Employability Policy in Malta: Challenges and Opportunities in a Small Open Economy

In the context of rapid global economic change, digital transformation, and shifting labour-market dynamics, employability has become a central priority in European Union policies on skills, inclusion, and competitiveness. However, policy responses often rely on a human capital model focused on individual skills acquisition, overlooking the role of institutional design and labour-market structures. This chapter addresses this gap through an in-depth analysis of employability in Malta, a small open economy characterised by high employment and low unemployment, yet facing structural challenges such as skills mismatches, dependence on migrant labour, informal work, and increasing digitalisation. Using a multidimensional framework aligned with EU concepts of skills ecosystems, flexicurity, and lifelong learning, the chapter conceptualises employability as the outcome of interactions between human capital, social capital, individual capabilities, institutional and regulatory contexts. This framework is applied to examine service-sector dominance, labour shortages, rising labour migration, and the growth of non-standard employment. Drawing on qualitative and quantitative evidence, including statistical indicators, EU and national policy documents, and existing research, the analysis identifies key challenges: education–labour-market mismatches, weak school-to-work transitions, gender gaps in job quality, and limited protection for platform and informal workers. It also highlights opportunities linked to digitalisation, remote work, entrepreneurship, and migration. The chapter proposes policy directions consistent with EU instruments, including individual learning, strengthened sectoral skills councils, improved validation of non-formal learning, targeted active labour-market policies, and regulatory frameworks promoting fair work. Sustainable employability requires integrated governance that improves adaptability, job quality, and long-term resilience.