Fifteen years after EU accession, Malta has nearly bridged the gap in terms of people’s purchasing power when compared to the European average, according to a study published by the European Commission.

In 2019, Malta’s GDP per capita index (PPS) reached 96% of the EU average, which represents an increase of 10 percentage points when compared to 2016.

The PPS index is similar to a common currency which factors the difference in price levels across member states, in order to be able to make a comparison on respective purchasing power levels.

Countries having a PPS greater than 100 are those where the purchasing power is above EU average.

This trend emerged from a comprehensive study measuring the competitiveness of 268 European regions, which was published on the occasion of the European Week for Regions and Cities.

Held in Brussels, the annual event is organised by the Committee of Regions, which consists of representatives from local governments across all member states. 

Launched in 2010, the study is meant to monitor progress in bridging economic and social disparities through various initiatives, primarily cohesion funds.

Its publication comes at a crucial time when negotiations on the next seven-year EU budget (2021-2027) are entering the final stretch, and just weeks before the new European Commission, led by Ursula von der Leyen, takes over.

In the period between 2013 and 2020, Malta secured almost €800 million in cohesion funds from the EU. According to draft proposals by the European Commission in May 2018, Malta will be given about €600 million in EU funds for the period 2021 to 2027, a reduction of 25%, but this still has to be negotiated.

The study shows that Malta climbed 10 places in terms of its competitiveness and is now ranked 177th (out of the 268 regions).

The final score is based on 11 main criteria which are grouped into three sub-indexes: basic, efficiency and innovation factors (dimension) of competitiveness.

In the basic dimension, Malta’s macroeconomic stability was way ahead of the rest as a result of an improvement in public finances and reduction in government debt.

Health and education were two other positive indicators. Such evaluations are based on indicators like life expectancy, infant mortality rates, cancer disease death, employer-sponsored learning, access to learning and the number of persons unable to speak a foreign language. 

Malta, however, still lags behind in transport infrastructure, registering a slightly negative score for its “institutions” which is based on a long list of criteria like the respect for the rule of law, fight against corruption, impartiality of the various watchdogs, and crime levels.

Malta’s overall score in the basic dimension was still better than the EU average. 

Higher education and lifelong learning was one of the areas in which Malta performed significantly worse than the average.

This score reflects the number of graduates as share of the country’s population, and the percentage of those who do not further studies after finishing secondary level.

Malta was slightly below par in technological innovation, which is based on factors like the number households having a broadband internet connection, online commerce and foreign direct investment in this sector.

However, thanks to its thriving financial services sector it recorded a positive score in the businesses sophistication index.  As for innovation itself, the overall performance was slightly below EU average. The indicator is based on criteria like expenditure in research and technology, the percentage of workers directly employed in this sector and the level of exports.