Malta’s Cash-in-Hand Culture Faces Reckoning as New Law Targets TCN Wage Abuse

**Cash Crackdown: New Law to Ban Under-the-Table Wages for Third-Country Nationals**

In a move that could reshape Malta’s labour landscape, government officials are drafting legislation that would prohibit cash-in-hand payments to third-country national (TCN) employees. The proposed ban—expected to be tabled in Parliament this autumn—aims to stamp out abuse, shore up national insurance contributions and level the playing field for Maltese and EU workers who complain of being undercut by undeclared cheap labour.

For decades, envelopes stuffed with €50 notes have quietly changed hands on building sites, in restaurant kitchens and behind farm gates. Employers say cash helps seasonal businesses survive; unions call it systemic exploitation. TCNs—now numbering roughly 120,000, or one in four residents—have been the most vulnerable to the practice, often paid less than the minimum wage and denied sick leave or injury cover because they officially “don’t exist” on books.

“Every week we meet workers with festering wounds who were told to slap on a plaster and keep going,” said Neil Falzon, director of aditus foundation, a local human-rights NGO. “Their payslips read zero, so they can’t even rent a legal apartment. The new law, if enforced, could finally tether them to the social-security net the rest of us take for granted.”

The draft bill will oblige all employers to pay TCNs via bank transfer or cheque, with random spot checks by the Department of Industrial & Employment Relations (DIER) backed by on-the-spot fines ranging from €2,000 to €10,000 per undeclared worker. Repeat offenders risk criminal prosecution and the loss of trading licences. Government sources say the measure is modelled on Italy’s 2018 “cash ceiling” law, which cut undeclared labour by 13 % within two years.

Yet in a country where the informal economy still hovers around 20 % of GDP—double the euro-zone average—the proposal is sending ripples through bars in Buġibba, vegetable markets in Ta’ Qali and the marble-dust-coated workshops of Ħamrun. “I’m not a crook, just a realist,” sighed Marco, 52, who runs a 12-man stonemasonry yard in Mosta. “Clients want cheap restorations. If I payroll everyone at €8.50 an hour plus NI, the quote balloons and they give the job to someone else who’ll pay cash. The government needs to police the customers too, not only the small guys like me.”

Economist Stephanie Fabri argues the reform must be paired with incentives rather than penalties alone. “Micro-businesses need digital-payment subsidies and payroll-tax rebates to make the transition viable,” she said. “Otherwise we risk pushing entire sectors further into the black.”

Culturally, the crackdown collides with Malta’s deep-rooted tradition of *bartering* and *favour-banks*. From fishermen swapping lampuki for tractor parts to housewives paying cleaners from under the mattress, cash has long been the social glue of tight-knit communities. Older generations still recount the 1970s when banks were distrusted and salaries were collected in brown envelopes from the *kaxxa* at the dockyard gates. “We’re asking people to abandon habits forged before credit cards even existed,” noted anthropologist Dr. Maria Grech Ganado.

For TCNs themselves, reactions are mixed. Suman Rai, a 29-year-old Nepalese chef in St. Julian’s, hopes a bank trail will help him qualify for a joint mortgage with his Maltese partner. “Finally I can prove I’m not a ghost,” he smiled. But others fear being priced out altogether. “If boss pays tax on me, he may cut my hours or replace me with a part-time student,” warned Kenyan farmhand Daniel, who sends half his €450 weekly cash wage to his family in Nairobi.

Women’s rights NGOs point to an added gender dimension: thousands of Filipino and Sri Lankan carers who work 24-hour shifts for elderly families often receive only a fraction of the official €181 weekly minimum wage in cash. “A ban without outreach will simply drive the most precarious workers further underground,” warned Carmen Sammut, coordinator of the KOPIN migrant network.

Enforcement will hinge on whistle-blower protection and Malta’s overstaffed yet under-resourced DIER, which currently fields just 28 inspectors for 30,000 active employers. Government has pledged to double inspection teams and roll out a mobile app where workers can anonymously upload photos of cash envelopes or handwritten IOUs.

If the bill passes, parliamentary secretary Andy Ellul says the social-security fund could swell by €40 million annually—“money that can go back into pensions, health and cancer drugs.” But success will ultimately depend on whether Malta can shake off the *u ijja* (come on, it’s fine) attitude that has normalised rule-bending for generations.

For a nation built on limestone, copper coins and handshake deals, the shift to traceable wages is more than economic reform—it is a cultural reckoning. The question now is whether the country can modernise without losing the human flexibility that has long defined its labour market. One thing is certain: the age of the invisible worker is coming to an end, and every €50 note that stays in an employer’s pocket could soon cost a lot more than €50.