Malta’s SMEs face growing challenges amid employee shortage, skills mismatch and unfair competition

The latest SME Barometer® survey for the first quarter of 2025 reveals that SMEs continue to face major challenges, including employee shortages, unfair competition, rising inflation, and growing concerns about governance and general business conditions.

Conducted by the Malta Chamber of SMEs in collaboration with MISCO Malta between 7th and 18th April 2025, the survey captured insights from 427 businesses across various sectors.

The key findings can be found below: 

Top Business Challenges:

• Employee shortages (43%) remain the most pressing issue.

• Unfair competition (24%) and excessive competition (19%) closely follow.

• Inflation (16%) and skills mismatch (15%) are increasingly problematic for SMEs.

Top National Concerns:

• 33% of respondents cite a lack of good governance as a top national issue.

• Corruption (30%) and overpopulation (30%) are also significant concerns.

• Inflation and the ease of doing business remain major issues for SMEs.

Business Sentiment:

• 30% of SMEs believe Malta is moving in the right direction— the highest result among recent SME Barometer reports.

• Only 16% believe the next 12 months will be a good time to invest, showing a decline from previous quarters.

• 30% responded “No” (an 8% increase from the previous survey), while 54% replied “Not sure.”

AI Adoption:

• 50.8% of businesses already use AI tools, while another 29% plan to adopt them within the next 12 months.

• 65.9% of respondents reported that neither they nor their employees have received training on AI tools.

The SME Barometer highlights several urgent recommendations for policymakers, including:

• Launching AI education campaigns to support businesses in the safe and effective adoption of AI tools.

• Reforming labour migration policies to better meet economic needs.

• Strengthening transparency, tackling unfair competition, and reforming public procurement processes.

• Reviewing and streamlining regulations that impact SMEs in alignment with the Omnibus Directive.

• Reviewing and revamping investment-related schemes, such as Micro Invest, to further encourage business investment.

SME Chamber President, Paul Abela, noted that while the significant challenges businesses face remain consistent, the number of businesses identifying these challenges has declined compared to previous SME Barometer surveys. A similar trend emerged when respondents were asked about national concerns.

Abela added that the recent Envision 2050 initiative announced by the government may have contributed to reducing some of the challenges reported compared to earlier surveys.

COO of the Malta Chamber of SMEs, Andrew Aquilina, emphasised that although the SME community continues to play a vital role in Malta’s economy, today’s challenges require immediate and decisive action.

The SME Barometer survey is a collaborative initiative between the SME Chamber and MISCO.