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COVID 19 and its Impact on the Maltese Economy

By March 24, 2020November 28th, 2023No Comments

As the far-reaching impact of COVID-19 is felt around the world, society at large is still coming to terms with the fact that the implications of this pandemic go beyond the direct effect on our health, but that unfortunately it will also leave an impact on our economy.

Malta has already experienced the closure of major businesses in the past couple of weeks, as initially Legal Notice 76 of 2020 ordered the closure of public spaces, namely the following:

bars,  restaurants,  cafeterias,  snack  bars,  cinemas, gymnasiums, museums, exhibitions, clubs, discotheques, night clubs, open-air markets, indoor swimming pools, national swimming pool, gaming premises including controlled gaming premises, bingo halls, casinos, gaming parlours, lotto booths and betting shops

As from the 23rd March 2020, further businesses had to close due to Legal Notice 95 of 2020, which ordered the closure of non-essential retail outlets and outlets providing non-essential services, the principal business of which shops mainly relate to

selling of clothing, sportswear, jewellery, hand bags and leather goods, costume  jewellery  and  accessories,  footwear,  non-prescription  eye-wear, perfumeries, beauty products, haberdasheries, soft furnishings ,souvenir  shops,  discount  stores,  luggage  shops,  toy  shops,  hobby shops, furniture shops, florists and vaping shops, whether operating in shopping malls and/or elsewhere:


“hairdressers,  barbers,  beauticians, spas, nail artists, nail technicians and tattooists.”

As a result of this, most businesses no longer have any source of income to be able to continue paying the salaries of their employees, amongst many other expenses. In the midst of this, however, businesses are coming up with innovative ideas to keep their businesses going. In fact, most businesses have introduced the option of online shopping and delivery services as these types of services are so far still allowed according to law. Needless to say, such initiatives require a level of investment from those businesses which did not avail themselves of such platforms prior to the outbreak of COVID-19; some businesses will undoubtedly struggle to take such a step at a moment when levels of income are next to nil. However, so far such initiatives are proving to be quite successful for those businesses which adopted them and have been well received by society at large. This will surely influence the way the majority of businesses will seek to operate once the COVID-19 pandemic is over.

Other businesses have also taken the leap into adopting teleworking measures. Employees over the world are now practicing social distancing whilst carrying out with their usual work from the comfort of their house. Businesses have realised how important it is to have sound Teleworking Policies in place available for their employees so that they can continue operating as smoothly as possible. The Malta Enterprise has recognised the efforts made by most businesses to adopt teleworking measures, and to this end, it issued a scheme with the purpose of aiding businesses in investing in a teleworking system.

This scheme is aimed at all businesses, irrespective of their size or particular industry. However, in order to be eligible for this scheme, a company must have a formal teleworking agreement in place and must ensure that it is connected to the workplace via a VPN (or similar) solution. Furthermore, it is important to note that such scheme is capped at €500 per teleworking agreement and at €4,000 per undertaking and shall be awarded in the form of a cash grant.

As explained by the Malta Enterprise:

The grant shall be awarded against 45% of the eligible cost which must be incurred after the 1st of March 2020. The following costs are eligible for this cash rebate:

a) Purchasing and/or leasing of computer hardware (included operating systems) which are considered portable including installation and setting up of connectivity software.

b) Communication solutions (hardware and software) that allows different users to connect to their place of work (VPN, Point-to-point connection etc.)

In order to apply for this grant, a company needs to submit its application together with the required documents on by 30th March 2020. Together with the application, applicants must submit a signed teleworking agreement commencing not earlier than 1st March 2020; a declaration that no previous teleworking arrangement was in place in the previous 12 months; and a short explanation on how the teleworking arrangement will function explaining how employees will have access to company data (ex. through VPN or Cloud Services).

If an application of a particular company is approved, then a letter of approval is issued indicating the value of aid awarded. The employer is then required to provide/install the necessary teleworking solution at the employee’s residence within 2 weeks. Moreover, the employer is required to submit monthly reports on the teleworking activity of the employee/s for the 3 months following the approval.

Another scheme introduced by the Government to alleviate the burdens suffered by businesses in the current circumstances, includes the postponement of certain tax payments otherwise due by the end of March and April 2020. This scheme refers to provisional tax, employees’ taxes, maternity fund payments, social security contributions and VAT. No interest or penalties will be charged on tax payments that are postponed in terms of this measure. This scheme is intended for those companies who are suffering a significant downturn in their turnover as a result of the impact which COVID-19 is having on the economy. The Malta Enterprise in fact clarified that this incentive is “primarily aimed, but not limited to, the tourism and hospitality, entertainment, transport and manufacturing sectors that are being affected by COVID-19.

The application for such scheme is to be made by not later than the 15th April 2020 by completing and submitting an online application form available on

Furthermore, the Government also announced that it will shoulder 2 days of salary per week for employees in industries which have been harshly hit by the COVID-19. This refers to businesses whose operations had to be suspended, namely the accommodation, food and beverage, language schools and entertainment industries. This grant shall be based on a salary capped at €800 per month. In the case of self-employed individuals having their own employees, the grant shall cover the equivalent of 3 days’ salary per week, also capped at a salary of €800 per month.

Businesses who have experienced an operational loss of at least 25% shall also be given the equivalent of 1 day’s salary a week per employee. Similar to the previous grant, this shall also be capped at a salary of not more than €800 per month.

In light of the fact that all schools in Malta had to close down, parents who need to stay at home to take care of their children were also impacted. To this end, the Government also announced that a grant shall be given to parents when both parents work in the private sector and neither of them has the possibility of teleworking. In this case, the Government promised to grant €800 per month for an additional two months of leave for one of the two parents.

Given the introduction of mandatory quarantine leave, whereby the employers are obliged to pay their employees a full salary for the duration of such leave, the Government also announced that a grant of €350 shall be granted for every employee on mandatory quarantine leave.  

Despite all of these measures, it is still inevitable for some of the businesses to close down and declare their employees redundant. As a result, many have lost their employment as a result of the COVID-19. The Government introduced a temporary measure for those who have lost/will lose their job as from the 9th March 2020, whereby they will receive an unemployment benefit of €800 per month. In this case, the employees shall also become eligible for a rent subsidy, if they did not previously qualify for this. Sole dependants who were already in receipt of a rent subsidy, shall benefit from an increase in such subsidy if they become unemployed.

Another measure introduced by the Government is aimed at disabled persons who unfortunately are constrained to remain at home during this pandemic but do not have the option of teleworking. In this case, the Government promised that they will receive €800 monthly.

Third country national workers have also been impacted by the current situation, as applications from third-country nationals will no longer be accepted in Malta unless the applicant is deemed to be a highly-skilled individual. Furthermore, businesses which terminates an active employment contract will no longer be able to apply for third-country national workers. Nonetheless, assistance shall be given to third-country nationals becoming unemployed due to the COVID-19 pandemic so that an alternative employment is found for them. In fact, Jobsplus has launched a scheme to assist unemployed residents and third-country nationals with working permits.

Unfortunately, despite these benefits, many businesses still have to face the reality that in the coming weeks and perhaps months, they will be receiving no income, and unemployment rates are going to reach new levels. More effective measures need to be implemented to mitigate the economic impact as much as possible so as to ensure that citizens will still be able to make ends meet. In the meantime, however, the innovative measures being adopted by businesses will surely influence the way our businesses will continue operating in the future and the world is definitely going to witness big changes in its markets.

Av. Charlene Gauci

24th March 2020