A template for social justice and prosperity | Michael Falzon

Michael Falzon, Social policy minister

The standard of living of a nation is often measured by its economic performance, particularly employment rates. In Malta, even the harshest critics acknowledge that the government’s record on these metrics has been outstanding. Year after year, Malta ranks among the best-performing countries in the EU.

Yet, true to its social justice principles, this government does not rest on these achievements alone. Instead, it remains committed to translating economic wealth into policies and programmes that deliver justice and prosperity for all. The 2026 budget is a clear and a tangible demonstration that real improvements in the lives of working families and vulnerable groups remain the government’s foremost performance measure.

This year’s budget allocates approximately €2.6 billion to social investments and benefits, an all-time record investment. It represents more than a quarter of total government expenditure and an increase of €157 million over 2025.

The contrast with the Opposition’s last budget in 2012 is indeed stark. Back then, the only measures offered were a cost-of-living adjustment and a limited increase in children’s allowances, excluding the lowest-income households. At that time, unemployment had soared to 8,000, while 102,000 people were at risk of poverty and 42,000 classified as severely deprived.

Faced with this precarious situation, the Labour administration embarked on an ambitious programme to lift those at the lower strata of society from the risk of poverty and accelerating social mobility. Over the past decade, this government introduced a wide range of incentives, including free childcare, substantial increases in children’s allowances, and improved retirement pensions. These measures have already delivered €708 million directly into the pockets of Maltese families.

The results speak for themselves: Full employment, the lowest unemployment rate in the EU, a 63% reduction in people on social benefits, and a considerable fall in the share of the population at risk of poverty—from 24.6% to 19.8%. Severe deprivation now affects only 4% of the population, among the lowest rates in the EU. Budget 2026 continues this trajectory, sending a clear message of solidarity, while acknowledging that the work is still ongoing.

Key measures include a €160 million reduction in the tax burden, easing the strain of home loans and boosting disposable income for families. This is expected to have a positive impact on Malta’s declining fertility rate, supported further by a €2,000 bonus for families welcoming a third child. Children’s allowances will rise between an average of €250 to €417 per child, with the highest rate payable increasing by 76% to €2,239 over six years. Pensioners will yet again see their disposable income grow steadily.

Malta’s strong economy has enabled the government to provide families with the financial support and opportunities they need to avoid hardship and invest in their future. By expanding access to finance, education, and employment, the government has empowered low-income households as well as the whole working class to improve their socio-economic status. Today, Malta boasts one of the lowest rates of workers earning a minimum wage in the EU.

These social measures are not simply about putting money in people’s pockets. They are rooted in the government’s socialist conviction that everyone deserves a genuine chance to succeed in life. Access to finance, education, training, healthcare, housing, pensions, and social assistance when needed are the pillars of this vision. As the media has noted, the clear winner in this budget is the Maltese family.

Make no mistake; this is the template for the years ahead.