The Shifting Structure of the Maltese Economy: Evidence from Chain-Linked Data

The economy of the Maltese islands has undergone significant structural change and diversification since the turn of the century. The aim of this study is to provide an overview of sectoral developments in output, employment, unit labour costs, and prices in Malta during the two decades to 2020. Analysis is conducted using the newly-available chain-linked sectoral national accounts data, which is a departure from previous studies. Furthermore, we complement our findings with a comparative analysis of structural developments in Malta and in the euro area. The results show that the Maltese economy underwent a significant shift towards the services sector between 2000 and 2020. Sectors such as finance & insurance, information & communication, professional, scientific & technical activities, administrative & support services, and arts, entertainment & recreational services saw large increases in their shares of both output and employment. On the other hand, more traditional sectors such as manufacturing, construction, and food & accommodation services saw a decline in their relative importance. An analysis of productivity and cost developments also suggests that services sectors were generally the most productive during the period under study, while recording the highest levels of compensation per employee and the lowest unit labour costs. Nonetheless, sectoral productivity levels in Malta generally remain below those observed in the euro area. Output prices rose significantly in Malta between 2000 and 2020, generally reflecting the higher pace of economic growth when compared with the euro area. Received: 2 May 2021 / Accepted: 15 June 2021 / Published: 8 July 2021

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International Differences in Manufacturing Unit Labour Costs

National Institute Economic Review ◽

10.1177/002795019515400106 ◽

1995 ◽

Vol 154 ◽

pp. 85-110 ◽

Cited By ~ 4

Author(s):

Mary O'Mahony

Keyword(s):

Productivity Growth ◽

The United States ◽

Minor Role ◽

Nominal Wage ◽

Market Exchange ◽

National Accounts ◽

Competitive Position ◽

Labour Costs ◽

Unit Labour Costs ◽

Time Changes

This article presents measures o f competitiveness in manufacturing comparing Britain to Germany, France and the United States. Data from the National Accounts and the Census of Production are combined to derive new estimates of relative unit labour costs for a number of manufacturing industries. The results show that British manufacturing had a competitive advantage over Germany and France in 1993. This arose primarily from the devaluation of Sterling and followed a period, from 1989 to 1992, when unit labour costs in British manufacturing were generally close to those in Germany and France. Unit labour costs in American manufacturing, however, were considerably lower than in the European countries in 1993. The results by industry show that Britain performs relatively poorly in much of the engineering sector while being relatively more competitive in consumer goods industries. Over time changes in the market exchange rates and nominal wage inflation have large impacts on the relative competitive position of total manufacturing in the four countries whereas productivity growth plays a minor role. However, at the industry level productivity growth is important. In the face of similar movements in relative nominal wages across industries, differences in productivity performance distinguish those British industries which gained ground over their rivals abroad from those whose competitive position worsened.

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