Joseph Gerada
Advisor to Ministry for the Family, Children’s Rights and Social Solidarity
In a society where there are real equal opportunities, an individual’s socio-economic background should not have a big bearing on their achievements. Unfortunately, it plays a very significant part in determining life chances.
Research suggests that happiness is higher where people at least believe they have the possibility to progress up the social ladder on their own merits. This is social mobility related to social cohesion, where people are not divided on the basis of socio-economic or other grounds but accept that the division of rewards in society is achieved fairly and from equal starting points.
This is why governments strive to grow and widen the middle class. A large, stable and growing middle class is a cornerstone to both the market economy and democracy. The middle class creates a strong consumer base that steers productive investment. It is an entrepreneurial and innovative class which directly contributes to economic growth and prosperity.
Bearing this in mind, the government has encouraged investment and innovation, reduced income tax, incentivised new graduates to set up businesses while reducing costs such as energy tariffs, and introduced free transport and free childcare. This stimulus to the middle class drove economic growth, and coupled with direct foreign investment gave us the highest levels of GDP, lowest rates of unemployment and highest rates of employment and female participation.
However, improved GDP is not enough to eliminate the risk of poverty because there are other determinants that influence the extent to which people take up the opportunities offered by society.
One is pay and another is job security. In this regard, the government took steps to fight precarious work and introduced structured increases to the minimum wage, special bonuses for low income workers and in-work benefits while eliminating income tax for minimum wage earners.
Another determinant is family-related influence, good or bad. Work pay breaks the cycle of inter-generational unemployment while the youth guarantee supports those at risk of dropping out of education.
Failing exams no longer disqualifies you from earning a stipend while entry requirements for courses have become more inclusive, giving more young people the opportunity to succeed.
Social programmes for groups in vulnerable situations have been introduced or widened to help them take the first step on the ladder of self-determination.
The government has embarked on an ambitious social programme. Housing policies have been designed to target specific individuals, such as first-time buyers and, with the equity share scheme, those over 40 years of age.
The government’s strategy responses have been focused on ensuring wealth reaches all strata of society. Are we there? We still have some way to go, but the policy is working. We need to stay the course. Access to opportunities, well-being and happiness are shared values, not exclusive ones.
Claudio Grech
Opposition spokesman for family well-being, social solidarity, pensions, children and rights of the unborn
For centuries, distribution of wealth has been a central plank of political agendas the world over. Malta is no exception. We have just marked 100 years since the events of June 7, 1919, whose motivations stemmed from the government’s failure to make the basic essentials available and enable people to make ends meet at a basic level.
We have come a long way since but – a century later – large swathes of our society are still experiencing enormous pressures on their monthly disposable income.
People are working longer hours, some hopping from one job to another to make ends meet in order to maintain their lifestyle and deliver a semblance of normality for their loved ones. They may also be earning marginally higher wages but are certainly not living better.
Young couples are facing an impossible mission to take out a mortgage that would allow them to acquire a decent property to build their home. To exacerbate matters, those exposed to the rental market face unpredictable hikes in their rents, risking the wipe-out of chunks of their take-home pay.
More painful is the plight of pensioners. Thankfully they are living longer but they are definitely living poorer across all income levels. The much-trumpeted marginal increase in pensions has been gobbled by the exponential surge in rental costs, spiralling cost of living and the steep cost of medicines they have to pay for.
All this is leading to an increased incidence of mental health issues, pressures on family life and an evident erosion of social wellbeing, which contrasts starkly with the ‘surplus’ mantra.
Unfortunately, the government’s rhetoric, branding and social media bombardment have taken priority over families’ wellbeing. So long as it sounds nice it’s fine, irrespective of the reality families have to face.
The Opposition has a central role in providing alternatives to effectively shape economic priorities. We can either sing to L-aqwa żmien (Best of times) or portray the social and economic realities that the people face in going about their daily efforts.
People’s realities are not made of superficial clichés, often eclipsed by ivory towers. We are in politics because we owe our citizens the right environment, one that will not suffocate them and one that will enable them to have a decent life.
This is why, as a strong political force, the central theme of our efforts should be rapidly shifting towards a radically new economic vision for this country; a vision that is built on wellbeing rather than the grossing up of numbers and percentages on glossy billboards.
Ultimately, the surplus our people need is a surplus in liveability, reversing the toxic vortex we are all marching in, handing our future generations a fighting chance to live in a decent place.
Marcus Lauri
Interim PRO, Democratic Party
The distribution of wealth has become more uneven in recent years. A recent working paper by Clemens Knoppe, an economist from the Research Department of the Central Bank of Malta, found that “while inequality in Malta remains subdued by international standards, there has been an increase in recent years as low wages have remained stable in real terms, while those in the middle and at the top of the distribution have seen significant rises. Due to the rising demand for certain types of skills, wage mobility appears to have declined, particularly for older workers. This points to an importance of increased investment in education and retraining.”
When Mr Knoppe mentions that “low wages have remained stable in real terms” he is implying that low income wages have kept up with inflation based on the NSO’s Retail Price Index (RPI) but have not exceeded it.
This is particularly worrying since the RPI is not calibrated frequently and housing costs are only given a weighting of 7.9 per cent. In today’s Malta, mortgages and rents make up a much larger portion of an ordinary household’s budget. Property prices have increased at a much faster rate than the RPI, and thus in reality, low-income workers have suffered a major reduction in real incomes, despite the much-praised surplus.
The IIP scheme has contributed to both the surplus and to rising house prices. Unfortunately, the benefits that the scheme has brought to government coffers are largely being used to finance an ever growing army of ‘persons of trust’, while the increase in property prices benefits mostly wealthier land owners, and the ridiculously high rents are hurting low income earners. Like most core issues that gravely impact Maltese residents, the failures of the IIP scheme boil down to rule-of-law weaknesses. Until we address these underlying issues, all sitting governments will retain the liberty to freely dish out jobs in return for votes and they will be allowed to line their pockets from loosely controlled IIP schemes that are attractive to oligarchs.
An IIP scheme would work well where a strong rule of law exists, as citizens, and the rest of the world can rest easy that checks will be strong and authorities independent and well-resourced, to investigate and to counter any individuals who slip through the net. In an advanced democracy, citizens would benefit equally from the surplus created by the IIP scheme.
The share of income earned by workers has fallen from 51.1 per cent in 2012 to 46.3 per cent in 2017. Clearly, for many people, the current economic model simply means more traffic, higher rents, smaller residences, more construction and less countryside.
This is a Times of Malta print opinion piece