Historical Trends and Development of Digital transformation in partner country

What is the national structure of the economy?
Introduction to the Economy of Malta

The Maltese economy is best understood in its historical context, comprising a largely service-based economy which has evolved of the decades from a dependency on the British naval presence in the years after achieving Independence in 1964, to a more diversified structure relying on tourism and hospitality, financial services, foreign trade and various other economic sectors. This highly industrialised economy benefits from the island’s strategic location in the centre of the Mediterranean as well as a predominance of spoken English in the Maltese workforce and a low corporate tax rate.

Statistical and Sectoral Analysis of the Economy of Malta

The Gross Domestic Product (GDP) of Malta for 2020 amounted to approximately 12.8 billion euros, a marked decrease of 5.7% from the 2019 figure of 13.6 billion euros. This corresponded with a decrease in Gross Value Added (GVA) which was largely due a larger drop in services particularly in the hospitality industry, transportation and storage activities and trade activities and can largely be attributed to the impact of the COVID-19 pandemic on tourism as well as consumption by locals. The decline occasioned by these sectors was somewhat compensated by growth in other sectors particularly those related to ICT activities.

The Chart above illustrates the structure of the Maltese Economy through an analysis of the GDP identity from the production side, namely with regard to the GVA by NACE Sector. As the Chart shows the largest sections of the economy include those related to retail, transport, manufacturing, financial services, hospitality and tourism as well as the public sector. [1]

Development of digital transformation in recent years
Introduction to the development of digital transformation

Digital transformation has increasingly come to the forefront of public consciousness in Malta, particularly with regards to the potential positive and negative impacts this transformation could have on the labour force as well as the efficiencies that it can offer businesses and individuals. In the 2019 European Commission Country Report on Monitoring Progress in National Initiatives on Digitising Industry Malta was given an overall score of 57.7 and a ranking of 12th out of the then 28 EU Member States. This puts Malta firmly in the medium performing cluster of countries showing some substantial progress in digital transformation.

The key focuses of Malta’s digital strategy in recent years have been ensuring a high level of Connectivity throughout the country as well as the Use of Internet Services by citizens. On both of these fronts Malta has experienced substantial improvements with universal access to Fixed Broadband, Fast Broadband and Ultrafast Broadband for the entirety of the population by 2018, with a substantial increase in the percentage of the population making use of Mobile Broadband. Malta also scores well above the EU average on most indicators on digitalisation including use of social media, reading news online and making video calls.  Conversely Malta still lags behind the EU average in terms of those making use of eGovernment services, provision of eHealth services and the percentage of the working population equipped with e-skills.[2]

Key Training and Fiscal Incentives in the Digital Transformation Process

A key indicator of the Maltese government’s efforts to boost the digital transformation process are a number of fiscal incentives which it has offered businesses and individuals in recent years to promote the development of STEM centric and digitally empowered economy, targeting established enterprises, startups and students to ensure the long-term viability of this process. Below are some key fiscal incentives including some information of the nature of the incentive and its impact on digital transformation in recent years.


The Malta Information Technology Agency (MITA) has instituted the YouStartIT programme which is a training programme for early-stage tech startups. This initiative sees startup founders validating their startup idea to understand whether their project is viable and worth pursuing. Through this publicly funded course these entrepreneurs gain the ability to clearly frame the problem they wish to solve and identity and verify the market for their tech solution. [3]

Fusion R&I

The Malta Council for Science and Technology (MCST) has managed a national funding programme to drive and support local research and innovation and to bring this research into a state of market readiness. The stated aims of this programme include:

  • Raising the level and profile of locally funded research
  • Ingraining R&I at the heart of the Maltese economy
  • Spurring knowledge-driven and value-added growth
  • Sustaining improvements in the quality of life[4]

E-Skills Malta Foundation

The eSkills Malta Foundation is a National Coalition made up of various representatives from Government, industry and education, who can contribute to the increase in digital skills and the development of the IT profession. The Foundation’s main areas of concern are advising stakeholders on matters of eSkills policies, contributing to ICT educational programmes and professional development, and championing campaigns to promote eSkills in the population. This gap in eSkills under Human Capital is one that has been repeatedly identified as a leading barrier to digitilisation in Malta. The Founding members of the Foundation are the Ministry for Education and Employment, the Malta Information Technology Agency, the Malta Communications Authority, the Malta Enterprise, The Malta Gaming Authority and The Malta Chamber of Commerce Enterprise and Industry.[5]


The Malta Communication Authority (MCA), as the entity responsible for the implementation of the National eCommerce Strategy has offered eCommerce training for businesses under its eBiznify programme. This programme was both publicly and privately funded, with the ultimate aim of assisting businesses in taking the leap into a concrete online presence beyond marketing strategies, with advice on the setting up of eCommerce services and platforms.[6]

FastTrak to e-Commerce

The Malta Communications Authority has also organised a number of hands-on information sessions on the use of digital marketing with the aim of helping participants improve their businesses by establishing an effective online presence.  Its main focus areas were Digital Marketing Concepts, Social Media Marketing, Email Marketing, as well as a general overview of the eCommerce landscape in Malta. The objective of these practical sessions was to support and mentor local businesses on how to boost brand awareness, generate more leads, and improve customer relationships.[7] This initiative was followed by a similar initiative named “Fast Trak to Mobile” which focused on similar themes but centered around mobile commerce. [8]

Malta Cloud Forum

The aim of the Malta Cloud Forum (MCF) is to facilitate the uptake of cloud computing, particularly by micro-organisations and SMEs. The forum therefore strives to increase and diffuse cloud awareness and create an innovative local culture that supports, embraces, and benefits from cloud computing. The MCF is a multi-stakeholder forum of parties, comprising representatives from consulting companies, civil society, government and academia.[9]

Business Start and Microinvest

Business START is an incentive offered by Malta Enterprise which offers seed and growth funding for small start-ups. Start-ups undertakings that are still in their early development phase may receive an initial grant of up to ten thousand euro (€10,000) to help them develop their business proposal. Start-ups that present a viable business plan may receive additional support linked to full time employment which may reach up to twenty thousand euro (€20,000) per quarter.[10]  Similarly, Microinvest is another scheme established by Malta Enterprise which encourages undertakings, not only start-ups but also family business and the self-employed, to invest in their business, so as to innovate, expand and develop their operations. [11] Both of these schemes target digitalization areas such as the use of social media, mobile services, cloud technology, the Internet of Things (IoT), development in cyber security and data analytics amongst others.

Skills Development Scheme

Through this scheme, Malta Enterprise aimed to support business undertakings to provide training to develop and update the skills and knowledge of their workforce. This initiative complements other eSkills related programs discussed above by supporting training and knowledge transfer initiatives that will support employees to acquire new skills, know-how and knowledge.  [12]

Business Re-Engineering and Transformation and Change to Grow Schemes

Malta Enterprise has launched two twin schemes with the Business Re-Engineering and Transformation Scheme having the aim of supporting small and medium-sized enterprises (SMEs) to realign their business activity and restructure their business in order to optimise the use of technology and embrace green technology and practices. Through this scheme SMEs are provided with support from external advisors which will enable them to accelerate development.[13] This Scheme is then re-inforced through the Change to Grow initiative whereby businesses are incentivised to kick-start transformation processes, oftentimes, but not exclusively, on the basis of the advice received under the previous scheme[14]

What are the forecasts for the future?

The advent of the COVID-19 has undoubtedly quickened the pace for digitalisation the world over, and this trend has also had its impact on the Maltese society and economy. Throughout 2020 and the first half of 2021 vast shifts have taken place in societal needs, bringing about pressure on the existing digital infrastructure and a realisation of the impending need to upskill and reskill students, employees, and other individuals to face up to the needs of an increasingly digitised world.

Evidence of these changes can be found in the Maltese government’s use of a home schooling and teleworking policy, obliging schools and businesses to foster a culture of digital competency whilst also providing those tools that are necessary to enable the smooth transition from in person communication to online interaction. These policies have also brought into sharp relief flaws in digitalisation process in recent years as well as potential barriers for this digitisation in the future, particularly centring around economic and social disparities in accessibility to technology as well as the lack of e-skills particularly in the adult population. In response to these challenges Malta has seen increased investment in its already ongoing digitisation process as well as the recognition that connectivity can be considered a right of individuals and amongst the obligations that the Maltese welfare state should be tackling.[15]

However, the implications of this digitalisation process cannot be accurately forecast with commentators and economists still playing catchup as to the impacts of these unforeseen pandemic on the local economy. Amongst the key changes during this period have been those to consumer trends, with a vast increase in the use of technology in order to solve complex problems, create new business models, and reach untapped markets.  The increase in the use of e-Commerce platforms coupled with delays in global shipping as well government incentives have given the necessary impetus for many businesses to launch an online presence, however as the COVID-19 vaccination program reaches its peak and the inevitable relaxation of measures takes place it remains uncertain as to whether this trajectory in the investment in digitalisation by businesses will continue.[16]

The forecasts for the future of digitalisation in Malta are therefore hard to assert, and should be understood within the context of the various government innovations in terms of legislation, strategic documents and institutional frameworks to be discussed in the subsequent Chapter to this report. However, in establishing an understanding of the timeframes for some of the expected milestones in digitisation one may refer to the Maltese Economic Vision as launched in July of 2021 entitled “A Future-Proof Malta. In this document the Government recognises the scale of the digital transformation needed within the country, citing the low-level digital skills found in the population particularly among older workers, and commits to the introduction of policy measures to promote re-skilling over the next decade. These commitments accompany others related to the digitalisation of public administration and strengthening the fintech, gaming and ICT sectors which form part of a vision which the government refers to as that of a “digital island of the future”. [17] This emphasis on digitalisation as one of the key pillars of the government’s economic vision gives a positive indication to those forecasting the future of digitalisation in Malta, an optimism tempered by the lack of concrete timeframes attached to these government proposals.

National framework
The Malta Digital Innovation Authority Act (MDIA Act)

The MDIA Act came into force in July 2018 with the aim of establishing the Malta Digital Innovation Authority (MDIA). MDIA’s role can be summarised under two key points namely that the MDIA was established to promote and develop the innovative technology sector in Malta but also to give it the State’s stamp of approval whilst developing the necessary framework of regulation around them. The stated objectives of the MDIA as enshrined under its founding act is the:

  • Promotion and enforcement of ethical and legitimate criteria in the design and use of innovative technology arrangements;
  • Harmonisation of practices and facilitating the adopting of standards on innovative technology arrangements in Malta in line with international norms, standards and rules;
  • Promotion of transparency and auditability in the use of innovative technology arrangements;
  • Promotion of the ease of accessibility to the facilities provided by publicly available innovative technology arrangements and the recognition and implementations of the right of exit, withdrawal or termination of participation from any arrangement.[18]

Innovative Technology Arrangement and Services Act (ITAS Act)

The ITAS Act came into force in November 2018 with the aim of supporting the previously enacted MDIA Act. Through the introduction of the ITAS Action regulation was provided for innovative technology arrangements (ITAs) and designated innovative technology services providers (ITSPs). This regulation was included within the broader scope of the MDIAA to which there is substantial reference throughout the act and aims to provide further structure for the Authority to recognise, categorise and regulate innovative technology arrangements, taking an approach designed to allow flexibility of application whilst simultaneously providing for the necessary regulatory safeguards.[19]

Virtual Financial Assets Act (VFA Act)

The Virtual Financial Assets Act came into force in November 2018 and was aimed at regulating the area Initial Virtual Financial Asset Offerings and Virtual Finance. This act allows for the classification of cryptocurrency as a VFA with a comprehensive regulatory framework to ensure that consumer protection and the growth of the industry occur side by side. This Act was pioneering legislation in the field of virtual financial assets.[20]

Strategic Documents
National eCommerce Strategy

The National eCommerce Strategy was launched in 2014 by the Parliamentary Secretariat for Competitiveness and Economic Growth and the Malta Communications Authority with the aim of supporting the take up of eCommerce and the provision of eCommerce related services by local businesses. As part of its broader strategy this document also sought to address the prospect for Malta to attract foreign companies providing eCommerce or ancillary services to establish operations in Malta. This strategy was divided into four pillars:

  1. Engendering trust in eCommerce: seeking to entice those that may still not realise the advantages that online shopping can offer them through the implementation of educational and ongoing awareness programmes.
  2. Transforming micro-enterprises: aiming to facilitate the proliferation of eCommerce activity by increasing awareness amongst potential sellers on the opportunities brought about by the use of internet technology and by supporting the latter in becoming more competitive, entrepreneurial, efficient and resilient.
  3. Taking SMEs and industry to the next level: establishing an SME business innovation framework that will support and ensure that both business and industry are equipped with the necessary tools and possess the right business acumen to tap into new markets and enhance competitiveness.
  4. Making Malta a Global eCommerce player: Explore and exploit the opportunities created by the advent of a stronger European digital single market, the developing North African market and the new entrants penetrating and disrupting mature industries.[21]


Digital Malta Strategy

The Digital Malta Strategy is a strategic document issued in March 2014 in a joint collaboration between the Malta Information Technology Agency (MITA), Malta Communication Authority (MCA) and the Parliamentary Secretariat for Competitiveness and Economic Growth. The Strategy lays out a number of key principles and actions with the ultimate aim of harnessing information and communications technology to impart a positive impact on the county’s economic well-being, particularly in terms of employment, industry and assisting small businesses. The Strategy outlines three major themes, namely, the Digital Citizen, Digital Business and Digital Government, which in turn are supported by three strategic enablers: Regulation and Legislation, Infrastructure and Human Capital. The key actions arising from these themes are of particular interest as they give some insight into which stumbling blocks to digitalisation the government considers to be most pressing.

Within the broad theme of the Digital Citizen actions are grouped around tackling security concerns, particularly with regard to children accessing the internet, as well as the issue of the universal accessibility of technology, both in terms of providing the necessary physical access to tech but also in the education of individuals to make good use of it, particularly with regard to basic digital skills. The actions falling under Digital Business can be grouped under initiatives to assist in the reskilling of the workforce, measures directed towards developing an entrepreneurial environment in the field of digitalisation as well as providing support in digital transformation and change management to existing companies. These actions can be seen reflected in the key training and fiscal incentives discussed in the previous chapter of this document. The final pillar, that of the Digital Government, is comprised of actions which envision the government administrative services becoming digitised for two main reasons; the ease of the consumer, be they commercial entities or private persons, as well as efficiency and accuracy of data handling and processing.[22]

Malta.AI Strategy

The Malta.AI Strategy “Malta: The Ultimate AI Launch Pad” was launched in October of 2019 by the Parliamentary Secretariat for Financial Services, Digital Economy and Innovation. The aim of this strategic document was for Malta to gain a strategic competitive advantage in the global economy as a leader in the AI field. As with the previous strategy this document sets out a series of three pillars which are then paired to three enablers. The Pillars are as follows:

  1. Investment, start-ups and innovation: The government sets out a number of initiatives aimed at generating investment in order to position the country as a frontrunner and centre for the application of emerging AI technologies
  2. Public sector adoption: The strategy document explores how AI can be deployed widely in public administration to improve citizens’ experiences, expand access to public services, and directly improve well-being. The document outlines how this can be used in pilot projects in the spheres of traffic management, education, health, customer service, tourism, and utilities. This point builds on the Digital Government initiative outlined the Digital Malta Strategy.
  3. Private sector adoption: This pillar outlines initiatives catered at enabling private companies to integrate AI into their company structures and across their organisations. These initiatives include both access to expertise and financial assistance.

The strategic enables for these pillars as outlined by the document are as follows:

  1. Education and workforce: The focus of this enabler focuses on the impact of the envisioned AI transformation on the country’s human resources and seeks to lay out a plan for re-skilling workers to make use of this technology whilst simultaneously increasing the number of specialists in the field.
  2. Ethical and legal: This enabler seeks to establish the world’s first national AI certification programme to provide a platform to practitioners and companies that wish to showcase ethically aligned, transparent and socially responsible AI solutions, building on Malta’s Ethical AI Framework Towards Trustworthy AI.
  3. Ecosystem infrastructure: The government proposes a series of investments in tools to enable Maltese Language AI solutions, initiatives to support data availability and actions to mitigate cybersecurity risks and facilitate cost-effective access to high-performance compute capability among other measures designed to create the underlying infrastructure to support a thriving AI ecosystem. [23]

National eSkills Strategy 2019-2021

The National eSkills Strategy 2019-2021 was launched in October of 2019 by the eSkills Malta Foundation, a Coalition of stakeholders on which further information was given in the previous Chapter. The stated aim of this strategy was to complement initiatives at both local and EU level to address the need for existing and new digital skills. The National eSkills is formed of twelve main recommendation areas which will be summarized briefly below:

  1. Developing a 3-year rolling plan to ensure that the strategic direction pursued retains full relevance on an annual basis.
  2. Developing a robust communications plans suited to a digital environment by utilizing various online mediums that are also being used by trainees, individuals, businesses and industries.
  3. Publishing an online reference technology board to serve as a benchmark for technology adoption and corresponding market usage.
  4. Funding sustainable initiatives business models taking into account aspects of project continuity as well as incorporating a triple bottom line which includes considering stakeholder interest, the environment and society.
  5. Providing students at an early stage with a fuller industry experience by inviting experts to the classroom.
  6. Supporting the introduction of ICT changes in curriculum across all educational structures, particularly to ensure harmonisation of new curricula across public, private and independent education organisations.
  7. Collaborating with industry to develop continuous profession development (CPD) toolkits to assist various industries in establishing the relevant core skills that shall be required in the coming years.
  8. Supporting initiatives at a national level leading to the provision of short-cycle specific training in order to support agile upskilling of the workforce in targeted areas of business.
  9. Developing a framework for grading and evaluation digital competence.
  10. Establishing initiatives that support a shift of youth focus from the consumer aspect of technology to participative use of technology and online systems.
  11. Reducing the mismatch between the skills available and those demanded for thedigital transformation of the.
  12. Opening up to a professional structure in the domain of ICT whereby there would be a structure that supports recognition for IT professionals at local level.[24]

The role of social partners

Maltese national social partners discuss and promote their views at the Malta Council for Economic and Social Development (MCESD),[25] which is an advisory council issuing opinions and recommendations to the Maltese Government on social and economic matters. The MCESD is the official fora for social dialogue in Malta. Considering its tripartite format, social partners expect that the Maltese Government listens and takes up recommendations prior to implementing important reforms.

A second important tripartite institution for social dialogue in Malta is the Employment Relations Board (ERB),[26] which is set up according to the provisions of the Employment and Industrial Relations Act and is tasked with making recommendations on national standards for conditions of employment. The ERB representatives are nominated by the social partners that form part of the MCESD.

Trade union density accounts to around 45% of Malta’s workforce and is mostly concentrated in the public sector and other traditional sectors such as manufacturing. Coverage is less found in other established sectors such as financial services, gaming, construction, and tourism.

Apart from the public sector, where a collective agreement is signed between Government and several unions representing different categories of employees (such as in the medical and education professions), in the private sector collective bargaining is characterised by a decentralised system. This means that in the absence of multi-employer and sectoral collective agreements, collective bargaining takes place at company level. As such the employers’ associations are not direct participants to the process.

Decentralised collective bargaining in Malta is viewed as a system that is more in tune with the exigencies of individual firms and ensures flexibility in wage setting. From a national perspective, wage flexibility is considered as a main trait for preserving economic competitiveness in the context of a small open economy.

Apart from wage increases negotiated in collective agreements, all employees in Malta qualify for annual statutory wage increases linked to the cost of living; an economic formula referred to as the Cost of Living Allowance (COLA).[27] Over time, collective agreements have also started including more non-wage clauses such as family-friendly measures.

For the past decades, Malta largely experienced harmonious industrial relations, with no firm changes expected to the system in the foreseeable future. In this respect, discussions relating to the EU autonomous framework agreement on digitalization are likely to take place among social partners, with outcomes contributing to national strategies and/or legislations, while specific recommendations are communicated to respective members for adoption at company level.

State of play on the main issues outlined in the Autonomous Framework Agreement on Digitalisation
Digital Skills

Being a small open economy deprived of any natural resources, Malta depends entirely on its human capital to create added value. For this reason, Malta has developed a high-level educational system made of both academic and technical institutions that have produced qualified persons for all aspects of economic activity. Nevertheless, as Malta experienced high economic growth in the years prior to Covid-19 and as work functions rapidly develop, primarily because of digital transformation, labour market challenges escalated. These related to (i) insufficient supply of labour for work categories of all skills sets, (ii) lack of interest by Maltese nationals to work in certain trades, (iii) inadequate skills forecasting, and (iv) slow adaptation of educational providers to the needs of industry.

To address these issues Malta has looked at different solutions, some of which aimed for the short term, while others for the medium and long term. For the short term, in the years prior to Covid-19, Malta imported substantial amount of labour, both from the EU and third countries, to meet the demand generated by high economic growth. In parallel, comprehensive debate took place at national level on how to improve the provision of home-grown labour skills to meet the demand of industry. As explained further below, several initiatives were undertaken to address the skills gap through better forecasting. Finally, fully aware that the level of their competitiveness depends on productivity, enterprises in Malta proactively provide continuous training to develop the skills of their workforce. Digital skills are one of the most important components of training provided.

Training or further study opportunities are also widely available with the support of several national and EU funded opportunities provided through Government-led schemes[28][29] and other national public agencies’ initiatives such as by the Employment Service Agency (Jobs Plus)[30], the Malta Development Bank (MDB)[31] and the Malta Financial Services Authority (MFSA)[32].

Social partners in Malta agree on the need for more take-up of digital skills at all levels due to the impact of digitalization on the workplace. Trade unions acknowledge the positive impact on business operations while also express the concern of the impact this may have on workers. Nevertheless, they acknowledge that the digital transformation will continue nonetheless and that the key to overcome the issue lies in the upskilling of competences. This is not a simple task due to the challenge that may be experienced by some to accept or adapt to digitalized systems.

On the other hand, business organizations are all for technological advancement at enterprise level and are active in promoting the take up of digital tools as well as identify barriers. They also push for support programmes that provide adequate training and encourage employers from within their membership to enroll employees in training.

Social partners see the value of social dialogue in this area and are committed to contribute to national policies through the established fora such as the MCESD, based on their experience and feedback provided from members.

Modalities of Connecting and Disconnecting

Modalities of connecting and disconnecting, or as it is better known, the right to disconnect, is not an entirely new topic, with some EU member states having already legislated on the subject matter in recent years. In Malta the issue was not predominant prior to Covid-19. It was only brought to the fore of public debate as remote working became mainstream due to the pandemic, which increased awareness around the topic.

For many years remote working was associated with flexible-work arrangements, requested in the great majority by female workers, due to care responsibilities. Provisions for remote working have been included for applicable categories of workers in collective agreements, particularly for public sector workers. The practice, while not totally absent, was less common in the private sector.

Covid-19 changed the perception of remote working entirely. Although the change was initially brought about by convenience rather than conviction, both employers and employees quickly adapted, opening horizons to new operational and work practices for the future. This phenomenon was studied locally in a report undertaken by the Malta Business Bureau on the implications of working from home on business and the environment.[33] The study concluded that remote working positively impacts work satisfaction and productivity although this diminishes progressively towards a senior level. Positive environmental aspects are derived from less road congestion although on the negative side household energy and water consumption increases. Some barriers to the work environment relate to communication and social interaction with co-workers. However, other research suggests that one of the biggest obstacles to remote working is the challenge of blurring between work and private life.[34]

The Minister within the Office of the Prime Minister responsible for social dialogue announced in November 2020 that the Maltese Government was considering making the right to disconnect legally enforceable, even prior to any EU initiative.[35] This refers to a Maltese MEP-led motion for a European Parliament resolution calling for an EU Directive on the right to disconnect, which was also strongly motivated by the increase of remote working across Europe due to the pandemic. The resolution was adopted in December 2020.[36]

In July 2021, the Maltese Government announced that as from October 2021, civil servants, whether working physically or remotely, will have the right to disconnect, which allows them to disengage from work and refrain from participating in work related communications.[37] Following the November 2020 announcement, no further public statements or tripartite discussions took place between Government and social partners on regularizing modalities for connecting and disconnecting in the private sector.

Social partners’ discussions on the right to disconnect has been very much centred around the aspect of remote working. Employers view the opportunities related to remote working and the use of digital services in the workplace as self-evident, namely for the potential to improve work-life balance for employees by eliminating long commutes and mold their lives more easily around family life. It is broadly acknowledged that remote working could blur the line between work and private life, although this does not lead to a common position among social partners on the need for legislation. Trade unions tend to emphasize the difficulty to disconnect from work while at home and the stress levels this could lead to. Employers’ representatives believe that working hours are regulated and these should be respected through good management processes such as by assigning deliverables that can be met within the working hours for which employees are contracted for.

Both employer and worker representative organisations see the scope for social partner dialogue to jointly address these issues.

AI and guaranteeing the human in control principle

Artificial intelligence (AI) is increasingly becoming a core component of goods and services. It has great potential to improve standard of living as well as to increase the competitiveness of companies. Nevertheless, there are certain risks with AI that should be kept in check, particularly the human in control principle.

In recent years, AI has gained more traction in Malta’s public policy. As referred to earlier in this report, in October 2019, the Maltese Government published Malta’s national AI strategy[38] with the objective of creating a new economic niche and positioning Malta as an investment destination for the sector, particularly for start-up support and innovation. It also envisages further AI solutions adopted to improve services by the public sector. The strategy also focuses on the requirements for the education and workforce, a legal and ethical framework as well as infrastructure.

A special task force was established made of academics, entrepreneurs, and experts to provide a holistic approach for the sector. The progress in the implementation of the Maltese national AI strategy is promoted on a dedicated web portal.[39]

As stated above, the human in control principle is of strategic importance for there to be trust in AI systems. They require strong governance and control practices. For this reason, the Malta AI strategy is complemented by an Ethical AI Framework[40] to support AI practitioners in identifying and managing the potential risks of AI. This focuses on four main areas:

  • Human autonomy: humans interacting with AI systems must be able to keep full and effective self-determination over themselves;
  • Prevent harm: AI systems must not cause harm at any stage of their lifecycle to humans, the natural environment or other living beings;
  • Fairness: the development, deployment, use and operation of AI systems must be fair;
  • Explicability: end users and other members of the public should be able to understand and challenge the operation of AI systems as required for the particular use case.

Malta has also developed a certification framework that is technology neutral and voluntary. It believes that this will be used by reputable organisations that wish to send a positive sign of recognition in the process of building trust and transparency. The certification framework is managed by the Malta Digital Innovation Authority.[41]

Social partners in Malta share the view on the benefits of Artificial Intelligence and what its limits should be. On the positive side there is the efficiency in business processes and on the other hand the increasing dependence on AI raises other concerns such as around issues of cybersecurity. In terms of impact on employment, Unions emphasize that distribution of AI technology should not lead to job losses. On the other hand, business organisations acknowledge that with the advent of successive technological advancements some job functions may be lost, but also note that others are created. They argue that this cyclical process therefore ensures that whilst economies develop towards a point of increased efficiency, the workforce remains gainfully employed in the industries that surround this advancement.

Social partners also agree that despite the comprehensive AI strategy launched by the Maltese Government, there needs to be a bigger drive, a horizontal one, in terms of implementation. Very little has been done in terms of integrating outcomes of that strategy into tangible policy solutions. Employer social partners also expressed the concern that AI is not present enough at the workplace and that greater uptake is necessary. It is noted that there is a shortage of skills within the workforce and great disenchantment. Nevertheless, the advent of Covid-19 has accelerated digital transformation and this needs to be reinforced by necessary financial schemes to accelerate the uptake of AI at the workplace.

Respect of human dignity and surveillance

There is a broad understanding among stakeholders in Malta that surveillance at the place of work must take place only for adequate reasons. There are merits to it such as for example for security reasons and to expose any dishonest activity taking place at the workplace, but this should not be to the extent of impinging on the employees’ right for privacy.

There is little research on the subject referenced in Malta, albeit a study conducted in 2013 by a Maltese researcher as part of advanced academic studies, which focused on workplace surveillance among graduate professionals in the Maltese public sector. A summary was featured by Eurofound.[42] In the study, most interviewed workers claimed that monitoring systems resulted in a loss of dignity and lack of empowerment, which created a sense of discomfort. The greatest concern was on how the organization managed the monitoring system.

Nevertheless, there is no specific regulation on employee monitoring and surveillance in the place of work in Malta. This is regulated more broadly in the context of the Data Protection Act of the Laws of Malta and its subsidiary legislation.[43] Furthermore, the Information and Data Protection Commissioner adopted the 2020 European Data Protection Board’s (EDPB) recommendations on European Essential Guarantees for surveillance measures.[44]

Therefore, in the absence of specific regulation, monitoring, rather than surveillance, is permitted if it is relevant, not excessive and implemented in the least intrusive way possible. While employers are not required to obtain express consent for monitoring if the above criteria are fulfilled, they should inform the employees about any monitoring that is carried, for which purpose, and how data will be used.[45]

There has not been elaborate discussion among national social partners on the subject matter. As stated above, there is general agreement that surveillance at the workplace should be done for adequate reasons. Unions also expressed a more specific opinion in the context of remote working, stating that any surveillance should be strictly work related. From their end, business representatives consider the need for surveillance for operational and productivity reasons. While they support policies measures that protect employees, they express caution with respect of creating a litigation culture. They would like to see an educational approach through positive communication among employers and employees.

Both employer and worker representative organisations see the scope for social partner dialogue to jointly address these issues.

Challenges and opportunities faced by social dialogue deriving from the digital transformation of the world of work

On the positive side, industrial relations in Malta are generally harmonious and social dialogue takes place at the MCESD, a tripartite institution. Social partners are open to discuss matters of national importance and come up with solutions that are mutually beneficial. Nonetheless, the role of social partners in Malta’s industrial relations framework is a consultative one. In the absence of collective bargaining by social partners due to Malta’s decentralized system, they can only come up with policy recommendations. Depending on the relevance of the topic, this is either legislated upon by Government, or communicated to members for voluntary action.

Nonetheless, in the context of Malta’s size and economy, Maltese social partners are small organisations. Despite all good intention, they often lack the capacity to engage on an extensive range of issues and can only focus resources on selective topics. Priorities change over time and are influenced by both international and local trends.

Maltese social partners require better support to increase capacity for a stronger engagement and contribution to national policy making. The European Social Fund (ESF+) can play a role in this respect. In a document published in 2021 for consultation[46] by the Maltese Government, the ESF+ programme is being earmarked to support the capacity building of partners to strengthen social dialogue and their contribution towards the formulation of national social, education and employment policies. However, it was indicated that a budget of Eur1 million would be allocated for social partners, civil society, voluntary organisations, workers’ and employers’ organisations over a 7-year period. In view of the capacity issues mentioned above, this amount is clearly inadequate and should be revised. Business organisations have conveyed this concern in their feedback to Government.

[1] https://nso.gov.mt/en/News_Releases/Documents/2021/03/News2021_040.pdf
[2] https://ec.europa.eu/information_society/newsroom/image/document/2019-32/country_report_-_malta_-_final_2019_0D3133AC-ADD1-AB10-6A71F15503A6D9DF_61213.pdf
[3] https://mih.mt/2020/05/mita-innovation-hub-opens-applications-for-the-second-edition-of-the-mita-youstartit-validator-programme-with-a-special-focus-on-covid-19/
[4] https://mcst.gov.mt/ri-programmes/fusion/
[5] https://eskills.org.mt/en/Pages/eSkills-Malta-Foundation.aspx
[6] https://www.mca.org.mt/articles/mca-launches-ebiznify-ecommerce-training-programme
[7] https://www.mca.org.mt/initiatives/fasttrak
[8] https://www.mca.org.mt/articles/mca-launches-fasttrak-mobile-business
[9] https://tech.mt/media/project/malta-cloud-forum/
[10] http://maltaenterprise.com/support/bstart-2021
[11] http://www.maltaenterprise.com/support/micro-invest
[12] http://www.maltaenterprise.com/skills-development
[13] http://maltaenterprise.com/reengineering-and-transformation
[14] http://maltaenterprise.com/support/change-grow
[15] https://timesofmalta.com/articles/view/education-minister-pledges-free-internet-pc-access-for-disadvantaged.857545
[16] https://maltabusinessweekly.com/digitalisation-for-a-hopeful-new-decade/11577/
[17] https://economicvision.mimcol.com.mt/wp-content/uploads/2021/06/A-Future-Proof-Malta-Final.pdf
[18] https://mdia.gov.mt/wp-content/uploads/2018/10/MDIA.pdf
[19] https://legislation.mt/eli/cap/592/eng/pdf
[20] https://legislation.mt/eli/cap/590/eng/pdf
[22] https://digitalmalta.org.mt/en/Documents/Digital%20Malta%202014%20-%202020.pdf
[23] https://malta.ai/wp-content/uploads/2019/11/Malta_The_Ultimate_AI_Launchpad_vFinal.pdf
[24] https://eskills.org.mt/en/nationaleskillsstrategy/Documents/National_eSkills_strategy.pdf
[25] Malta Council for Economic and Social Development (MCESD)
[26] Employment Relations Board (gov.mt)
[27] Subsidiary legislation: Wage increase national standard order (legislation.mt), Schedule A, pgs.2-3
[28] ENDEAVOUR Scholarship Scheme (gov.mt)
[29] Get Qualified (gov.mt)
[30] Jobsplus (gov.mt) / Jobsplus.gov.mt/iis
[31] MDB to launch a new EU funded scheme for students
[32] Financial Services Scholarships Scheme | EduMalta (gov.mt)
[33] Working from Home in Malta: Implications for Business and the Environment | Malta Business Bureau (mbb.org.mt)
[34] Workers want to telework but long working hours, isolation and (europa.eu)
[35] Government considers making right to disconnect legally enforceable (timesofmalta.com)
[36] REPORT with recommendations to the Commission on the right to disconnect (europa.eu)
[37] Civil servants on track to get right to disconnect before it becomes EU law (timesofmalta.com)
[38] Malta_The_Ultimate_AI_Launchpad_vFinal.pdf
[39] Malta AI
[40] Malta towards Ethical and Trustworthy AI.pdf (gov.mt)
[41] Malta Digital Innovation Authority – Malta Digital Innovation Authority (gov.mt)
[42] Garzia, C. (2013), Workplace Surveillance: Good Watchdog or Cynical Control?, unpublished manuscript, Birkbeck College, University of London – Impact of electronic surveillance in the workplace | Eurofound (europa.eu)
[43] LEĠIŻLAZZJONI MALTA (legislation.mt)
[44] Recommendations 02/2020 on the European Essential Guarantees for surveillance measures – IDPC
[45] Working Conditions – Employee monitoring and surveillance: The challenges of digitalisation (europa.eu)
[46] Public Consultation Document_26 July 2021.pdf (gov.mt) p.53

Disclaimer: With reference to social partners opinions cited in this report, the national social partners were invited by the affiliated entity, the Malta Business Bureau, to provide their views on the four topics addressed in the European Social Partners Framework Agreement on Digitalisation. Feedback was received from: (i) The Malta Chamber of Commerce, Enterprise and Industry; (ii) The Malta Chamber of SMEs; and (iii) The General Workers Union.