP by almost 3 percent in 2024. Poland is now feeling some of the same labour shortage pressures that pushed Malta toward foreign workers and is responding with more regional migration, but from a very low foreign starting point. So on present trends it is not heading for Malta-style migration level especially given the political climate in the country but there are signs that this might happen especially if Ukranians return to their country if the war ceases. 

So the mechanism is similar. Many EU economies are facing demographic decline and tight labour markets, and they are using foreign labour to sustain growth. EU-level tools such as the Single Permit system are designed to facilitate this across the bloc.

Malta is different in three ways.

First, the scale is exceptional. Eurostat data show that in 2023 non-nationals made up around 28 percent of Malta’s population, among the highest shares in the EU and far above the average.

Second, the speed of change is unusually fast. It took many EU countries decades to reach foreign population shares similar to Malta’s. Malta moved from 6.4 percent foreign residents in 2014 to close to 30 percent in 2024.

Third, geography and size magnify the effects. A four percent annual population increase in a large country can be absorbed more easily across multiple regions. The same rate inside a small and densely built island translates directly into pressure on housing, transport and public services.

So the broad pattern of “tight labour market plus ageing plus migration” is EU-wide, but Malta has combined it with a very aggressive growth model and very limited land. That is why the social impact feels sharper than in most other member states.

Final verdict: Is the EU causing Malta’s population boom?

Yes, the EU partly created the conditions to make the migration boom possible but it has not forced Malta to do so at this scale either.

The sequence is clear: Malta first experienced very strong job creation, unemployment fell toward 3 percent, participation by women and older workers rose, and once that domestic reserve was largely used up, employers turned to foreign workers, who account for most of the rise in employment since 2013. EU accession and the single market helped create this growth environment, and EU fiscal rules reward higher GDP because they focus on debt and deficit ratios with GDP in the denominator, which makes rapid output growth politically attractive.

EU measures such as the Single Permit Directive simplified procedures and harmonised rights for third-country nationals, lowering the administrative cost of hiring from abroad. However, none of these rules set quotas or told Malta to rely on migrant labour at the scale we see today. The key decisions were national. Whilst Malta did grow effient sectors as well, it did not slow the expansion of labour-intensive sectors when the economy was strong and key targets were being met, which allowed structural pressures to build. Many EU countries face similar demographic challenges, but few have seen migration rise at Malta’s pace, showing that the EU framework enabled the model but did not determine its scale.