Malta’s economy has exhibited a high degree of resilience in the aftermath of the COVID-19 outbreak which caused huge shocks particularly in tourism, performing arts and the entertainment industries. The persistent low unemployment rate is testament to this positive trend. Arguably, the wage supplement scheme introduced by the government in collaboration with the social partners, was a game changer as it gave a lifeline to enterprises whose operations ground to a halt or were severely hampered.

However, it would be premature to conclude that Malta has managed to weather the storm.

As its name suggests the wage supplement scheme was never intended to replace the employer’s responsibility to remunerate workers, but a means to compensate for the expected losses. Under this measure the employer was expected to pay only €400 which would add to the €800 wage supplement from by the government. Such mechanism was meant to ensure a minimum a monthly salary of €1,200. Yet, there was a proviso whereby the employer could be granted an exemption from paying any top-up at all, if there would be enough evidence to support the claim that no such expense could be afforded. To date no detailed breakdown has ever been published of the number of employers given such exemption. However, these cases should have triggered the alarm bells immediately as they indicated straight away that the private enterprise had already been in the red prior to the outbreak of the pandemic. In this respect, the writing is on the wall. The moment that the wage supplement scheme is halted, they will in all probability close down. Such prospect is very worrying indeed as it could be symptomatic of an unemployment time bomb. Government is bound to look into these cases by digging deeper into the business plans of these employers and if need be seeking certain guarantees and commitments. Otherwise, the wage supplement scheme could just be a stay of execution for the Maltese economy.

From a wider perspective, there have been thousands of workers who retained their job but were nonetheless affected. According to the latest Labour Force Survey in the last three months of 2020, the average monthly salary in Malta (which is calculated on the gross basic wage prior to any tax and social security deductions and excluding any overtime or allowances) dropped to €1,555 from €1,619 in the corresponding quarter of the previous year – the last three months prior to the COVID-19 outbreak. The decline is equivalent to €64 or €768 over an entire year. The data shows that this is partly due to the fact of an economic slowdown which results in less demand. As a matter of fact in the last quarter of 2019 employees worked an average of 39.9 hours per week, while in the corresponding months of 2020 the respective figure was of 36.6 hours. Consequently, it would be wrong to assume that these employees will automatically revert to their previous income in the coming months.

Much has been said on the need to be prepared to hit the ground running when the pandemic is over. The so-called post-Covid era should neither be a cliché nor treated as an overnight changeover. There will be no New Year’s Eve countdown. The best case scenario we can hope for is a gradual shift towards normality. Failing to act now to address certain warning signs will jeopardise our chance for a swift recovery.