Employee shortages remain the top concern for Maltese businesses, even as nearly half report using artificial intelligence in their operations, according to the latest SME Barometer for Q1 2025.

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The survey, conducted by the Malta Chamber of SMEs in collaboration with MISCO, gathered insights from 427 businesses across various sectors between 7 and 18 April.

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A shortage of employees was cited by 43% of respondents as their most pressing challenge, followed by concerns over unfair competition (24%) and excessive market competition (19%). Inflation and skills mismatches also emerged as major pressures, reflecting the mounting difficulties businesses face in attracting and retaining qualified staff. Meanwhile, 50.8% of SMEs reported already using AI in their operations, and a further 29% plan to implement AI solutions within the next 12 months. However, only 34.1% said their employees had participated in any form of AI training, highlighting a growing gap between adoption and skills readiness.

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At a national level, the lack of good governance was flagged as the most critical issue, with 33% of businesses expressing concern. Corruption (30%) and overpopulation (30%) were also high on the list, reinforcing wider anxieties about Malta’s business environment.

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Despite these challenges, business sentiment showed some signs of resilience. Thirty per cent of SMEs said they believe Malta is moving in the right direction — the highest positive reading recorded in recent editions of the SME Barometer. However, confidence about future investment prospects remains weak: only 16% of respondents believe the next 12 months will be a good time to invest, with a growing number uncertain about economic prospects.

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The SME Chamber is urging policymakers to act swiftly. Recommendations include launching national AI education campaigns, reforming labour migration policies to better meet business needs, tackling unfair competition, and streamlining public procurement procedures. The Chamber also called for investment incentives like the Micro Invest scheme to be revamped to better support small businesses.

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Commenting on the findings, SME Chamber President Paul Abela noted that while the core challenges remain the same, the number of businesses identifying them has declined slightly compared to previous surveys. He suggested that recent government initiatives, such as the Envision 2050 strategy, may have contributed to the shift.

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Andrew Aquilina, COO of the Malta Chamber of SMEs, stressed the importance of urgent action. “Malta’s SMEs continue to drive economic growth, but today’s environment demands decisive steps to address labour shortages, skills gaps, and regulatory barriers,” he said.

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The SME Barometer remains a key pulse check on the state of Malta’s vital SME sector, offering policymakers and business leaders clear insights into where support is most urgently needed.

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