The European Commission’s autumn forecast confirms that Malta is likely to continue to enjoy robust economic growth, low unemployment and further fiscal consolidation. This forecast is good news and should stimulate the government to address areas that have so far received inadequate attention.

Cash-for-passports and golden visas will continue to have a positive impact on government finances even if inflows drop from the levels reached in the last three years. GDP is expected to reach 4.9 per cent in 2019 and 4.4 per cent in 2020, one of the best estimates for EU countries. Unemployment will remain low at four per cent in the coming two years. The national debt continues to shrink, reaching an estimated 42 per cent in 2020.

Domestic demand will be the primary stimulus to growth with inflow from foreign investment also supporting this surge in economic activity. This growth is bound to cause general inflationary pressure with inflation forecast to rise to two per cent by 2020. Wage pressures, especially at the higher end of the labour market, are expected to strengthen even more as the cost of accommodation continues to rise, especially for skilled foreign workers on whom the economy is increasingly dependent.

However, an evaluation of these indicators can only be meaningful if it is made in the context of the more significant socio-economic scenario. Few can deny that not everyone is equitably benefitting from the economic bonanza. Decades of failures in educational achievement have left an underclass of people who are employed but still struggle to make both ends meet. Their bargaining power in the labour market has been suppressed through the inflow of low-skilled workers taking up the low-paid jobs that locals refuse. The last Budget addressed aspects of this issue but much more remains to be done.

Investment in social housing has been insignificant in the last three decades, leaving a substantial backlog of demand from deserving families that are a part of the country’s social fabric. So far, the government has not indicated how it intends to eliminate this waiting list by providing more social housing units for the truly deserving. This failure is not good news for those who look beyond economic growth to gauge the state of well-being in society.

Significant reforms in the national pension’s scheme remain shelved, exposing those planning to retire in the next three decades at high risk of qualifying for inadequate pensions. Of course, the present political leaders will no longer be in power at that time to face the frustrations of tomorrow’s pensioners. This could be the right time to consider some form of mandatory savings for retirement.

The present administration, like those before it, shows little commitment to curb the black economy. According to a study by the Austrian University of Linz, what is defined as informal legal economic activities that escape the tax authorities radar accounts to about 24 per cent of GDP in Malta, one of the biggest in the EU. Tax evasion seems to go beyond the big-ticket transactions and permeates the spectrum of economic activities.

Strong macroeconomic indicators are an excellent starting point to tackle the trickier issues that affect the well-being of society. Now is the right time to show political determination to make our society a fairer one for all.

This is a Times of Malta print editorial

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