Going ‘beyond GDP’ | Daniel Darmanin, Maria Giulia Pace, Glenn Fenech

This is an opportune moment to make a choice on whether we want to go back to our old ways, or take this as a golden opportunity to build a better and more ‘people’ centred economy

“We need to correct models of growth incapable of guaranteeing respect for the environment, openness to life, concern for the family, social equality, the dignity of workers and the rights of future generations.”

In his encyclical Laudato Si, Pope Francis encourages us to restructure our economic models and move beyond just financial gains.

Over the years, globally, we have seen Gross Domestic Product (GDP) taking centre stage in the economic evaluation of a country, often being used as the sole gauge of a country’s success. This inevitably led governments to focus on production and value added, in the false belief that GDP automatically equates to better quality of life and happiness of its people. This meant that other socio-economic factors which are important for people’s well-being, but which do not feature in this headline figure like health, equality, and fair working conditions, have been put aside. Indeed, it is clear that GDP fails to measure all relevant dimensions that lead to a good quality of life.

In the past years, Malta has recorded exponential growth rates, coupled with high foreign direct investment, low unemployment and improved public finances. Yet, this might have materialised at the cost of other social and environmental factors. How is this growth in GDP being reflected in terms of better quality of life for all, especially the most vulnerable amongst us?

By no means are we proposing to disregard GDP. However, we find it absolutely necessary to stop looking at it in isolation. We are therefore proposing to introduce a wider framework which takes into account a number of other socio-economic variables, which when paired up with GDP growth, can help to paint a truer picture of our country’s success.

In our study, ‘Beyond GDP’, we propose the inclusion of a six-pillar framework, which includes a variety of dimensions and related indicators. The first dimension proposed is that of income and its distribution amongst all citizens. Through indicators such as ‘at risk of poverty’ as well as the degree of inequality amongst all the population, we can ascertain if the high growth rates and economic prosperity being recorded are truly being shared by all.

Another dimension proposed is that of housing, which is one of the basic needs (shelter) of every human being. The conditions of housing as well as the affordability of having a roof should be considered, given its important impact on quality of life. We are also proposing to look at education and skills levels. Education increases opportunities for a better life in adulthood, and hence achievement in these aspects could help to ensure a better quality of life in the long-term.

A fourth indicator proposed is that of jobs. Unemployment should not be the only indicator being analysed, the working conditions of our workers should also be analysed, through for instance the number of hours worked. Health is another dimension which impacts the welfare of every person. By looking at issues such as obesity, common ailments amongst the population (e.g. cardiovascular diseases), as well mental health, we can identify the health status of our population.

Finally, we propose to include environmental indicators. The environment represents our common ‘home’, the air that we breathe, the land that we can enjoy during our free time. These are all indicators which impact our day-to-day living and therefore our quality of life.

We are of the firm belief that this study is just the first step towards a wider project of reframing our economic success. The creation of an online dashboard including all data sets and indicators proposed could be a first step of bringing these statistics together and enable greater discussion and action.

We invite all stakeholders and authorities to come together and seek how to best adopt this framework, so as to make sure that policies and strategies aim towards a better life for all. Designing a national well-being framework to be used in conjunction with the traditional GDP figures, should be the way forward.

Moreover, making sure that well-being factors are rooted within all policy making will ensure that ‘quality of life’ is prioritised amongst all sectors. We are also recommending reopening discussions in terms of the Cost of living adjustment (COLA) and initiating the debate of creating a social pact.

In a time when we are being forced to stop and reflect on our economic structures and rebuild our systems due to the global pandemic, it is an opportune moment to make a choice on whether we want to go back to our old ways, or take this as a golden opportunity to build a better and more ‘people’ centred economy.

The authors are: Daniel Darmanin, Justice & Peace Commission, Maria Giulia Pace, EY Malta, Glenn Fenech, Seed Consultancy

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