Top 10% earners had median net wealth of €1.2 million in 2020

Inequality among Maltese taxpayers appears to have increased in the first Labour administration, before starting a decrease during the 2017-2020 period.

In 2020, the median net wealth for the lowest fifth of the population stood at €14,800, while that of the wealthiest 10% of households stood at just under €1.2 million: 80 times richer than those living just above the bottom 20% but below the top 60% earners.

In an indication that inequality has decreased, the wealthiest 10% had been 95 times wealthier than households in the 20-40% bracket in 2017.

This emerges from an analysis of the European Central Bank’s Household Finance and Consumption Survey (HFCS) by Central Bank economists Valentina Antonaroli, Warren Deguara and Aleandra Muscat.

Inequality is measured using the Gini coefficient, in which a value of zero denotes perfect equality, indicating that wealth is distributed equally amongst all households, while a coefficient of 1 would denote perfect inequality, where all the wealth is held by one household.

In Malta, the HFCS’s Gini coefficient increased from 0.56 to 0.60 between 2014 and 2017, but decreased to 0.55 in 2020. This suggests that while accelerated economic growth between 2014 and 2017 fuelled greater inequality, this was not the case in the next three years.    

Between 2017 and 2020, the value of net wealth increased across all quintiles of income, with that of the top 20% increasing from just over €1 million in 2017 to nearly €1.2 million in 2020. But the study suggests that wealth increased at a higher rate for the lower income brackets.

While wealth inequality, which includes assets like property owned by households, decreased between 2014 and 2017, income inequality remained stable. The Gini coefficient for income in 2020 stood at 0.40, only slightly decreasing from 0.41 in 2017.

The annual household gross median income for Malta in 2020 stood at €29,716, up from €25,417 in 2017.

Households in the top 20% of the income distribution had a median income of €71,291, implying that they hold on average more than twice the overall median value, and almost eight times that of households in the bottom 20%.