Why you’re hot in Malta

The tiny Mediterranean island has retooled itself as a financial services hub. The trouble is that is doesn’t have enough accountants.

Malta is mainly known as a holiday destination, but over the past decade the former British colony has been quietly transforming its economy. The Mediterranean island still relies on tourism, but it is also known for its financial services and gaming industries. However, it has become a victim of its own success.

As service industries have blossomed in Malta, the demand for qualified accountants has far outstripped supply. The result is that businesses and accountancy firms on the 17-by-9-mile island are importing as many as half of their accountants.

In 2000, overseas workers comprised 1.3% of Malta’s workforce, according to a new study by Malta’s Central Bank. By 2014, that figure had risen to over 10%. This percentage is expected to rise further over the next few years, as long as the economy continues to grow.

To provide some perspective, the services sector accounted for 83% of Malta’s output by 2014. Its growth has led to impressive expansion in areas such as accountancy and legal services, which have been developing at similar rates. Joseph Camilleri, a partner at PwC Malta, says his firm, which now employs 550 staff, grew by around 10% last year, and 20% in 2014.

Other large accountancy and legal firms paint a similar picture. “There is a huge battle for homegrown talent on the island,” he says. “We still recruit from all the traditional sources, such as university, and we have our own PwC Academy, where we train ACCA and ACA students.”

But universities are not producing enough accountants to satisfy demand. The University of Malta produces between 70 and 100 accountancy graduates annually, all of whom are snapped up before they graduate. KPMG alone looks to recruit around 30 accountants annually.

Quantity and quality Some senior accountants are concerned about the consequences of this; the quality of accountancy students may be affected if there is little competition to secure a job post-qualification. “Students are offered a contract of employment by professional firms during their first or second year of a five-year university course.

This may be discouraging some from doing their utmost. They might settle for an average or sometimes even mediocre performance, as their employment is ‘guaranteed’,” Maria Micallef, managing partner at RSM Malta, recently told the Malta Chamber of Commerce, Enterprise and Industry. The reliance on recruiting overseas accountants is far from dissipating.

In 2012, accountants recruited from abroad made up just over 1% of KPMG Malta’s total workforce. That figure increased to 21% this year. Tonio Zarb, senior partner at KPMG Malta, estimates that within five years it will rise to around 40%. Zarb says the challenges don’t just lie in recruitment. “The shortage is a problem but it’s also a struggle to find people who want to stay. Many move on after a few years.”

There is an upside to overseas recruitment, Zarb says. The island’s accountancy workforce is exceptionally diverse; KPMG Malta’s employees come from 20 different countries. There are downsides, too; the battle for talent is pushing up salaries, which increases business costs.

Amanda Cini, HR senior manager at fund and corporate services provider Alter Domus, says the Maltese government should do more to promote homegrown talent by incentivising students to study accountancy. She says there’s a precedent for this, with the government having encouraged people to study nursing by providing an additional stipend. “There’s so much competition that it has come to a point where we cannot survive like this. We are poaching people from each other,” Cini says, adding that salaries have increased by 20% over the past five years.

Cini is now recruiting from outside the EU, despite the additional hiring costs. Alter Domus needs around 60 accountants annually; 85% of its staff are accountants. Another solution, Cini suggests, is developing a better apprenticeship scheme, with the aim of attracting school-leavers directly into the profession. “We should consider the AAT apprenticeship scheme. I would take people from England on an apprenticeship,” she says.

Alter Domus currently employs five apprentices from AAT and will offer them permanent jobs next year. Growth on the island is projected to slow down this year, but only slightly. If Malta wants to retain its status as a sought-after business destination, then the government, schools, universities, businesses and accountancy firms must work together to find a solution that doesn’t dilute the quality of homegrown accountants, increase salaries and further raise competition for talent.

As published in the September/October issue of Accounting Technician magazine.

Michelle Perry is a writer for Accounting Technician Magazine.