A new labour migration policy aimed at controlling high turnover rates and safeguarding the rights of third-country national (TCN) workers in Malta was proposed on Wednesday 8th of January 2025. This move comes in response to concerns about labour market instability and the exploitation of TCN workers. The government intends to block companies with high employee termination rates from hiring new foreign workers, a policy that reflects a shift towards promoting fair employment practices and retaining a skilled workforce. High turnover rates often indicate poor working conditions or inadequate investment in employee development. By targeting companies with such practices, the government aims to encourage businesses to adopt long-term strategies for workforce retention. Firms that previously relied on a “quantity over quality” model will be required to rethink their approach, prioritising employee well-being and skill development. This will not only improve labour market stability but also create a more competitive environment where employers must offer better conditions to attract and retain talent.

Micro firms employing fewer than 10 people will be exempt from this policy, recognising the unique challenges faced by small businesses. For small firms employing between 10 and 50 workers, the policy establishes a maximum termination rate of 50%. Companies exceeding this limit will fail the labour market needs test, resulting in the rejection of any new applications for TCN workers. Medium-sized firms, defined as those with 51-249 employees, will be subject to a stricter threshold, with a maximum allowable termination rate of 40%. Meanwhile, large firms with 250 or more employees will face a limit of 35%. Any company that surpasses these thresholds will be ineligible to hire additional foreign workers until turnover rates are reduced.

The policy will introduce stricter criteria for companies applying for TCN workers, aiming to reduce dependency on temporary, short-term labour. A period of public consultation will follow the policy’s launch, with discussions focusing on how employers can support a culture of employee retention by investing in training and improving working conditions. This approach aligns with the broader goal of promoting social cohesion and fairness in the labour market.

Malta’s move mirrors efforts made by other countries seeking to balance labour market demands with the protection of workers. South Korea’s Employment Permit System (EPS) has been widely regarded as a successful model for managing labour migration. EPS allows employers to hire foreign workers under strict regulations aimed at preventing exploitation. The system limits the duration of employment contracts, requires employees to abide by national labour standards and promotes skills development. Moreover, it includes mechanisms to prevent high turnover and ensure foreign workers are treated fairly whilst aligning with the broader goal of workforce stability.

As the policy is rolled out and feedback is gathered, its success will depend on effective implementation and the willingness of employers to invest in workforce retention and development. This directive has also introduced lower renewal fees and higher first-time application fees, whilst permits can be renewed every two years for workers with two-year contracts. TCNs will have a 60-day grace period after losing their employment to find a new work opportunity, while employers must pay salaries via bank transfers to prevent underpayment. Firms must also advertise vacancies locally for three weeks before hiring TCNs and justify rejecting EU applicants. TCNs must also complete an online course on Maltese culture, language and history before arriving on the island. Ultimately, these approaches promise long-term benefits for both businesses and society at large. By prioritising quality employment over quantity, this policy will not only protect workers’ dignity but will also reduce unfair competition. Companies that fail to adapt to this policy will risk being sidelined in a labour market that increasingly values stability and fairness over rapid turnover.

The issued consultation document marks the initial phase of the review of the proposed Malta Labour Migration Policy. A more detailed report will follow a public consultation and stakeholder engagement process.