Eurostat lately published early estimates of social protection benefits expenditure for 2019. Malta was among 14 EU member states which provided data on expenditure on eight headline indicators of social protection benefits, ranging from sickness and healthcare to unemployment and housing.
The social protection expenditure was juxtaposed against Gross Domestic Product (GDP) of each of the countries which made available the estimates for the year. Given that the ability to allocate resources for social protection is closely correlated to a country’s wealth, it was not surprising that the top seven rankings in the classification were taken up by countries whose GDP per capita is relatively high.
Social protection spending as a percentage of GDP was highest in France (31 per cent), followed by Denmark, Germany, Austria, Italy, Belgium and Sweden. Malta, together with other relative newcomers to the EU – Hungary, Bulgaria, Lithuania and Latvia – occupy the bottom rungs of the table.
Taken within the context of Malta’s annual budgetary expenditure, the social protection outlay in 2019 was a sizeable €2.04 billion, representing nearly half of the government’s recurrent expenditure in the same year. Unsurprisingly, though understandably, the magnitude of the amount paled when compared to the expenditure of the other EU countries. In fact, Malta’s outlay was the smallest among the 14 countries featuring in the Eurostat list, with countries like Germany and France allocating the biggest amounts – €998 billion and €763 billion respectively.
Thus, a more relevant comparison would be one focusing on the expenditure on social protection per inhabitant. Such a comparative list would place Denmark at the top with €15,391 per capita and Bulgaria at the bottom with €1,348 per inhabitant. Malta places ninth with an expenditure of nearly €4,000 per capita.
A further analysis of the growth of social expenditure per inhabitant shows that Malta had a cumulative growth of 19.8 per cent over the period between 2012 and 2018, compared to 13.8 per cent in the EU and 10 per cent in France. In terms of the annual growth in expenditure per capita, Malta’s was three per cent compared to France’s 1.6 per cent. In terms of the annual growth in social protection per capita, Malta ranks in fifth position.
Malta allocated the highest percentage of all countries on sickness and healthcare
Looking closer at the early estimates for 2019 published by Eurostat, one finds that Malta allocated the highest percentage of all countries on sickness and healthcare. The allocation stood at €740 million, representing over 36 per cent of Malta’s total expenditure. Coupled with disability benefits, at 40 per cent of the total, Malta’s share on sickness, healthcare and disability was the second highest after Germany’s 44 per cent.
Expenditure on old age and survivors’ benefits captured the major part of social protection benefits in all reviewed member states, with Malta’s expenditure, at over €1 billion, nearly reaching half its total spending on protection benefits. As a percentage of its total outlay, Malta’s 42.7 per cent was slightly above the average of the mentioned member states while the percentage for survivors (7.8 per cent) was the second highest after Italy.
Given the significant bounce in employment in recent years and the resultant plunge in the number of jobless persons, it was no surprise that Malta’s share on unemployment benefits was the lowest together with that of Hungary.
Social protection expenditure makes a big difference to people’s lives. Eurostat data suggests that while before social transfers the proportion of the Maltese population that was at risk of poverty stood at 37 per cent in 2019, after social transfers, the percentage at risk of poverty was reduced to 17 per cent.
The latter rate is virtually equivalent to the EU average, suggesting that, despite spending relatively less than many other countries, social benefits in Malta are more effective in reducing the risk of poverty. This may reflect better design, such as measures intended to reduce poverty traps, and better targeting and more effective means-testing.
This effectiveness is key to making social expenditure sustainable because affordability, coupled with a clear ability to alleviate poverty, is essential to maintain the strong support of these programmes among the general population.
Mark Musu, Permanent Secretary, Ministry for the Family