IT professionals’ shortage fuels wage inflation – report
IT personnel with online gaming companies are paid a total remuneration package that is five per cent higher than elsewhere in the industry.
Wage inflation in Malta’s information and communications technology sector has been fuelled by supply of IT professionals increasingly falling short of demand, a report has found.
The shortage is expected to continue to plague the industry over the next 12 months, and will be acutely felt as igaming companies – offering above-average packages – develop their presence on the island. Wage inflation will continue to feature over the next year, but its momentum will weaken.
More than 60 per cent of companies which responded to Misco’s 2012 report on the salaries and benefits in the ICT sector confirmed that recruiting IT talent is becoming even more difficult locally. More than 85 per cent of companies believe recruiting constraints will remain unchanged or worsen.
The report covers 700 remuneration packages gathered from local ICT companies. Just over 55 per cent of participating firms employ up to 50 people; 34.5 per cent between 51 and 150 people, and 10.3 per cent more than 150.
Compiled using information gathered between February and April, the study found that firms have had to enhance salaries and benefits to retain key team members. Some remuneration packages have seen increases of up to 19 per cent.
The report covers 22 posts in several ICT companies based in Malta ranging from managers and engineers to analysts and developers. The ICT companies included in the sample ranged from IT service firms, software houses, web developers, IT departments in the financial services sectors, mobile telephony operators, and organisations involved in satellite technology.
“Wage inflation could be very damaging to the sector’s competitiveness,” Misco’s business development director Morgan Parnis and head of the business advisory unit Ritienne Bondin said.
“The need for further training and education is, as such essential, to retain competitiveness. Meanwhile, non-Maltese are potentially being recruited for highly specialised jobs. However, there is still a great deal of poaching going on.”
Information technology managers saw their remuneration packages increase by four per cent this year, with other managerial posts seeing rises of between one and two per cent.
But the highest increases have been enjoyed by people occupying posts like software testers (19 per cent), senior software developers (12 per cent), systems and IT engineers (nine per cent), and systems analysts (eight per cent). The salaries of quality analysts and systems analysts remained stable, but those of junior software developers and of web developers dropped by two per cent over the past year.
Misco’s research has found that, on average, IT personnel engaged with online gaming companies are paid a total remuneration package that is five per cent higher than that paid to people occupying similar roles elsewhere in the IT industry. This has made recruitment and retention even more challenging for other players.
The growing financial services industry has also been a remuneration game-changer for the IT sector, particularly as heavy investment in cutting edge technology infrastructure has created significant demand for professionals. Besides above-average remuneration, financial services players have also had to resort to offering special conditions like reduced summer hours, and recruiting non-Maltese.
Fringe benefits – including company cars, health and life insurance, club memberships and other allowances – make up to 17.5 per cent of the total packages attached to some roles like managers, technical specialists and software developers. The report does not delve into the taxability or otherwise of the perks.
Almost one in four companies use performance as a yardstick to determine increases or revisions in remuneration packages. Twenty-two per cent of firms determine increases and revisions according to pre-established salary scales, 22 per cent use market changes, 11 per cent company profitability, and just six per cent individual negotiation.
Meanwhile, 89 per cent of firms use a performance management system throughout their organisation, while the rest said they did not have one in place. In 56 per cent of the participating companies, all employees below management grade are entitled to overtime.
Three in four companies offer a flexible hour scheme to their teams, while 25 per cent offer employees shorter working days in the summer.
At the opposite side of the spectrum, the talent pool seems fully aware of its market value.
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Jonathan Camilleri
Aug 4th 2012, 07:04
The latest suggestion made by people interviewed on Bloomberg, in view of the shortage of IT skills, is to utilize the European Central Bank to create some liquidity in the market. The grants being provided have a delay which do not make up for the time it takes to get the money. Timing bears an interest cost in finance, and, this is intrinsically the business model of banking, investment and finance industries.
They who made the wheels turn for centuries, by creating fake money, may use real money to stimulate investment, rather than keeping gold buried in the safes and ducking their hands in the sand hoping the storm passes.
Jonathan Camilleri
Jul 31st 2012, 19:54
Learning curve, and, training periods, seem to disappear from management, in view of pressures, deadlines and the rush that is the direct result of in appropriate planning at times, and, other issues, such as urgent requirements.
The adrenalin rush of capitalism leads to stress, distress, and, a decay of the progressive business requirements, which leave no room for learning, as in a learning organization.
Karl Marx had predicted through dialectical materialism, that the motivation to achieve goals leads capitalists to contribute to their own decay. The side-effect of progress is unemployment, and recessions which have featured within economic trends at least since the 1700s, notwithstanding the progress.
Organisations need to cater for the social responsibilities they have especially in depressed times, and, a humanistic philosophy does not hurt competition; it stimulates consumption.
Jonathan Camilleri
Jul 30th 2012, 20:42
Do IT entrepreneurs ever bounce off the job descriptions with people who are into education and training, because there is surely a skills gap, and, this is not the fault of the majority of students, who study.
It is not fair that they are left out of a job because the educational institute has not updated its curriculum in line with the times, and, something needs to trigger them into continuing to do so.
What about the current IT students, do you just want to throw them away to the lions?
Jonathan Camilleri
Jul 30th 2012, 14:05
I think that compared to the wages earned by our European and American counterparts, the salaries and remuneration packages of IT professionals are still a bit of a joke. For example, some software engineering positions are advertised with €100k yearly salaries, and, I have not yet encountered a similar remuneration package for a software engineering position in Malta.
One might argue that Malta has a low cost of living, however, isn't that just a lame excuse for keeping wages low?
Jonathan Camilleri
Jul 30th 2012, 13:50
Do IT Entrepreneurs ever carry out a skills gap and consider how long it takes to master a particular technology prior to coming up with expectations?
Do they take into consideration the ever-changing technologies, and, which of them will be required for IT projects?
How good is their ability to forecast the demands of technology, or do they just expect candidates to be a perfect match for their needs?
Where is human resources management heading, other than for measuring performance?
What are the human resource responsibilities within a technology firm? Do they include training?
John Mallia
Jul 30th 2012, 13:48
Being offered another job or an increase solely depends on the individual and not only the supply demand ratio. If the company finds a person has high quality skills he / she would be in a much better position to change career and negotiate a better salary.
Jonathan Camilleri
Jul 30th 2012, 13:34
When my supervisor made an undertone promise that he would have me leave the company in 2009, presumably because he did not like my face, it was perfectly legitimate and I could not do anything about it.
When I called him publicly a questionable leader, I was threatened that they would take me to court, for expressing a negative opinion about him. Why should I care? It is my opinion, and, I will repeat it in court.
This is the arrogance of software company managers.
Jonathan Camilleri
Jul 30th 2012, 12:25
I have been bullied when I asked for training, I have been dragged into all sorts of meetings when I asked for information, and, I have been treated like a dog by recruitment agencies for years.
Now the IT business is complaining that they have shortage of skills?
A friend of mine graduated from MCAST and she could not find a job in IT, so she had to take up a job which is not IT related and which carries a miserable annual salary of €7,000. Does that sound like a good package to you?
The sources of information surveyed by MISCO reports, are clearly cherry picked positions, and, do not take into consideration the wider social view of people who have IT skills but cannot get themselves a job.
In any case, why am I surprised, MISCO is a private business whose interest is to market the business interests, rather than speak holistically about employment and unemployment.
I just felt I had to contribute with the darker aspect of unemployment, and, what unilateral, bottom-line oriented capitalism can lead to. Of course, not everyone is like me, for example, Steve Jobs was more successful than me, but I still remain a human being, who still hopes to find employment in the IT business, and, I have a feeling that if we take off the "crap" from the recruiters' heads such as "5 years commercial experience required" to work in a Junior Development position, it might give a better chance to students to make a career out of IT.
Currently the recruiters and executives seem to be creating a barrier to job entry simply by having too many requirements. It is not the job-seeker's fault that technology requirements are complex, that is the role of the competence of technical architects who must work with vendors of technology (e.g. NET, Google, Java) to simplify the coding and production process in a way that any person with a logical brain can learn computer science and the important and relevant aspects of say, a programming language, or, other specific skills that are required by IT.
One has to mention that IT is a business which is based on high specialization of roles, and, regrettably the persons who have a generic and wider exposure to IT, as opposed to specialized skills, seem to be taken as entry level persons. This may be true for specific projects which require skills, however, the potential of a person who has a wider set of skills may be better for the long term, because it might indicate that the person is so curious that s/he prefers to be exposed to as much technology as possible without specializing into any. It might be a weird yet feasible option for a well-paid career.
Jonathan Camilleri
Jul 30th 2012, 12:14
Recently I was hired for a project, which was planned initially to take 1 and a half years, and, subsequently it was downscaled down to 3 months. This creates a bit of instability, however, the recruitment companies and legislation are guaged towards the needs of the business, and not towards the human resource needs, such as the need for a stable job and a lifelong career. Who cares about that these days, nobody is indispensable, as the CEO of a bank whose major shareholder is a religious institution was once quoted saying. This means that in the executives' eyes - the executives who earn hundreds of thousands in salaries and bonuses, software developers, testers etc are mere disposable employees (i.e. resources on a project).
My contract was terminated via SMS on a Friday night, and this means that the verbal plan for three months of work was simply discarded by a change of "mood", so to speak. The reasons require separate discussion, however, the point is that IT project managers are not reliable when it comes to promising careers, and, that is my experience of working in IT.
I was treated like a dog by IT companies, and, when I had distress issues, they preferred discarding me rather than guaranteeing that I could take my job back after a brief vacation.
I could mention many names, and, get myself into all sorts of cases for defamation, because I would then have to prove myself innocent, by their arrogant standards. I have no issues spelling out names of certain people at the appropriate courts of law, however, the issue here is the lack of ethics by which my person, dignity and career has been treated.
Every executive brushes away responsibility when all has been said and done, and, negotiation of a good salary is an important aspect of recruitment.
Jonathan Camilleri
Jul 30th 2012, 10:13
From the lens of a person who has tried to start-up business, the high wage costs is a real turn off, because, even though some business incentives are provided - again by the Government of Malta - it is hard to compete with established firms who make it more difficult to compete through business strategies and by leveraging their existing organisational structure and expertise available.
Breaking into the market is not made any easier because if I go to a bank they ask for 30% upfront commitment, and, experience shows that a project can mean anything between an installation worth €15 up to a project worth millions of euros. How can the small entrepreneur compete on venture-based projects?
The Malta Business Bureau has been promoting the use of IT to automate and help business, however, if nobody helps IT professionals to remain up-to-date, and, employed, there won't be a long-term benefit for IT entrepreneurs. Thus iGaming companies will be forced to move to other tax havens and leave people unemployed or out of business.
Entrepreneurs need to understand that in order to keep talent, they have to nurture talent, and, this is stated by various business magazines such as Harvard Business Review.
Arguing on the basis of 4-5% percent and trivial differences won't make the big differences in revenues, and, the focus needs to remain on business development, rather than on putting a wage freeze on IT people. However, IT people might agree to work for less, they will probably give you less value than you would get for lower incomes, and, you know why? Because the more you focus on a specialization, the better you become at it.
The difference between the IT industry and other ignorant industries is perhaps the focus on Human Resources, which has proven itself correct over time.
If you don't invest in your people, there will be no return, and, this is valid for any industry.
Economic officers have criticized approaches solely based on bottom line and decreased costs, yet, Maltese keep hitting hard on costs, in a desperate attempt to keep themselves competitive. I think it is just a sign that they are weak, and, this is expected to reflect negatively in the long-term. If you don't believe me, read motivational theory and leadership theories.
The rest of the commentators of this article do not seem to be aware and as such, one needs to develop awareness of how developing talent leads to improved performance, which time has proved right!
Jonathan Camilleri
Jul 30th 2012, 10:01
It is not just the wages that are inflated; even training costs are inflated, and, required by the IT industry. It is not always the case that IT companies finance training, and, the Government of Malta is providing financial incentives to the industry as well.
Why are the entrepreneurs so greedy?
Jonathan Camilleri
Jul 30th 2012, 09:33
The last time I had contact with an arrogant IT Manager, he said that my skills were good enough to be considered for voluntary work, whereas he had turned down my application for paid work because according to him I require more experience for the privilege to show my skills. Whilst experience is just an indication and does not really and truly measure skill effectively, I would say that some IT Recruiters are dreamers!
They should actually talk to the people before rejecting their applications. Perhaps, if they did that, they wouldn't have to push up wages that much because they can liaise with the "holy" executives to provide and finance training required by their business!
John Azzopoardi
Jul 29th 2012, 21:39
Maybe instead of turning out more lawyers and students with reading kind of diplomas, we should focus on encouraging students to take on IT training. Just a suggestion before someone goes balistic.
Joseph Caruana
Jul 30th 2012, 09:14
John , no one will stop you from resigning from the law course and attending an IT related course, this is a 'free' country, ...in this respect.
Jonathan Camilleri
Jul 30th 2012, 09:31
The problem is that IT Training costs money, and, quite a bit of it for that regard. For example a certification course lasting one week may cost €2,000, and, the IT Professional needs to keep abreast of the latest technologies, trends, and, certifications, which means that in addition to ordinary day-to-day expenses, the IT Professional has to dedicate a good part of his time and wages training.
Some IT companies provide training themselves, and, some do not.
My experience shows that IT companies and recruitment companies are hardnosed when it comes to recruitment, and, they just won't recruit people with little experience. As a matter of fact, it is common to ask for 2-3 years commercial experience with a particular expertise, and, this leaves MCAST students hoping to find a job, but probably not making their way through the snob culture of IT management.
I have been unemployed for over six months and nobody gives me anything. I have had to do jobs which are not IT-related because the IT industry is project-based, which means that if there is no work to do, the IT professional might find himself or herself out of a job in no time.
All the IT professionals have are promises of high wages. The wages reach the few who happen to have all the magic skills required by the project at hand, and, IT project managers never seem to plan ahead, because they assume that skills might be available on the job market. They need people, but they are not prepared to hire people with less experience than the "ideal". They keep searching for the right people and keep holding recruitment adverts with very demanding skills.
Sometimes I find myself asking "who is the superman who has all these skills?"
Jonathan Camilleri
Jul 30th 2012, 12:32
@John Azzopardi I studied IT, and although I am unemployed I take interest in other subjects, and, have taken courses in different aspects. It is because I prefer to keep some business skills and some IT related skills.
One has to question why ETC seems to have discontinued support for free training for IT courses. There was more selection back in 2007, and, now the only course available seems to be a Web Design course. ETC obviously needs to liaise with the private business industry to make funds available to everyone - not just those who can afford paying for courses upfront which is discriminatory in the knowledge of the high unemployment rates.
When asking the ETC executives they had not provided any explanation for discontinuation of certain IT courses such as programming in Java and .NET courses. What they intend to do is to provide grants - out of EU funds because national funds are wrecked apparently - by which people have to pay for the courses upfront.
This country needs finance and wealth, not wage cuts. Wage cuts might lead to deflation, decrease in consumption and an increase in reliance on public funds for social services, so we need to watch out the side effects of cost cutting as well.
Joseph Caruana
Jul 29th 2012, 16:26
Oh well , thank God, Smart City , turned out to be just Land Speculation, if not , the wages of these dudes, would have doubled, possibly trebled!
Jonathan Camilleri
Jul 30th 2012, 09:51
Why do you wish people to strive with lower wages? I am an unemployed IT professional and you are merely insulting. Can I drag you to court for defamation?
D Agius
Jul 29th 2012, 13:27
Actually, the IT industry in Malta is one of the lowest-paying in Western Europe. The UK isn't much better. Many Maltese IT professionals are now working on the mainland, where salaries are easily double the equivalent job in Malta, with only a 10-20% increase in tax (and a much better quality of life).
Please choose the reason of your report below: