The recently published data on the 2021 census held in Malta offers a number of points for consideration. These points go beyond the fact that the number of persons living in Malta increased very significantly between 2011 and 2021. They have social, political and economic implications, and what I wish to do in this contribution is to make a brief reference to economic considerations. Admittedly, I will just be scratching the surface.
Students of economics and business studies know that demographic analysis is the collection and analysis of broad characteristics about groups of people and populations. This information is useful for businesses that want to develop products and services targeted at specific population segments. It is also useful for governments in shaping their economic policy.
The economic growth of any country is dependent on investments, technology and people. The larger the population very often leads to a greater gross domestic product, if it is supported by a growth in investment and development of technology. What is particularly interesting about demographics is that they provide indications for the long term. For example, when there is an increase or decrease in the birth rate, the economic impact is not felt immediately, but is felt over a span of say 20 to 30 years.
As such, Malta has benefitted from the increase in the number of persons living in Malta economically as this increase has contributed to our economic growth. Up to a certain extent, the undeclared policy has been to allow non-Maltese persons into the labour force to grow the economy.
The total number of persons living in Malta has grown by 102,000 over a 10-year span, giving an average yearly increase of over 10,000 persons. This is way above the average yearly increase we have experienced since the 1967 census, the year when a drop in the population was registered, mainly caused by outward migration. However, in the last 10 years, the Maltese population increased by just 7,000; the remaining increase is represented by the increase in the non-Maltese population.
We cannot continue to grow the economy on the basis of population growth but by moving up the value chain
From an economic perspective, one needs to appreciate that most of the 115,000 non-Maltese persons living in Malta are working. Through the taxes they pay, they are contributing to government income, while they get very little in return in terms of social benefits.
Up to a certain extent, our economy has become more vulnerable to the presence of foreign workers. With an age-old dependency rate of 27.6, ours is one of the lowest in the EU. On the other hand, the average age of the Maltese population increased from 40 to 43 years between 2011 and 2021, indicating an ageing population.
Since the Maltese population is relatively flat (an average yearly increase of less than 1,000), will we need to import more foreign workers to sustain our economic growth? If the answer to this last question is yes, then we need to ask whether a further and constant influx of foreign workers is sustainable.
We already have a population density of 1,648 persons per square kilometre, which is 15 times the EU average. What would be the economic impact in terms of productivity, investment in infrastructure, demand on public funds, environment sustainability, if population density were to increase further? All this seems to indicate that we need to change tack with regards to our economic policy. We cannot continue to grow the economy on the basis of population growth but by moving up the value chain.
Other countries have already had to face a fall in the birth rate and an ageing population. They have tended to respond to this by having policies that promote the family. I believe we should go in the same direction. This may require a total rethink of both our social and economic policies. However, the country’s present demographic structure has placed us at the crossroads and we must think of the long-term economic implications.