Ageing Malta needs migrant workforce but also push for greater families

Malta has one of the lowest fertility rates in Europe and according to Anna Borg, a labour studies lecturer at the University of Malta, if current trends persist the country will struggle to provide social welfare in the future.

Declining fertility rates – the average number of children a woman bears during her lifetime – are a common factor to many European nations, whose ageing populations need more workers to sustain the demand for jobs to generate growth, exports as well as to pay taxes and social security. And that source can only be through immigration.

Malta’s fertility rate has fallen below the EU average, and has been in decline since 2001 when it stood at 1.48, to 1.42 in 2014. The EU average in 2014 was 1.58. In 1990, Malta’s fertility rate stood at 2.04. 

A total fertility rate of around 2.1 live births per woman is considered to be the replacement level in developed countries: in other words, the average number of live births per woman required to keep the population size constant in the absence of inward or outward migration. At a rate below, a population will start to shrink.

Borg said that at this stage in Malta’s declining fertility rate, its older generations are still in their working years and so far are just enough to keep things going. However with people having fewer children, this won’t last forever.  “Once it’s time for the baby boomers to get their pensions we will have a problem. People used to have more children back in the old days, and we just don’t have the replacement rate. It’s definitely something the country needs to look into,” Borg said. 

Intuitively, depopulation to some may seem like a good thing – fewer people, more resources to go around. In reality, shrinking populations mean fewer workers to drive the economy, which also means fewer people paying taxes. And since people are living longer thanks to better, as well as free, national health services and more efficient medicines and treatments, the government must also dish out more money in pensions and other benefits.

One reason for the decline in Maltese fertility rates is the cost of raising children, especially when viewed against a decline in the availability of well-paying jobs, and increasingly expensive lifestyles.

This was highlighted in a study commissioned by the Malta Council for Economic and Social Development, which noted that households at the lower end of the wage spectrum are more likely not to be able to afford certain essentials if they have children.  

Anna Borg also said that another contributing factor to low fertility rates was that Malta, like many other southern European states, does not have the supporting structures for working families that exist in Nordic countries.

“Higher female representation in the labour market would mean the working population would be able to afford more children. We seem to think that free childcare solved all our problems. It’s a good initiative, but children go to childcare till they’re three, what happens after? We need a much more holistic approach to the problem if we are to see an improvement,” said Borg.

This was echoed by JosAnn Cutajar, a senior lecturer in gender studies at the University of Malta, who said there are still many obstacles for women who would like to have a job. “Carers need to be less stigmatised. For instance, in Nordic countries parental leave is accessible to both parents.”

“Policies that make it easier for both parents to work are important because without them, many women are forced to choose between having a second child and their career,” Borg added. “This is true of all sectors in Malta, especially the private sector.”

Need for a foreign workforce

With the working population in decline, one way of ensuring economic continuity is a foreign workforce. Workers resettling in Malta fill job vacancies and contribute through their taxes and spending. 

Immigration has helped accommodate a rising demand for labour in Malta, to the extent that without foreign workers, Malta’s working age population would have declined instead of risen.

Data from the national employment agency JobsPlus suggests that the number of full- and part-time jobs rose by 25,500 between 2010 and 2014 – nearly equally divid¬ed between Maltese and foreign workers.

Until the 1980s Malta was a country of emigration, but now the odds that a third-country national is employed in an elementary occupation is 4.5 times that for the average Maltese, who instead have benefited from higher skilled jobs.

Malta is now a country that employs foreign workers at either end of the labour market – the higher end where skills are scarce, and the lower end where jobs are no longer that attractive for Maltese workers. Both EU nationals and non-EU nationals are filling in these vacancies.

Service jobs, sales workers and plant and machine operators remain clear¬ly dominated by Maltese workers, but 50% of the growth in EU workers are managers, professionals and technical staff.

Conversely, the proportion of the for¬eign workforce engaged in elementary occupa¬tions and in clerical and support duties rose from 7.5% in 2000 to 28.3% in 2014. These two trends, a declining share of higher-end and a rising proportion of lower-end occupations differ from those observed amongst Maltese workers.

Employment by sector and type of nationality: Malta’s workforce is diverse and it needs this diversity if it is to sustain its economy. Data: Central Bank of Malta

More impressively, dependence on foreign workers in elementary occupations and in clerical and support duties has risen from 0.5% to 14.1%.

For¬eign workers are more likely to be employed in other services, mainly remote gaming, profes¬sional services and admin¬istrative support and in tourism. 

Migrant workers are ever present in various jobs, namely ‘other services’ (29% of workforce), 23% in professional services & administrative support, 21% in tourism, 18% in real estate, 16% in information and communication, and 13% in construction.

The Central Bank is cautious about how this data, which it complied in a recent quarterly review, is read. “It is important to emphasise that the fact that a sector is heavily dependent on foreign workers should not be misconstrued as evidence that these have elbowed out Maltese employees.”

What this means was that the Maltese also were main recipients of new jobs: they occupied 50% of new full-time jobs in entertainment during the decade to 2014, and 66% of jobs in professional services.

But in tourism and construction the growth in employment since the 2009 financial crisis was mainly taken up by migrant workers. Non-EU nationals occupied 37% of new jobs in administrative support between 2009 and 2014, 13% of health and social care jobs, and 11% of retail jobs.

Even the use of public hospitals by foreigners shows that this has risen from approximately 1,500 patients in 2008 to less than 2,300 in 2012, less than the growth in the foreign workforce during the time.

But as the Central Bank continues, migrants also do not appear to be weighing down on the social benefit budget – with just 130 on unemployment benefits, for instance – this suggests that in addi¬tion to their significant contribution towards economic growth, foreign workers have also contributed significantly to improve the state of public finances in Malta.

And tax data indicates that revenue from foreign workers in the form of income tax and national insurance had risen to 10.1% of some €984 million in 2014, a growth of nine times during the period 2000 to 2014, whereas that from Maltese workers doubled.

Encouraging births

Anna Borg says just replenishing ageing societies with foreign workers, although a realistic solution, is not without its repercussions when it could alter the make-up of native populations. “If we are talking about work, then strictly-speaking foreign workers will solve the problem, however if we want the traditional Maltese population to continue then that is a different matter,” Borg said.

In a 2011 study by the EU’s statistical agency Eurostat, it was found that with an end to migratory flows the EU’s populations would age considerably, which is why immigration can be seen as an option for softening the ageing process. “But as immigrants are always older than newborns, if the population growth factor were to be immigration instead of fertility, then the ageing process would be softened less than in the case of a fertility increase. This effect is diminished if the fertility of immigrants is higher than in the host population.”

Governments across the globe have implemented other measures in an attempt to halt declining fertility rates. In Singapore, the government pays couples a bonus of $6,000 for each of their first two children and $8,000 per child for the third and fourth; the Danish government recently launched an advertising campaign to encourage people to have children and the Russians have even experimented with sliding benches to get people closer together. 

Overall, the fertility rate in the EU increased from 1.46 in 2001 to 1.58 in 2014.

Those European nations bucking the trend of decline include France, which has the highest fertility rate in Europe, alongside Ireland. After two decades of decline in the 1970s-80s, the fertility rate started picking up again in the late 1990s. Since then the country has registered scores just short of the hallowed threshold of 2.1 children per woman.

What France and equally successfully Scandinavian countries are doing is focus on gender equality and government intervention. The key is distancing away from the traditional family model that centres on the figure of a breadwinner going out to work, and the woman staying at home as caregiver. Family-friendly measures, parental leave, flexitime and telework, childcare support are all essential ingredients.

Two main factors can explain France’s exceptionally high fertility rate: a generous welfare system which gives cash allowances and tax breaks to families with children and a wide range of state-subsidized childcare options to help women get back to work.

So does Malta employ a more favourable tax rate for parents, and a new free childcare system for parents who are both in gainful employment. But even in its last review in December, the World Bank (the IMF) called for further actions to integrate the remaining inactive population, particularly women, into the labour market. “Expanding labour activation policies, and enhancing education quality, would reduce skill mismatch in the face of the changing labour demand. Further incentivizing delayed retirement would boost labour force participation among the elderly.”

Whether the effects of these measures will be felt in the years to come, will be something for experts to watch out for.