Budget 2026 brings a welcome incentive for long-serving workers in Malta and Gozo. The government has announced a new two-year wage-support scheme designed to reward employee loyalty and ease the pressure on businesses that wish to offer higher pay which will be introduced in 2026.
Supporting Those Who Stay
Starting in 2026, as previously announced in the Budget 2026, the scheme will apply to employees who have been with the same company for at least four years. Employers who choose to increase these employees’ wages will receive a government subsidy covering a significant share of the pay rise.
- En Malte, the subsidy will finance 65 % of wage increases, up to €780 per year for each qualifying employee.
- En Gozo, where talent retention remains a key challenge, support rises to 80 %, plafonné à €960 per year.
The measure will run for deux années consécutives, encouraging both employers and workers to commit to longer-term employment. It aims to strengthen job stability, improve retention and promote fairer wage progression, particularly in sectors facing staff shortages or high turnover.
Case Study: How the Wage Subsidy Works for Long-Term Employees
| Localisation | Government Covers (%) | Maximum Government Support (€) | Illustrative Gross Pay Rise (€) |
|---|---|---|---|
| Malte | 65% | €780 | ≈ €1,200 gross pay increase |
| Gozo | 80% | €960 | ≈ €1,200 gross pay increase |
A company that increases a long term employee’s gross annual wage by around €1,200 will reach the maximum subsidy cap — up to €780 in Malta ou €960 in Gozo. This means the government will effectively reimburse most of that wage increase, allowing businesses to reward long-term staff at a much lower cost. While employers still pay the remaining share, the support makes it easier to retain experienced workers and bridge wage gaps between regions.
Boost for Small Businesses
Alongside the employee-support measure, the government also announced an expansion of the Micro Invest scheme, increasing the maximum benefit from €45,000 to €65,000 in Malta et €80,000 in Gozo. This change is expected to make a real difference for small and medium-sized enterprises, many of which have faced rising operational costs in recent years. By widening the threshold, more businesses will now have the financial flexibility to upgrade equipment, invest in digital tools, improve workplace conditions, and provide staff training.
The update also reflects Malta’s broader strategy of encouraging local enterprise growth and job retention, particularly in Gozo, where smaller businesses form the foundation of the economy. Together with the new wage-subsidy measure, these initiatives aim to build a more resilient private sector — one that rewards commitment, nurtures talent, and supports long-term employment stability.
What This Means for Employees
For workers who have built their careers in Malta, this could translate into a meaningful pay rise in 2026 and 2027. The subsidy makes it more affordable for employers to reward commitment, which may encourage higher retention and new internal progression opportunities.
In Gozo, the measure could have an even stronger impact. By covering 80% of pay rises, it helps local businesses compete more effectively with the mainland labour market, and retain skilled workers who might otherwise relocate. It could also inspire smaller enterprises to invest more confidently in staff development and long-term workforce stability.
Before You Sign: The Employment Contract Essentials in Malta
Our View
This measure represents a positive step toward a more balanced labour market. While the increases may not dramatically transform wages overnight, the focus on rewarding long-term employment reflects a shift toward sustainable economic planning rather than one-off relief.
For employees, especially those who have weathered the post-pandemic years in the same workplace, it’s a sign that loyalty may finally start to pay off.
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