Caruana: TCNs won't vanish, but Budget 2027 will cool demand

Finance Minister Clyde Caruana has pushed back against claims that Budget 2027 will drive third-country nationals out of Malta, insisting the measures target future demand, not existing workers.

Speaking on TVM's XTRA programme alongside PN finance spokesperson Adrian Delia, Caruana clarified that the punitive TCN measures are designed to influence the labour market through wage dynamics.

“The market is made up of supply and demand. The market is influenced by prices, which in this case is wages. I’m certain that through these measures, the price will be influenced directly or indirectly. As an economist I’m convinced that this mechanism will start working in the months to come.

And if we want to control the population, this is a step in the right direction,” Caruana said. "I'm certain that through these measures, the price will be influenced directly or indirectly. As an economist I'm convinced that this mechanism will start working in the months to come."

The Budget 2027 proposals drew sharp criticism from NGOs, employers, and unions, including the General Workers' Union, which described the measures as “purely populist.”

Caruana defended the timing, calling the measures “a long time coming.” and pointing to his earlier warning that Malta's population could reach 800,000 by 2040 if growth continues unchecked.

“Now we’ve started to address this,” he added.

Delia questioned how the measures square with Prime Minister Robert Abela's statement that maintaining population growth of 14,000 people per year is sustainable. Caruana responded by distinguishing between existing demand for non-EU workers already in Malta and future demand for new TCNs.

The finance minister also addressed the traffic crisis, a persistent business concern. Delia criticised the budget's lack of transport solutions, arguing that cars keep piling up on the roads and that a mass transport system is the answer.

Caruana revealed that Sustainable Transport Minister Chris Bonett is still in talks with ARUP over mass transport studies. He added that he is in discussions with the World Bank and the IMF on the project, with the World Bank advising on feasibility and the IMF assessing macroeconomic impact.

For Malta's business community, the key takeaway is that the government is betting on wage-driven market correction rather than direct caps or bans. Employers who rely on TCN labour should expect rising costs and tighter conditions for new hires, even as existing workers remain.

The reliance on World Bank and IMF input for the mass transport project signals that government is serious about external validation, but also that any major infrastructure shift remains in early study phases.