‘Work doesn’t pay’ | Charles Miceli

Did Budget 2016 do enough to reduce poverty levels to within sight of EU targets? Veteran social justice campaigner CHARLES MICELI answers with a resounding ‘No’  

Raphael Vassallo
25 October 2015, 9:15am
Last updated on 26 October 2015, 8:28am
Veteran social justice campaigner Charles Miceli. Photo: Ray Attard
Veteran social justice campaigner Charles Miceli. Photo: Ray Attard
Malta is by any yardstick a fast-changing place. I will soon be invited to consider just how much it has changed since the 1960s – around a decade beyond my memory’s reach – by a man who will (paradoxically) also argue that it hasn’t changed enough.

But before getting there, one small aspect in which times have certainly a-changed concerns the annual presentation of the Budget in Parliament. 

In years gone by, this otherwise unremarkable event had the power to mesmerise the entire country. Apart from the obvious interest regarding how individual measures might (sometimes drastically) affect one’s livelihood, there was also something almost ritualistic about the political paranoia surrounding the event… which, as a rule, was broadcast live on national TV.

The mystery of the black suitcase, tightly held by the finance minister as he treads slowly, ominously, down the corridor in between medieval suits of armour, with cameras and media in full pursuit… there was something contrived, yet compelling about the whole spectacle.

Today? Budgets are a good deal less… well… emotional. But it doesn’t mean there is any less to discuss, or indeed to worry about. At least, not according to Charles Miceli, who had reason to follow this year’s Budget speeches more attentively than most.

For years a social worker with Caritas, and a long-time campaigner for social justice in his own right, Miceli has often sounded the alarm over the rise of poverty in 21st century Malta. His frequent press contributions have for some time now urged governments of both hues to take a step back and look at the socio-demographic landscape for what it really is… not for what government statistics say it is.      

Seated at the kitchen table at his Naxxar home, Charles Miceli repeats that entreaty with a curious mixture of urgency and good humour. It is, in fact, his first answer to the question: so what did you think about Budget 2016, anyway?

He takes a sip of piping hot tea before answering. “As [Finance Minister] Scicluna himself said, the government first wants to consolidate the economy, and then begin to distribute benefits. At the same time, he also told us that the economy is going well.”

He shrugs, as if to underscore the contradiction. “But this is the sort of rhetoric we’re used to. The first thing to look at is what was on government’s mind when drawing up the Budget. Government is bound by two factors: it is bound by EU targets to reduce poverty by 2020, and also by its own electoral manifesto. It’s not just me who argues that the main goal should be to eliminate poverty. It’s the government’s own electoral promise, written in black on white.”

These two electoral pledges, he adds, are not abstract commitments, but are circumscribed by targets that have to be met. “I forget the exact details, but the EU’s target is to reduce the number of poor people by 20,000 by 2020. That’s for Malta; for each country the figure will be different.”

This brings us to the first of many pitfalls regarding these targets. How does one calculate the number of people in poverty so precisely? What sort of yardsticks are we using to decide who among us is ‘poor’ or not?

Miceli breaks into a characteristic laugh: almost (but not quite) a chuckle. “It’s more complicated than that. The term used for the EU targets is ‘relative poverty’, as opposed to ‘absolute poverty’. But relative to what?”

Both labels, he adds, are in themselves problematic. Absolute poverty is generally defined as a life materially destitute of even the most fundamental necessities: food, water and so on. “In Malta we never really had ‘absolute poverty’ in that sense… you have to go back to the very early part of the 20th century. My own memories are from 1960s onwards. In those days, everyone had at least a piece of bread to eat. And as time wore on, more and more people managed to overcome the sort of absolute poverty that existed before. But this doesn’t mean that poverty has been eradicated. 

We now talk of ‘relative poverty’ instead, he goes on. As the standard of living rose in the decades after Independence, so too did the benchmark against which poverty is measured. 

“Before, our measure of poverty might have been: can a man afford a loaf of bread? Now, the government’s calculation is: how many people earn less than 60% of the median salary? That’s around €7,500 a year. People in this category are labelled ‘at risk of poverty’…” 

Miceli does not disguise his distaste for such terminology. “The problem is that the yardstick being used to measure poverty is flawed (‘fazulla’). Anyone who earns less than 7,500 a year – especially if he or she pays rent, what with the prices as they are today – is not ‘at risk of poverty’. He is poor. Simple as that. To call them ‘at risk of poverty’ is practically an insult… at least, to someone who worries about these things, like me.”

That laugh again. “For other people, maybe it’s not an insult. But you tell me…” here he suddenly gets serious… “If someone is living on €140 a week… sorry, but how can he live on that? There was an interview with the finance minister in [Sunday newspaper] Illum recently, where he said that ‘with two euros from here or there, you can rise above poverty’. What is he saying, exactly? That if you get €140 a week, you’re poor… but if you get €142, you’re not?”

He trails off into a look of bewilderment. “What I can’t understand is how they can just draw a line, and say, ‘anyone who’s below this is drowning, while anyone who’s above… even if they’re up to their nostrils… is fine’.”

Nor is that the extent of the problem with such official statistics. “It’s already bad enough that these things are decided just by drawing a line. But even the line itself is flawed. Even people earning more than 60% of the median pay would struggle.”

Miceli rejects as ‘fazzul’ another aspect of government’s formula: its mechanisms to calculate cost of living increase.

“The Opposition leader pointed out how, while the cost of living rose by one-point-something per cent, food prices actually went up by 3.5%. Ultimately, people at the bottom of the ladder do not measure poverty by whether they can afford the latest tablet or iPhone. They measure the cost of food.”

To use government’s ‘flawed’ calculations and ‘insulting’ labels, the number of people currently ‘at risk of poverty’ stands at around 102,000. This is the number that should, in theory, drop by 20,000 by 2020.

Miceli acknowledges that progress has been achieved in the last Budget, but nowhere near enough to reach the target.

“Until recently, that number grew steadily by around 5% a year. But the rate is going down... Government announced a decline of something like 0.2%. This doesn’t mean that the number itself is going down. The important thing, however, is that the upward trend has been slowed, even if by a little. But still: the calculations on which all these figures are based was wrong to begin with. The real number of people in poverty is higher. The yardstick needs to be changed…”

Miceli is perhaps more exposed to the naked realities of terms such as ‘relative’ and ‘absolute’ poverty. His experience with Caritas exposed him to ‘thousands’ of cases where people couldn’t afford even the barest of essentials. Contrary to public perception, he argues that the situation faced by many among the 102,000 is actually closer to the more extreme of the two labels.

“In the 1970s, a lot of people either availed of government housing schemes, which meant cheap rent, or were helped financially to buy or build a house. There was a drive to make housing affordable, with banks such as Lohombus offering low interest rates. Many of us are now pensioners. I’m one of the lucky ones: I managed to buy my own home at a time when prices were more affordable. But others might be on a pension of €500 a month, and have to pay €200 or €300 in rent. Many people are in that situation today. They might not be dying of hunger, but they are definitely living in almost absolute poverty. A life of bread and pasta. They can’t afford to eat fish or meat every other day…”

Yet by the ‘official’ yardstick, they would still be labelled ‘at risk of poverty’.

“In America, they talk about “the one percent and the 99%”. It’s applicable to parts of Europe, too. We are living at a time when wealth is concentrated among the very few, at the expense of the very many. In Malta, we’re not at that level of disparity yet. It’s certainly not 1% to 99%. But unless there is some kind of intervention by the State – and a forceful intervention – we will certainly head in that direction.”

What sort of intervention does he have in mind?

“I have long argued that the minimum wage is too low, and should be increased. Government has ruled that out for now. What remains is the Cost of Living Adjustment, but Caritas recently conducted a study which showed that even here, the yardstick used is flawed. There was a big discrepancy between the mechanism used by Caritas to calculate the cost of living increase, and the mechanism agreed to between government and the MCESD.”

The discrepancy in itself did not surprise Miceli. “The way government’s calculations are made requires agreement with the social employers. But how can they ever agree? How can an employer be expected to agree to a change in yardstick that will affect his business? From the outset, it was impossible.”

Contrary to the official version of events, Caritas’ calculations suggest that a person on minimum wage is clearly not enjoying a decent standard of living. “And that was four years ago. The ‘basket’ [of prices used to measure cost of living] is now being revised. If the COLA was too low four years ago, what about today?”

Here Miceli tires of limiting the discussion only to official government statistics. “A lot of people switch off when they hear a lot of talk about percentages and figures. What they all understand, though, is that when they go to the supermarket, the number of items they can no longer afford is always rising. They can’t afford this, they have to cut back on that… And if their washing machine breaks down, they can’t afford a new one. There are thousands of people who can’t afford a washing machine.”

Against this backdrop, he argues that the question we should be asking is: ‘What sort of wage should people be getting to guarantee at least a decent quality of life?’

“Some time ago, we talked about the ‘living wage’. It’s been forgotten now. Is that a coincidence? Or was it deliberate? Is it because the two parties have drifted so close to the centre?” Another sudden chuckle. “Ironically, the only person talking about the living wage now is David Cameron in the UK. Not even Jeremy Corbyn…”

Another irony he is quick to point out is that while the living wage promise has been forgotten, government still spends enormously on social welfare. He rattles of a list of state-financed or subsidised services: health, education (including stipends), public transport…

“The irony is that government has to subsidise those services, because otherwise people wouldn’t afford them on their current wages. Take just health, for example. If someone has to undergo a serious operation, what would it cost without government subsidies to keep the health service free? Let’s say €70,000. It could be more, it could be less.  What does he do? Sell his house?”

The simple fact that government has to intervene on all these issues, he goes on, is itself confirmation of the maxim – repeated frequently by Charles Miceli throughout this interview – that ‘work doesn’t pay’.

“Bear in mind I’m talking only about people employed in the lower rungs,” he quickly adds. “The people on minimum wage or slightly higher… not consultants or whatnot, who get paid very well. In a nutshell, I’m talking about the 99%, not the 1%. These people can’t afford the basic things that make for a decent standard of living: food, rent, education, health… so government has to bail them out. That’s what I mean by ‘work doesn’t pay’…”

Still, we are no closer to establishing what sort of intervention Miceli has in mind. A number of questions arise. What measures could have been taken in the budget? How would any additional intervention – over and above the present expenditure on welfare – be financed? There is also the issue that, Malta being an EU member state, state aid is illegal (some exceptions and within certain parameters notwithstanding)?

Starting with the first question, Miceli expresses frustration at generally positive measures that didn’t go far enough. He singles out pensions as a prime example.

“To have a minimum guaranteed pension, we were told we have to wait till 2027. Why? If the economy is going as well as they described in the same budget, why do we have to wait? Does this make sense? And what is the ‘minimum’ that will be guaranteed? Sixty per cent of the ‘60% of median pay’… in other words, of another flawed line drawn by government. They’re not saying we’ll be getting a pension that will be adequate for our needs in 2027. We have to wait 12 years to get a sum based on skewed calculations of those needs.”

As for the questions of how a government as imagined by Charles Miceli would intervene, and the legal hurdles that may arise, he points out with a grin that for a different system to work, we have to start talking about why the current one doesn’t.

“Unfortunately, the way things work out we’ll soon start arguing that it’s the Labour or Nationalist parties’ fault that poverty is on the increase. But that’s got nothing to do with it. People are falling into poverty because there is neo-liberal system in place. And both parties subscribe to this system. Unless we break out of this way of looking at things, the gap between rich and poor can only be expected to widen.”