Statistics: A tool to be used in the right way | Silvan Mifsud

As the world is passing through a period of high inflation, it becomes rather appetising for the public to run articles that compare prices of daily goods from one country to another. However, such comparisons need to be considered within a much wider consideration of different economic eco-systems.

The price differences can be caused by a myriad of different things from the size of the economy and hence the level of economies of scale, to different structures and situations, from particular reliance on shipping and the split of what has to be imported and what can be homegrown. All these differ from one country to another and not taking due consideration of these when comparing such prices, makes the comparison of prices between countries an exercise which is at best an exercise in drawing reader’s attention but not informing them well on the basis of scientific and correct research.

A case in point is the article published on the Times of Malta on the 10 May 2023, “How do grocery prices in Malta compare to Sicily and Cyprus?”. This article contained an interesting exercise, the conclusions of which hinge on the comparability of the statistics quoted, particularly the measure of income being used for comparison and assessment of affordability.

Quoting from the said article, it stated that: “According to the most recent NSO data, Malta’s average monthly wage for employees was of €1,785 before tax and social security deductions... By way of comparison, the monthly gross wage in Cyprus is €2,237 according to the most recent data from Cystat, the Cypriot statistics office.”

Not quite. The comparison made between the average monthly gross wage in Malta and Cyprus is extracted from different statistical sources using completely different methodologies. The source of Malta’s average gross monthly wage is the Q4 Labour Force Survey published by the NSO on the 13th March, 2023. As the name suggests, the results of this survey is based on a quarterly gross sample of 3,200 private households.

On the other hand, the statistic quoted for the monthly gross wage in Cyprus is arrived at by dividing the gross earnings by the total number of employees who received remuneration, with the data sourced from the records of the Social Insurance Services in Cyprus.

Source: Eurostat

Evidently, the article in question amounts to comparing apples and oranges. One is based on a sample, the other is based on a full and integral statistic.

The accurate and valid comparison of the annual average salary amongst EU member states, is the one published by Eurostat on the 19 December, 2022 based on an annual average adjusted salary indicator based on a combination of national accounts and Labour Force Survey (LFS) data. This method bridges the error gap that the LFS has. This indicator clearly shows that the average annual gross wage in Malta in 2021 was significantly higher than that in Cyprus (Malta €27,334; Cyprus €22,734).

It is advisable that caution is exercised when using statistics as using them wrongly can create erroneous perceptions which are bound to gain traction.

Silvan Mifsud is council member of The Malta Chamber and chairperson of Entrepreneurship & Family Business Thematic Committee