Malta spinola

The productivity of Malta’s iGaming industry is dropping disproportionately compared to the sector’s employment growth, according to new analysis published by consultancy firm Seed. 

The analysis, part of the firm’s National Productivity Report 2021, titled ‘Digital Malta’, focused on the impact of digitisation on the economy generally and the productivity of employees. 

Productivity in this economic context refers to a ratio between the output volume and the volumes of inputs. it measures how efficiently production inputs, such as labour and capital, are being used in an economy to produce a given level of output.

In the aforementioned report, productivity is calculated as nominal GVA per employee.

The report found that while iGaming employment growth has increased by most out of any sectors between 2010 and 2019, during the same period its productivity growth was the lowest of any sector. 

Productivity vs wages and salaries

iGaming is not alone in following this trend, and the financial and insurance sector also struggled, although much less majorly.

According to Seed, the could be put down to the fact that GVA in the sectors was already high, and that it now seems to have plateaued.

A further factor may be the increase in regulatory requirements, which may have necessitated operational changes as well as an expansion of more labour-intensive functions such as compliance.

Notably iGaming employees were disproportionately well paid when compared to their productivity. Employees in the sector ranked fifth for productivity, but were paid the second highest wages and salaries. 

Employment vs productivity

These factors have seen the iGaming sector become an important user of services provided by other sectors of the Maltese economy, with Seed naming the professional services and information and communication as amongst them.

Providing a broad outlook on the industry, the report laid out a number of challenges, opportunities and future trends.

Amongst the challenges cited in the report were those related to compliance and KYC, responsible gaming requirements, multi-licensing requirements and reputational issues. 

Some opportunities being opened up to the sector include the growth of new niche sectors such as esports, technological developments such as machine learning, AI and blockchain, and the emergence of new iGaming markets, including those in Africa, for local companies to dominate.

Future trends forecast by the report’s authors include those new areas such as esports will dominate, while new markets such as Latin American and African ones, while regulatory developments will continue.

The report also said: “On the back of a buoyant gaming sector, the arts, entertainment, and recreation industry registers higher than average productivity levels, resulting in significantly higher salaries, whilst still managing to generate high returns to labour income.”

Seed is a boutique advisory firm focused on helping clients achieve growth, improved performance, and tangible results.

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