ESPN thematic report on in-work poverty : Malta

Abstract

The issue of in-work poverty (IWP) in Malta needs to be analysed in the context of a labour-importing economy which is booming, and which since 2017 has been characterised by low unemployment rates (under 4%). Overall in 2017, Malta had the fifth-lowest risk of in-work poverty of all the EU28 countries and at 5.9% the risk of IWP in Malta was significantly lower than the EU average (9.6%) This trend can be noted as far back as 2012, when the in-work poverty rate in Malta was 5.2%, as against 8.9% at the EU level. In spite of the overall positive situation, if we look at trends then a gradual yearly increase can be noted from 2016; and between 2012 and 2017, there was an overall increase of 13.5% in persons who were at risk of in-work poverty in Malta. Work intensity (or the lack of it) had a significant impact both in households with and without dependent children. However, the risk for low work-intensity households with dependent children (53%) was higher than the EU average (46.5%) in 2017. In both Malta (11.6%) and the EU (21.4%), the risk of in-work poverty in 2017 was highest in households with a single adult and dependent children. On the other hand, that year things were significantly better in Maltese households with very high work intensity (1.4%), or high work intensity (6.2%), compared to the EU at 5.4% (very high work intensity) and 11.2% (high work intensity). Between 2012 and 2017, on average the risk of IWP was similar for those on permanent (4.2%) and temporary (4.7%) contracts; however, it was significantly higher for selfemployed persons (12.9%) than for employees (4.7%). Furthermore, the risk was consistently greater for males (7.5%) than females (3.45%), as well as for those working part time rather than full time. The cohort aged 25-54 was most affected by IWP (6.1%). When assessed by country of birth, the risk was highest for non-EU28 nationals (13%). A number of interesting active labour market schemes have been introduced in recent years to attract more people (especially women) into the labour market. The main schemes (Tapering of Benefits and the In-Work Benefit scheme) have the aim of making work pay and of avoiding in-work poverty. Other measures which reduce IWP, including tax rebates and various schemes to encourage the low-skilled and low-educated to continue with their education, have also been discussed. While noting these positive measures, the issue of low work intensity among asylum seekers is highlighted, as this impacts on IWP. Furthermore, the issue of rising property and rental prices is discussed, since this may impact on household expenditure, especially for low earners. A number of mitigating solutions are analysed in this context and further recommendations are made. So long as the economy remains upbeat, and the figures for IWP remain low compared to the EU, the issue of in-work poverty is unlikely to be given the attention it merits. This may prove to be short-sighted, as things will be more difficult to tackle if they get out of hand.