Malta’s potential for teleworking

In a post-pandemic Malta, as much as 15.5% of the work could be undertaken remotely, according to a study conducted by the Central Bank of Malta.

At the start of the decade, only 3.6% of all employed individuals did some work from home and by 2019 the figure had risen to 11.7%, coinciding with the rise in employment among females and substantial growth in employment in high-tech sectors.

The figure was still relatively low by European standards, but the Covid-19 pandemic acted as a catalyst, boosting the percentage of employed persons who did some work from home in March and April 2020 to 33%. This is still below the figure for the EU, however, where in July, 48% of employees reported that they had worked from home at least some of the time during the pandemic. Of course, with different lockdown scenarios, the figures are not easily comparable.

The bank has now conducted research, published in its Quarterly Review, into just how high the figure for Malta could go, taking into account various factors, including the all-important consideration of the country’s industry composition. For example, in terms of employment, wholesale and retail trade and manufacturing are the two largest sectors in Malta, employing a quarter of all those in employment. A further 1/10th work in human health and social work activities while construction and accommodation and food service activities employ 7% and 8%, respectively. These industries often necessitate physical presence at the place of work and are thus not usually compatible with teleworking.

The bank also looked at education, which had to be performed from home during the outbreak of the Covid-19 pandemic but which, in normal times, can arguably be considered as less effective and productive than teaching in person.

The bank relied on peer-reviewed research to determine Malta’s potential to telework under three scenarios:

Scenario 1: includes only those jobs which require minimal, if any, interaction with others and are therefore deemed relatively easy to perform via teleworking. These mainly include jobs in information and communication, financial and insurance activities, professional, scientific and technical activities and online gaming and betting services.

Scenario 2: incorporates those activities that although less practical to be conducted via telework, may still be possible to perform away from the workplace. Activities classified under this scenario include public administration and some of the sectors found to have more than 70% capacity to work from home, such as publishing activities (including software publishing), real estate activities and office administrative and support service activities.

Scenario 3: considers other jobs that are deemed less likely to be performed from home in normal circumstances, either because they require a significant element of human interaction or due to the use of machinery which may be required. However, as shown during Covid19, they may be teleworkable under abnormal circumstances. Notable examples of activities under this scenario include telecommunications (including wireless telecommunications) and education.

Under Scenario 1, 15.5% of jobs in Malta are found to be teleworkable. When a number of other activities, that could potentially also be performed from home are included, in Scenario 2, slightly more than 23% of all jobs in Malta turn out to be potentially teleworkable. The 33.8% figure estimated in Scenario 3 relies on how to classify those working in education. If education were to be deemed a non-teleworkable activity, Malta’s teleworking potential drops down to 24.8%.

The 33.8% figure estimated under Scenario 3 is broadly in line with the share of workers who were working from home during the early weeks of the Covid-19 pandemic in Malta.

Malta’s work-from-home potential is higher than in the EU under all three scenarios but the country’s actual share of employed persons working from home in 2019 was still 2.9 percentage points below the average in the EU. This implies that Malta’s utilisation of its teleworking potential lags behind the majority of the other EU countries.

The bank said that closing the gap would require a shift in cultural and organisational practices, including higher levels of work autonomy, investment in information and technological infrastructure and training opportunities to raise firms’ and workers’ affinity with digital infrastructure.

The bank pointed out that the analysis was constrained by data limitations and would be helped by additional information about the occupations and economic activities that shifted to teleworking during the Covid-19 pandemic. In this light, information about the beneficiaries of the teleworking scheme issued by Malta Enterprise would be useful.

The study also pointed out that future research should

not stop at the teleworking numbers in isolation but should also assess the economic impact, such as the effect on labour productivity, its effectiveness and employees’ well-being.

Teleworking may also give rise to some economic opportunities and threats. Among others, firms may set up in Malta without the need of a physical presence of employees, which would mean the loss of the positive spill-overs on domestic consumption. On the other hand, teleworking could make it easier for individuals living in Malta to provide services worldwide without relocating.

In turn, the reduced need to be physically present in the country of employment may also give rise to issues surrounding taxation, such as the determination of the country where it should be charged.

The effects of teleworking are also likely to extend beyond the workplace. For instance, while the higher prevalence of teleworking may lead to higher electricity consumption, it can also have positive environmental effects, including a reduction in traffic congestion and air pollution, which in turn could help to address the country’s climate and energy targets.

This article was prepared by the Central Bank of Malta. The information is derived from a box in the bank’s Quarterly Review published on 9 February, which is available from the Publications section of the website www.centralbankmalta.org