Before 2013, Malta’s faltering economy resulted in considerable hardship. In the legislature before 2013, the number of persons deemed to be severely materially deprived had more than doubled from 17,000 to 37,000.
For the first time the proportion of Malta’s population in this condition exceeded the EU average. The number of those registering for work rose by 1,000 to reach 7,350, while a similar increase was registered among those dependent on social assistance. Fiscal austerity meant that for a generation, pensions and other social benefits were frozen in real terms.
The incoming Labour administration instigated a radical change in social policy. Its plan was based on three pillars. The first was the creation of work, particularly focused on enabling more women to participate in the labour market. The second pillar was changing the welfare system from a passive one, that led to social dependency, to an active one that provided incentives for persons to stand on their own two feet. The third pillar was to ensure that a significant part of economic progress was reflected in material improvements for those who could not work.
The active employment policies adopted by Joseph Muscat’s administration led to the number of registered unemployed falling to the lowest level ever observed in our nation’s history. The amount of registered unemployed today is less than a quarter that in 2012, falling to below 1,700. As a result, the number of job vacancies now exceed the number of unemployed, and the country is having to import labour to fill them.
The labour participation of women has increased dramatically. From 67,000 women working in 2012, by 2019 the number had risen to nearly 105,000. Nowadays, among women aged below 40, Malta has an employment rate that is 10 percentage points higher than the EU average, as opposed the situation in previous years where female employment in Malta was below average. The game changer was the introduction of free childcare, a measure which has benefitted more than 21,000 working parents.
The increase in jobs led to the creation of a new middle class. Household disposable income rose from €3.4 billion to €5.2 billion, an increase of more than 50%. The number of families that own their own property rose from below 119,000 to nearly 148,000. At the same time household deposits with local banks rose from under €7.7 billion to exceed €13 billion. The saving rate more than doubled.
The changes in the welfare system, such as the tapering of benefits, led to the number on social assistance falling to less than half the 2012 level. Measures such as in-work benefits, a reduction in income tax and an increase in the minimum wage also meant that the income of those on low salaries improved significantly.
With the registering of the first fiscal surplus, the Government started to raise social security benefits by more than the inflation rate. The main increases were awarded to pensioners, particularly widows and those on the minimum pension. However, there were important reforms that affected carers and those with disabilities (who started to receive a benefit equivalent to the minimum wage). More assistance was given to those elderly who continued to reside in their own homes, while health expenditure was boosted. Public outlays on social benefits, health and elderly care, as a result, rose from €1.1 billion to €1.8 billion, a 63% increase.
The median income of retirees rose from €9,500 to €11,500. As a result, the number of elderly suffering from severe material deprivation fell from 5,000 to 3,000.
In 2012 all those with a disposable income of less than €7,000 were considered at risk of poverty. There were 66,000 persons in this situation in 2012. Today there are around 34,000 persons in this situation, a reduction of nearly half.
From a situation where poverty was rising, in recent years the fight started to be won. Today the number of those in severe material deprivation is the lowest since data started to be compiled. Whereas in 2012 our rate exceeded the EU average, today our rate is less than half the EU average.
The social policies adopted by Joseph Muscat led to the lowest number of unemployed, the lowest number of severely materially deprived persons and the highest level of disposable income ever observed by families.
Glenn Bedingfield is a Labour MP