Productivity redefined

Malta's manufacturing sector is currently under unprecedented significant pressure due to geopolitical uncertainties, intensified technological transformation, and evolving regulatory demands. In response to these realities, the sector prepares to redefine its economic role in sync with Malta Vision 2050, calling for focus on high-value manufacturing, smart digitisation, and sustainability. This agenda for change calls for a revolutionary reformulation of productivity suitable to the needs of Industry 4.0 and Industry 5.0.

According to a Deloitte's report, Rethinking Productivity: Materially More with Materially Less, at Maximum Pace (Autumn 2025), traditional productivity models centred around scale efficiency and fixed predictable environments are not sufficient anymore. The report points out that productivity today must encompass speed, flexibility, resilience, and sustainability. Maltese producers have challenges common to global industries: organisational silos, legacy process complexities, fragmented data and enterprise technology, risk-adverse cultures, and hidden costs created by excessive customisation, all of which pose the threat of slowing the pace of required change.

Especially for Malta, human capital challenge is critical. Attrition and hiring of skilled employees remain burning issues as competition rises both locally and overseas. According to the recent market study, the tight local labour market has led to wage inflation and placed enormous pressure on manufacturers to hold on to talent. Skills shortages affect not only highly technical specialist positions, but also leadership and digital literacy capabilities essential for Industry 4.0 and 5.0 preparedness. Moreover, rising transport and logistic costs are adding to operating pressures, impacting supply chain efficiency and hence the sector's competitiveness. These increasing costs compound challenges in Malta's limited land and resource endowment, further highlighting the imperative of a strategic productivity reinvention.

Maltese manufacturing leaders need to embrace a new paradigm for productivity centred on six strategic imperatives highlighted by the Deloitte report:

• Simplification at scale: Standardising processes to reduce administrative overheads and accelerate decision-making.
• Technology-led innovation: Leveraging AI, collaborative robotics, and establishing external partnerships to release new capacity and innovation.
• Value reallocation: Redirecting resources freed up from streamlining to customer-centric and growth-generating activities (cost optimisation rather than cost cutting)
• Resilient measurement frameworks: Establishing robust metrics outside efficiency, including speed, agility, and resilience.
• Leadership-driven change: Establishing leadership commitment to overcome silos and establish a culture of ongoing innovation.
• Human-centric upskilling: Investing in workforce transformation through blending digital capabilities with creativity, problem-solving, and judgement.

By leveraging these imperatives and recognising local market realities such as talent retention and rising logistics expenses, Malta's manufacturing sector can reinvent itself as an agile, digitally empowered, and ecologically sustainable powerhouse, globally competitive while contributing meaningfully to Malta's economy.