The Malta Independent 18 April 2024, Thursday
View E-Paper

Cost of living and the Budget

Michael Briguglio Thursday, 7 September 2023, 07:31 Last update: about 9 months ago

As Malta is moving closer to its yearly national budget, the cost of living is on top of concerns of people living on the islands.

In surveys such as those of the Eurobarometer for Malta, the cost of living is cited as the most important issue for respondents, ahead of immigration, which has been topping such surveys in the past decade or so.  In the latest Eurobarometer, recorded during May and June, and published in July 2023, 56% of respondents in Malta listed cost of living as one of the most important issues, above the EU average of 45%, and over three quarters of respondents citied the cost of living as one of their most worrying issues on a personal basis. This Eurobarometer also showed a decrease in respondents, albeit still in majority, who are optimistic about the country’s economic situation and their own job situations.

ADVERTISEMENT

Some months ago, Caritas, the Church NGO focusing on social issues, published its ‘mini version of the Minimum Essential Budget for a Decent Living (MiniMEBDL)’ for the current year as at February 2023 prices. This exercise showed the monthly cost of food baskets of three types of families/households. For example, a food basket for a family of two adults and two children amounts to €719.50 monthly; a food basket for an adult with two children amounts to €542.49 monthly; it costs €362.28 for an elderly couple aged 65 and over. In turn, these represent a substantial increase of around 3% for over 2022.

The Caritas exercise also investigated the costs of medicines and healthcare:  A family of two adults and two children spend a total of €388.43 yearly on medicine and healthcare. A single adult with two children spends €245.78, and an elderly couple spends €598.12. In turn, these represent heavy increases of 9.32%, 14.07%, and 6.29% respectively over 2022.

More recently, further data showing the situation with Malta’s cost of living was released. Here I am referring to the latest National Census figures on dwellings released last week by the National Statistics Office. The data refers to 2021, where 297,304 dwellings were registered, an increase of 73,340, or 32.8%, over the previous census a decade earlier.

 

This data shows that whilst in 2011, the median rented furnished occupied dwelling cost €3,537 per year (€294.75 monthly), in 2021, this cost increased to €700 a month. Of course, these amounts vary by type of property and location – suffice to say that the highest rental payments were registered in Sliema (€1,150 per month), whilst the lowest were registered in Vittoriosa (€553 per month).

In the meantime, rents have kept increasing, and shared spaces are becoming more common. Even those who have mortgages are impacted – given that the price of property has risen, this means higher loan repayments.

With respect to the respective data quoted above, it is important to note that as a small island economy, Malta is very much influenced by the price of imports, and the plural crises at a global level are not helping. There are also internal reasons which influence inflation, such as the increase in demand for rent, goods, and services courtesy of high population growth, mainly through foreign workers. The increased supply of labour can also have a negative effect on income. At the same time, Malta’s fuel and energy prices are being subsidized by the government, thus exerting less pressure on inflation.

As regards properties, there are some who welcome the growth of the sector, dubbing it as the ‘investment of choice’ of many Maltese people: 80% of whom are homeowners, and many are also investing in other properties.  On the other hand, there are those, among property owners and the propertyless, whom do not have the opportunity, means, or will to invest in this sector, for various reasons.

Hence, it is not surprising that NGOs, such as those within the Anti-Poverty Forum, have been expressing their concern with the cost of living in Malta.  This is not only affecting low-income earners, but also those with middle to high incomes who are finding it increasingly difficult to make ends meet. In sociological literature these are sometimes referred to as the working poor.

Which takes us to a very timely editorial, entitled ‘What are we waiting for?’, by the Malta Independent on July 12. Here, the newspaper referred to the frustration of Unions on the lack of discussion for a possible revision of the Cost-of-Living Adjustment (COLA) mechanism. This issue is of major concern both for workers’ unions as well as employers, who are represented in the Malta Council for Economic and Social Development (MCESD).

COLA is just one aspect of policymaking which can help address inflation. Besides, a one-size-fits-all COLA can be regressive, because low-income households spend a larger proportion of their income on food and other necessities. Hence an income-adjusted COLA may be more socially just.

To date, it is unclear if and how discussions on such matters have progressed, other than, for example this week’s statement by the MCESD on a meeting of the low wage commission.  There are different policy areas , which can be informed by various expert disciplines and on the ground evidence, which deserve more consideration and deliberation in Malta’s policy discourse. This should not be a last minute pre-budgetary exercise, or even worse, an electoral quick fix which we may end up paying for in the future.

 

Dr Michael Briguglio is a Sociologist and Senior Lecturer at the University of Malta www.michaelbriguglio.com

 

  • don't miss