The Maltese economic model at work | Josef Bugeja

Josef Bugeja, GWU secretary general

At €10 billion, Malta’s annual budgetary spend has an immensely social dimension that reflects an era of industrial peace and consensus between unions and employers’ associations.

Over the past decade and a half, unions like the General Workers Union have participated and led the debate on economic modernisation and improved workers’ rights, at a time of historic economic growth for the Maltese islands. It would be facile to simply take everything Malta has achieved in 2025 for granted, especially when considering the headaches and turmoil faced elsewhere across the European continent, where democratic politics is being squeezed by the venomous far-right.

Maltese citizens’ lives today are sustained by a vast social spend, financed directly by our taxes. Annual budgets over the past decade have delivered improved quality of life, job security and mobility, and a dignified life. Consider Budget 2026’s Financial Estimates as proof of this statement—apart from free public schooling, Church school teaching salaries are paid by the State (€165 million) and private schooling’s growing expenses are subsidised to the tune of €25 million; €48 million is paid directly to our public university’s undergraduates in annual stipends; perhaps of a minor note, but €2.5 million in MATSEC examination fees are no longer payable to the State; school transport is furthermore subsidised for a total of €60 million; added to that is free public transport for all citizens, another €60 million; and an annual €56 million paid for free childcare.

These are just a few of the Maltese government’s cost-centres, but at least half of these redistributive pledges were developments from the last decade alone. Add to that the continued tax cuts for working families, higher pensions, and around €200 million in energy and fuel subsidies that keep supporting families and businesses.

Malta’s overall poverty levels remain below the EU average. In 2024, after three years of slow decline, the at-risk-of-poverty and social exclusion rate (AROPE) was 19.7%, consistently below the EU average of 21%. Strong economic performance has guaranteed high levels of gross disposable household income (a GDHI of 152.78 versus 111.02 in the EU), which, coupled with high employment, has kept overall poverty levels low.

What is concerning is that income inequality is also on the rise. Although not unlike the rest of the EU, the richest quintile in Malta earns almost five times more than the poorest one (4.87 vs the EU average of 4.66). This confirms the need for the government to ensure its social transfers are effective in reducing income inequality, and to never forget the need for a more progressive tax system, specifically on acquired and historic wealth.

The GWU is fully conscious that many non-EU nationals in Malta, including our fast-growing Asian workforce that contributes significantly to our economy, continue to face lower wages, higher housing costs, and greater job insecurity. If we truly want to strengthen social cohesion, we must ensure fairer income distribution and guarantee a dignified standard of living for these workers, too.

Overall, Malta’s model of great social spending is the high-water mark of our republican identity. To live in Malta today is to salute the opening line of our Constitution: “Malta is a democratic republic founded on work and on respect for the fundamental rights and freedoms of the individual.”

I implore all well-meaning citizens to weigh up the collective goodwill of all stakeholders and political parties—how far do they promote a democracy through the foundation of work and individual freedoms? There you will find the answer to a lot of what has made the last 15 years of economic gains possible.