Malta faces a number of challenges on the road toward developing adequate strategies on pensions, employment, healthcare and social inclusion, according to the European Commission 2007 Joint Report on Social Protection and Social Inclusion adopted yesterday.

The report, which provides a particularly harsh critique of the recent National Reform Programme, finds Malta’s proposed pension reforms “will only be fully effective if they are accompanied by an effective and sustainable strategy to increase participation by older workers in the labour market and to raise employment in general”.

The report also noted: “it remains to be seen how far the introduction of a second pension would contribute to adequate and sustainable pensions (particularly as regards access).”

Malta also needs, according to the report’s recommendations, to ensure the coming pension reform provides adequate pension levels, strengthens the financial sustainability of the pension scheme, as well as offers incentives to work and to remain in the labour market.

The immediate challenge, the report finds, is to expand the active labour force participation and increase labour market participation of the long-term unemployed, women, the 55+ age group and other groups at high risk of poverty and social exclusion.

It also calls on Malta to increase efforts to improve education, vocational training and lifelong learning, to fight illiteracy and to reduce the number of early school leavers in order to improve employability, and to prevent marginalisation and social exclusion.

The report recommends Malta raises the employment rate, particularly that of women, so as to improve social cohesion, reduce inactivity and the phenomenon of exclusion. The provision of home and community care, meanwhile, must be enhanced by better equity of access and reduced waiting times.

The report draws from and mostly reviews the national reports on strategies for social protection and inclusion submitted recently by member states, in Malta’s case the National Reform Programme.

While finding that, overall, the NRP’s four pillars of increasing employment, strengthening the welfare system through pension reform, improving access to health care services and guaranteeing quality health services are “sufficiently ambitious and well-focused on the key priorities for Malta, with a good comprehensive approach,” it also identifies a number of weaknesses.

“There is little quantification of expected results and indicators are supplied sparingly,” it says of the NRP. “Synergies and connections among the three strands (social inclusion, pensions and health care) could be further exploited. References to the previous plan in the main text are very limited, and there is no ‘lessons learned’ exercise.”

The report added that “while the strategy document is exhaustive in setting out the range of short- and medium-term solutions to Malta’s immediate problems, further in-depth analysis would be needed for it to achieve a truly multi-dimensional approach.”

The overall situation in Malta, the report finds, is characterised by slow progress on some of the key objectives of the Lisbon Agenda, reflected mainly in low employment rates compared to EU25 averages.

The need to reduce the public deficit and the likely growing demand for increasing social expenditure due to the projected aging of the population, as well as unemployment, meanwhile, will inevitably put conflicting pressures on the social protection system.

As such, the report finds achieving the Lisbon employment target is proving to be “quite challenging, in particular as concerns the female employment rate, which is by far the lowest in the EU”.

In addition to a low female employment rate, Malta’s employment of “older people is also an issue of concern, being the lowest in the EU”.

Overall, Malta’s unemployment rate remains relatively low compared to the EU average, as is also the percentage of people living in jobless households. The latter is 8.2 per cent in 2005 compared with the EU average of 10.2 per cent.

Although youth employment in Malta is “no emergency”, well above the EU average at 45.3 per cent, the report finds that “data on early school leavers, in particular, are worrying; at 42.1 per cent, Malta has by far the highest percentage of early school leavers in the EU.”

Yet despite this, the report notes the trend in recent years is positive, with the number of early school leavers gradually falling “as a direct result of all the special attention directed towards this issue by the Maltese government.”

The overall amount of the population standing at risk of poverty in Malta is 15 per cent, just below the EU average of 16 per cent.

The report finds that children and people over 65 years fall within the most vulnerable categories in Malta, at respectively 21 and 20 percentage points above the EU average.

But despite such gloomy figures, the report observes how the “wide-ranging social protection system absorbs 18.5 per cent of GDP; this figure, coupled with the active role played by NGOs and strong family and community ties, explains the low poverty rate.

“However, the demographic dynamics, coupled with recent poor economic growth and the large fiscal deficits, are putting a strain on the sustainability of the social protection system. The need for reform has been recognised and the process has been initiated.”

But despite this, the report doubts the long-term viability of Malta’s reform plans.

It adds of the NRP, “The document is not very clear on the detailed ways of tackling the different challenges. Although there is a very long list of actions described in the annexes, referring to ongoing and future initiatives along with potentially EU-funded initiatives, however the document tends to miss a clear link between the strategy report and the different projects.

“In particular, the document contains no plan identifying specific measures to be implemented in the different sectors, timing, financial resources, expected results and indicators… the absence of indicators and quantified objectives is a key point, because it risks undermining the future evaluation of the measures.”