During the third quarter of 2024, 42 per cent of businesses surveyed listed employee shortages as the biggest concern faced. This was followed by unfair competition (22 per cent) and traffic congestion (18 per cent).
These figures emerged from the Chamber of Small and Medium-sized Enterprises (SMEs)’s latest barometer survey, focusing on the third quarter of the year and announced in a press conference on Wednesday.
During the survey, the participants were asked to choose the two most important issues that their respective business is facing. Notably, access to finance and rising interest rates was the issue cited the least, at just three per cent.
Delving further into employment issues, the problem was identified to be more prevalent during 2024’s Q2. Similarly, issues with unfair competition have fluctuated over the past four quarters, with periods of increase and decrease, including a decline in Q3 compared to Q2.
During the press conference, the SME Chamber along with MISCO Founder and Director Lawrence Zammit commented on the impact of unfair competition on businesses and how this is a matter of concern, primarily for micro-businesses – namely the small shops found in towns and villages – and locally established entities who pay higher taxes.
Here, the SME Chamber shared that unfair competition can be caused by various factors, namely businesses operating illegally which evade paying taxes and the lack of enforcement of these unregistered businesses.
Additionally, the social partner stressed the discrepancies in taxes paid between local and foreign companies based in Malta.
Currently, the Government is in talks with the European Commission over Malta’s tax regime. After last Monday’s 2025 budget presentation, the SME Chamber reiterated its position on the Government’s promise in reducing corporate tax from 35 per cent to 25 per cent and commented that for another year “this has not been fulfilled.”
Furthermore, it also highlighted growing concerns surrounding Malta's micro-enterprises which cannot keep up with large-scale competition. For instance, they provided an example of small grocery stores in comparison to foreign supermarkets which have established themselves in Malta. The small businesses, the SME Chamber reiterated, aside from competitive challenges faced on a consumer level, are paying higher corporate taxes.
It commented that while this tax incentive made sense in the past to attract foreign investment and create new niches, "as it rightly did", now "it's time for the SME Chamber to be more aggressive on its position on the local corporate tax rate to eliminate unjust discrimination".
As for the issue of traffic congestion, the barometer found that the problem has grown significantly when compared to the first two quarters of the year, in line with the start of the scholastic year and the added congestion it typically brings.
It should be mentioned that issues with processing of Third Country Nationals (TCN) Visas have increased throughout the year and significantly from 2023’s last quarter. This can be attributed to the introduction of the Skills Pass for TCN tourism workers and Prime Minister Robert Abela’s stance on not allowing more taxi drivers and couriers into the country.
Indeed, with many businesses relying on TCNs in certain sectors of the economy, 28 per cent of the barometer respondents reported staff shortage as an issue that is hindering their day-to-day operation as a business.
This was followed by, again, traffic congestion (16 per cent), cashflow (12 per cent), closely followed by low client demand (11 per cent) and regulatory compliance (7.5 per cent). Apart from bureaucracy four per cent stated that they have no issues hindering operations and six per cent were attributed to unfair competition, high operational costs, regulatory discrimination, finding good quality staff, Government competing with the private and supply chain and issues with payments.
When asked what is hindering their growth as a business, participants mentioned high operational costs (21 per cent), once again lack of staff (18.5 per cent), and unfair competition (16 per cent). Meanwhile, 8.5 per cent stated that they were not interested in growing.
About the survey
The barometer surveyed 432 businesses operating in Malta. Answers were given as part of an online survey with unique submissions, gathered between 9th and 18th October 2024.
The majority of businesses contacted during the survey form part of the retail, import, distribution, wholesale (goods and services) sector (36 per cent), followed by the tourism, accommodation, catering and entertainment services sector (23.5 per cent). 14.5 per cent form part of the transport, services and logistics (land, sea and air) sector, 14 per cent from the legal, professional and other services, 12 per cent from real estate, construction, finishing and property rental, 10 per cent from the industrial sector, nine per cent from education, training and schools, six per cent from health, wellness and personal care services and 1.6 per cent from the arts and crafts industry.
In terms of size of business by head count, the majority of respondents have between one and nine employees (50.5 per cent), followed by 31 per cent who have between 10 and 49 employees. From the respondents 16 pe recent employ more than 50 employees and 2.5 per cent employ over 249.
The survey has a margin of error of 4.9 per cent.
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