The direct intervention by the government – particularly through Malta Enterprise – during the global economic crisis managed to save hundreds of jobs, according to a new report published by the European Commission.
Maltese companies survived the crisis with the help of incentives
According the study, four per cent of Maltese SMEs said that between 2008 and 2010, at the height of the economic crisis, they made use of government supported employment schemes in order to retain their employees and avoid layoffs.
In 2008 and 2009, Maltese companies, particularly those depending on exports, had gone through a rough period as Europe was hit by recession. Malta was not spared as its economic growth also ground to a halt. In order to lend a helping hand to ailing companies, the government had intervened directly with various firms, particularly those in the manufacturing sector, and offered various incentives to help them retain their workforce. These incentives were designed in accordance with EU rules.
The latest EU study shows that Maltese companies managed to survive the crisis with the help of these incentives while Malta continued to register one of the lowest unemployment rates in the EU. “This study proves that Malta’s direct intervention in the SME sector was providential and saved hundreds of jobs,” a Commission official told The Times Business yesterday.
“The various tailor-made schemes have even incentivised Maltese employers to think out of the box and invest for better times.”
SMEs are considered to be the backbone of the EU’s economy. According to the study, in 2010 there were 20.8 million enterprises in the non-financial business economy, providing employment for 87 million people in the EU. Between 2002 and 2010, SMEs had a much higher employment growth rate (one per cent annually) than the large enterprises (0.5 per cent). On average, the annual employment growth rate of SMEs was also higher than the growth rate of the total EU population (0.4 per cent annually) and the corresponding growth rate of the total EU active population (0.8 per cent).
The EU study shows that within the SME class, micro firms, which employ less than 10 employees, are responsible with 58 per cent for the highest proportion of total net employment growth in the business economy. At the same time, new firms – younger than five years – are responsible for an overwhelming majority of new jobs. New enterprises operating in business services create more than a quarter (27 per cent) of the new jobs, while the new firms in transport and communication contribute least – only six per cent.