Foreign workers in Malta paid €103.6m in tax last year
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Foreign workers in Malta paid €103.6m in tax last year

Since EU accession the amount of income tax and national insurance contributions paid by foreign workers in Malta increased from €15.3 million to €103.6 million in 2014, according to a report by the Central Bank of Malta which dispels many of the misconceptions about migrant workers, The Business Observer, distributed with Times of Malta, reports today.

Whereas in 2000, revenue from foreign workers accounted for just 2.4 per cent of personal income tax and national insurance contributions, by 2014 this share had risen to 10.1 per cent, the report found.

The amount of revenue collected from foreign workers increased by nine times during the period 2000 to 2014, whereas that from Maltese workers doubled.

Aaron Grech, the head of the Economic Research Department of the CBM, found that foreign workers boosted average annual potential GDP growth by 0.6 percentage points between 2010 and 2014.

The report challenges the impression that foreigners are taking Maltese jobs.

Foreign workforce should not be misconstrued as evidence that foreigners are crowding out Maltese workers

“The rising share of the foreign workforce should not be misconstrued as evidence that foreigners are crowding out Maltese workers. In fact, the increase in employment for Maltese nationals between 2010 and 2014 was nearly double that in the preceding four-year period.

“The evidence seems to indicate that the rising demand for labour by Maltese industries is too strong to be serviced by the supply of Maltese workers, even when the latter is expanding quite strongly due to a rapid rise in female participation,” the report says.

"Dependence on migrant workers is quite concentrated, with half of the entire workforce in entertainment & recreation, professional services & administrative support and in hotels & restaurants. Dependence on migrant workers amounts to nearly 29 per cent of the entire workforce in entertainment & recreation, 23 per cent in professional services & administrative support and 21 per cent in hotels & restaurants.

Managers and those employed in elementary occupations amount to nearly a third of all foreign workers. While managerial, professional and technical occupations still dominate the foreign workforce, there has been a very strong growth in the number of foreigners engaged at the lower end of the labour market.

“The probability that a foreign worker is a manager is more than twice the same probability for a Maltese. Similarly, the odds that a foreigner is employed in an elementary occupation are one and a half times that for the average Maltese. This is in line with the perception that foreign workers are employed at either end of the labour market – the higher end where skills are scarce and the lower end where jobs are no longer that attractive for Maltese workers,” the report said.

“There is evidence that in some sectors foreign employees may have acted as substitutes for local workers, e.g. in construction and hotels & restaurants, but it is harder to decipher whether in the absence of foreign workers, firms would have been able to induce more Maltese workers. In some sectors, like professional & administrative support services and in information & communication, the absence of foreigners could have resulted in too high a shortage of labour, and higher demand would have been very difficult to accommodate by simply raising wages to attract more effort.” 

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