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Malta is in a unique situation for the European Union. The member state needs more workers due to having the second-lowest unemployment rate of 2.7 percent in August 2023, below what economists say is ideal. Simultaneously, the nation may have to limit population growth on the island due to running out of space. Malta is by far the smallest nation with a land area of only 316 square kilometers yet the highest population density in the EU with 1657 people per square kilometer in 2022. For reference, the population density in the EU is only 109 people per square kilometer in 2022. Malta currently has an employment rate of 82.7 percent in the second quarter of 2023, meaning few citizens are available to fill job vacancies.
Houses That Meet EU Standards
While Malta is understandably eager to have more housing built as the population has grown, the government needs to ensure that the new housing is safe. Last year a 20 year old died at a construction site. Jean-Paul Sofia tragically died despite not being scheduled to work that day. He came to give tools to other workers. Jean-Paul entered the semi-constructed building only eight minutes before it collapsed. It took rescuers 16 hours to recover his body, which his parents painstakingly watched the recovery process and confirmed it was his body. Five other workers were hospitalized due to being injured by the building collapse as well. Jean-Paul’s death reignited discussions and demands of building safety regulations in Malta.
The European Union implemented new rules for concrete products in 2013, yet Malta has still not adopted these rules. This means that concrete products originating from Malta cannot be legally sold in the EU’s single market. Currently only two of eleven construction companies use bricks that meet EU standards. The overwhelming majority of bricks produced in Malta are not labeled with “CE”, which signifies that the producers are compliant with the health, safety and environmental protection requirements in order to be sold in the single market. There are criticisms about the national government not doing enough to help manufacturers obey these new regulations, as has been done in other EU member states.
The European Union also can play a role in making sure that Malta swiftly ensures these rules are obeyed in Malta. The European Commission can take legal action against member states under the infringement procedure for not fulfilling their obligations as member states. This year alone the European Union has initiated legal action against Malta including for not reducing emissions and air pollutants, the language requirements for acquiring long-term residency status, and for not transposing the Energy Performance of Buildings Directive. While it is logical for the EU to be concerned about the energy performance of buildings throughout the EU, building safety is also important as well. If a building is constructed using subpar materials and can collapse like the building under construction killed Jean-Paul, everything else about the building suddenly becomes less important.
Landlords Taking Advantage Of Foreigners
Foreigners may also have difficulties securing registered lease agreements, which is a condition in order to receive a residency permit from Malta. Recently, five Colombian citizens were deported due to presenting falsified lease agreements to Identity Malta, the agency responsible for issuing residency permits. The Colombians were caught when officials realized all five immigrants submitted lease agreements that list the same exact address. Malta needs to do more to ensure that immigrants needed to fill job vacancies are able to find housing with landlords who follow the law and register housing leases. As landlords are evading taxes by not registering leases, it would be in Malta’s best interest to better inspect houses that are not the primary residence of the owner yet have no leasing contract registered for them to control whether they are being leased out illegally.
Limit Population Growth
The Nationalist Party in Malta wants to limit population growth. The finance minister of Malta estimates that the population could swell to 800,000 people unless Malta changes its economic growth model. The Nationalist Party wants to limit work permits and make it mandatory to learn Maltese in order to curb the nation’s growing population. Ivan Castillo, the shadow employment minister proposes the creation of a database that would allow Malta to only issue work permits for jobs severely lacking workers. Malta’s unique circumstances may also make it the only EU member state where discussion over limiting immigration is focused on a lack of space rather than viewing immigrants as a threat due to a difference of religion, language, or culture.
Population growth may slow due to exterior factors as well however. One example is the new EU tax regime for corporations with a minimum turnover of 750 million euros. These companies will have to pay a minimum of 15 percent throughout the European Union starting next year. Malta currently depends on low corporate taxes in order to help fuel its economic growth, where corporations could pay a tax rate as low as 5 percent. This may decrease the demand for workers once these companies are paying higher taxes. Tripling the corporate tax rate for larger companies will also make Malta a less attractive location for companies in the EU to relocate. At the moment, Malta has the lowest corporate taxes currently within the European Union. In the EU, the average corporate tax rate is 22 percent.
Malta needs to figure out how to fill the labor shortage in its economy while simultaneously preventing the island from becoming too overcrowded. These concerns may be overblown however depending on the impact the new EU corporate tax will have on Malta’s economic growth. A higher tax alone may prevent Malta from reaching 800,000 people any time soon. The national government must do more also to ensure that new construction is being built in a safe manner for workers and future inhabitants, to prevent another tragic situation like the death of Jean-Paul Sofia. The European Union must also act as an enforcer when member states fail to fulfill their obligations, as Malta has since 2013 regarding concrete products.
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