Background for Malta

Between 2012 and 2022, Malta’s gross domestic product increased considerably, by 43.31%, which is above the EU27 average of 15.29% for the same period. During this time, unemployment fell for all categories and remained well below the EU average, with total unemployment at 2.9% in 2022 (the EU average was 6.2%). The largest decrease was in youth unemployment (-5.5 percentage points). Total employment in 2012–2022 increased by 16.1 percentage points to 80% and is therefore higher than the EU average of 74.5%. The largest increase in this period was in the female employment rate (24 percentage points). Youth employment in 2022 stood at 56.6%, above the EU average of 40.7% for that year. The Maltese economy lost its positive momentum throughout 2020 due to the COVID-19 situation: the gross domestic product for the third quarter of the year was 8.8% lower than the same quarter of the previous year (Eurostat [naidq_10_gdp]).

The Employment and Industrial Relations Act 2002 (EIRA), Chapter 452 of the Laws of Malta, is the main labour legislation regulating the minimum conditions of employment, employer associations and trade union representation. The EIRA is complemented by a number of legal notices and 31 wage regulation orders covering different sectors of the economy.

The introduction of new employment-related legal notices are first discussed within the Employment Relations Board, which is a national consultative body set up by the government as provided for in the provisions of the EIRA. The board makes recommendations to the minister responsible for labour, so that issues discussed are eventually included in a national standard order or a sectoral standard order.

The provisions of the EIRA are safeguarded by the Department for Industrial and Employment Relations (DIER), mainly through the Enforcement Section and the Industrial Tribunal.

Collective bargaining in Malta is generally conducted at company level between a single trade union representing at least 50% + 1 of the employees as members and a single employer. Collective bargaining usually leads to a collective agreement. In the public sector, where trade unions are traditionally stronger, a collective agreement is signed by seven trade unions. Government corporations/agencies/units are covered by separate collective agreements negotiated individually for each body. In the absence of collective bargaining, remuneration and other conditions of employment are determined by free individual bargaining. However, the Maltese legal framework provides for a national minimum wage, introduced in 1974, and for 31 sectoral wage agreements by means of the wage regulation orders. These orders were composed by tripartite wage councils, which were superseded by the Employment Relations Board in 1992. The establishment of the tripartite Malta Council for Economic Development in 1990 (which later became the Malta Council for Economic and Social Development) facilitated a more cooperative industrial relations approach at national level. For instance, it has led to the National Agreement on Industrial Relations (1990), which established a mechanism based on the inflation rate for the calculation of the yearly cost-of-living adjustment (COLA), which is granted to all employees. The National Agreement on the Minimum Wage signed by the social partners in April 2017 is the most recent example of such a cooperative model.

Adherence to statutory minimum wages and collective agreements is monitored by DIER, and breaches can be investigated by the same department, and tried in front of the Industrial Tribunal, Criminal Court and Civil Court. DIER is also involved in cases requiring conciliation, according to the EIRA.

In February 2016, the Constitutional Court ruled that the EIRA provisions for the appointment of tribunal members offer no guarantee that tribunals will be independent and impartial. Consequently, in June 2016, Act No. XXXIIII of 2016 – the Employment and Industrial Relations (Amendment) Act 2016 – was enacted. Among the most important aspects of these amendments were the increase in the tenure of office of chairpersons and members to five years from the previous three-year period. They may also be reappointed for another period of five years on the approval of the Employment Relations Board. This aims to guarantee security of tenure. In addition, cases requiring a tribunal should now be composed of three members, and the member representing the government must be chosen by the chairperson from a list of members appointed by the minister. Prior to these amendments, the minister had the power to appoint such a member on an ad hoc basis, which could have raised suspicion of bias, for instance in disputes between entities in which the government is the majority shareholder and trade unions.

During the COVID-19 pandemic, social dialogue played an important role. Whereas the first few weeks of the pandemic were characterised by social partners publicly advocating for the introduction of state support to protect enterprises and employment, a package of support measures, including a wage supplement, were introduced following agreement within the tripartite Malta Council for Economic and Social Development. Following this, social dialogue played an important role in the introduction, updating and phasing out of COVID-19-related support measures.

Sectoral agreements are rare in Malta, with most agreements occurring at company level. During the COVID-19 pandemic, trade union interventions were evident in some of the hardest hit and most essential sectors. Industrial relations were vital in agreeing changed working conditions for aviation workers in order to safeguard jobs, reaching agreements on improvements to working conditions for healthcare workers and ensuring that educators were prioritised for COVID-19 vaccination.