This newspaper carried an editorial a couple of weeks ago entitled, ‘Eradicating the root causes of poverty’. Among other things, the editorial stated that: “The first measure to address poverty is to aim to abolish it by ensuring that workers are paid decent wages rather than offered financial handouts when they face misery.” It also said that: “Too often, successive generations in some families are condemned to living on the fringes of society.”

Let us start with some official numbers. Quoting official statistics, the Times of Malta reported that 88,462 people in Malta were under the poverty line in 2023 and a fifth of those at risk of poverty were young people under the age of 18.

Other statistics show that the Gini coefficient increased from 31.1% to 33.0% between 2022 and 2023. The Gini coefficient is a statistical measure of economic inequality in a population. The closer it is to zero, the lesser income inequality is, and the closer it is to 100%, the greater the inequality of income. Therefore, between 2022 and 2023, income inequality increased, and not by a marginal amount.

Delving deeper, one notes that in 2023, the number of persons earning less than 40% of what is called the national equivalised income of €18,940, was 30,713, compared to 18,704 in 2022, when the national equivalised income was €18,155.

As such, the issue of poverty is not an imagined one but very real. Moreover, we need to appreciate that this is not a phenomenon limited to our country but is a global issue.

Whether an economy grows or not matters little, unless those at the bottom are experiencing progress as well, or the number of people on lower incomes is decreasing

There are many who believe that the answer to poverty is economic growth as this would eventually benefit the whole population. Economic growth, defined as the increase of GDP per capita, is not the perfect solution it is made out to be. It is generally accepted that as monetary wealth increases in a country, the situation of specific population segments will actually get worse. This leads to greater economic inequality and a greater likelihood that such people would fall into the poverty trap.

Moreover, for the sake of economic growth, governments have sought to make their labour market more flexible. This has meant more casual work, fewer long-term employment contracts, and lower wages and reduced protections for workers. This is all justified to ensure that countries remain attractive to businesses, who are now basing their competitive advantage on low-cost labour and parts of the working population being kept in poverty.

There is no doubt that this is happening in Malta as well, with the indiscriminate availability of third-country nationals, who are taking up jobs which EU nationals can do and want to do, but not for a pittance.

Whether an economy grows or not matters little, unless those at the bottom are experiencing progress as well, or the number of people on lower incomes is decreasing. If a person’s absolute income increases but falls in relation to other members of society, then that person experiences a loss in well-being.

This applies both on a local level and on a global level. We cannot ignore the poverty issue by hiding behind an increase in the gross domestic product.