The Malta Independent 19 September 2019, Thursday

Five consecutive years of cutting poverty

Sunday, 11 August 2019, 09:49 Last update: about 2 months ago

Michael Falzon

In 2010, national governments across the EU agreed to implement a strategy entitled ‘Europe 2020’ – a strategy that has five targets, one of which is to remove 20 million Europeans out of poverty. To measure progress, the European Commission has recently compared the number of people currently at risk of poverty and social exclusion with the number in 2008.

In the case of Malta, the Nationalist administration committed itself to bring 6,500 people out of poverty. In 2008, there were 81,000 people at risk of poverty in Malta, the same number as in 2005 – the first year that this data began to be compiled. Eurostat reports ‘evidence that, instead of falling, the number for Malta showed an incessant increase. In fact, in 2013 there were more than 100,000 people at risk of poverty. Malta had moved from a situation where 18.7 per cent of our population was in a vulnerable situation, to one where 23.8 per cent were at risk.

While the previous administration was stating that poverty was merely a perception, the data showed that, every year, another 4,000 people were being pushed into poverty.

Some could argue that this reflected a weak economy due to deteriorating external conditions, whereas I believe that it also reflected wrong decisions taken by the previous administration. In the EU, which faced a far worse downturn in GDP than Malta, the number of people in severe material deprivation increased from 8.5 per cent in 2008 to 9.6 per cent in 2013. In Malta the increase was larger – from 4.3 per cent to 10.2 per cent.

Let me give you one reason why government policy has resulted in such a large increase in poverty. According to Eurostat, the percentage of Maltese households with arrears in their utility bills increased from seven per cent in 2008 to 15 per cent in 2013. During this period, the proportion of those who said they could not afford to keep their home warm during the winter months rose from 11 per cent to 24 per cent. This increase was inevitable, given the wrong energy policy adopted by the previous administration. Between March 2008 and March 2013, the price of oil on international markets rose by four per cent and yet the previous administration chose to increase the price of electricity by 71 per cent.

The current Labour administration has been serious in its fight against poverty and social exclusion. It has strived to reduce financial burdens, cutting the price of electricity, keeping fuel prices stable, reducing income tax and introducing no new taxes in the latest budgets. As a result, the inflation rate in Malta has, for the first time in decades, fallen below the EU average.

We have focused our economic policy on job creation, not just for graduates but also for those in vulnerable situations. Free childcare has meant that thousands more women now have the opportunity to work and the introduction of the in-work benefit and a higher minimum wage has also meant that those on the lowest incomes end up with more take-home pay. The tapering of social benefits has helped thousands to escape from the poverty trap that had constrained them to remain on benefits, rather than accept a job.

For those unable to work, we intervened by boosting their benefits. Pensioners – particularly widows – have seen their benefits rise by more than double the COLA. We have introduced a better regime for carers and increased benefits for those with a disability.

All these policies have meant that for five consecutive years we have reduced the proportion of our population at risk of poverty and social exclusion. After the continuous rise in this figure up to 2013, in the last five years we have reversed the trend. In 2018, there were 13,000 fewer people in a vulnerable situation than in 2013.

I am honoured that, under this administration, for two consecutive years our country has achieved the lowest percentage of the population at risk of poverty or social exclusion since such data began to be collated. In 2017, the figure was 19.3 per cent and last year we reduced it to 19 per cent.

While the percentage of Maltese facing severe material deprivation in 2013 was higher than the EU average, we now have a rate that is half the EU average. From being the equals of Portugal, a country in the middle of its worst crisis, we are now the equals of Finland, a welfare system success story.

Does this mean that we can rest on our laurels? Not at all. The fight against poverty and social exclusion is entering a new and challenging phase. The success of our economy means that the benchmark against which relative poverty is measured is growing exponentially. The number of those who are deemed to be at risk of poverty today is measured against a poverty line that is 50 per cent higher in euro terms than the one in 2008. In fact, if we were to adopt the poverty line of 2008, the number of people at risk of poverty would be just one-fifth of what the current figure implies.

Similarly, while it has not been easy to move people off benefits and create so many job opportunities – particularly for women and young people – in the years to come we will face a tougher challenge. We have to integrate people with far fewer skills, those who have never worked in their lives and also foreigners who face language and cultural barriers. In addition, an ageing population also means that we will have more pensioners who depend on the state for their main source of income.

And yet, despite these odds, I am confident that we will continue to achieve more positive results and lift thousands of more people from their vulnerable situation and ensure that they have the standard of living they deserve.

 

Dr Michael Falzon is the Minister for the Family, Children’s Rights and Social Solidarity

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