Making poverty history

Statistics out yesterday show that 85,000 people in Malta remain at-risk-of-poverty, earning less than €10,222 a year.

The figures published by the National Statistics Office show that the at-risk-of-poverty rate stood at 16.9% in 2021. This translates into more than 85,000 people, including under-18s and over-65s.

The number of people accounts for 17% of the population, a figure which suggests no or very little improvement over recent years.

An even larger number (168,000 people) cannot afford a week-long annual holiday away from home, while 33,000 people cannot afford a get-together with friends or family for a drink or meal at least once a month.

This suggests that a sizeable segment of the Maltese population lives in a constant risk of falling into poverty and even more are deprived of life’s small pleasures.

This has remained a statistical constant despite targeted measures introduced over the past decade including pension increases, increases in children allowance, in work benefits, the tapering of unemployment benefits and universal childcare. The situation would have been far worse in the absence of these benefits.

In fact, the NSO points out that the ARP rate for 2021 would increase by 19.3 percentage points to 36.2% if one excludes all social transfers, including pensions. This in itself is a timely reminder on the importance of ensuring the sustainability of pensions and welfare, even in times of lower rates of economic growth.

But one can also argue that the measures taken so far to address poverty, although positive were not robust enough to change lives and making poverty history, as Labour pledged before 2013.

Since 2014, Malta adopted a National Strategic Policy for Poverty Reduction and Social Inclusion, which identified the groups most at risk of poverty and proposed measures targeting each group.  But so far, the piece meal approach has only worked in so far as keeping poverty in check rather than at substantially reducing it.

Moreover, statistics suggest that categories like the elderly remain more vulnerable than others and a regional divide between more affluent regions and less affluent ones persists.  The problem is bound to get worse in view of the rising cost of living triggered by the breakdown of supply chains in the aftermath of COVID and the Ukraine War.

But the persistence of poverty suggests that although the economy has grown at a fast rate, the trickledown effect is not strong enough to raise the living standards of everyone.

The state needs to have an active role in wealth redistribution and in setting the agenda for social dialogue on the pressing issue of wage stagnation. Making work pay would contribute to a reduction in poverty while empowering people to move away from dependency on benefits.   

Unfortunately, the problem of wage stagnation and low wages was not sufficiently addressed in the best of times when business was doing well, and it is more difficult now during an international economic crisis.

And while the government is shielding the entire population from energy poverty, the increase in food prices is bound to take an even larger bite from low-income earners.

There is no easy solution to poverty, which is also tied to other factors like gender, ethnicity, housing affordability and cycles of dependency.

Addressing the roots of poverty has to be accompanied by monetary handouts in the shape of targeted benefits but the country also needs an institutional reference point in the shape of an anti-poverty commission led by a recognizable and credible figure who commands respect across the board.

Such an agency should also be backed up with a team of experts who can constantly monitor the situation, proposing both short term and long-term solutions while anticipating trends. The commission should also be in a position to give a voice in social dialogue to those categories who are neither represented by trade unions nor employers’ associations.

Malta must do everything to prevent the emergence of social ghettoes concentrated in deprived areas and social mobility should remain a prospect for all, including immigrants, single parents and the differently abled.

And while everyone should eventually fish with his or her own rod, to make this possible the state has to ensure that people are earning enough money to buy a rod and are eating enough to be in a position to fish.