Economist warns no babies, no future

Malta needs a holistic approach that reduces the barriers to parenthood if it is to address the fertility timebomb, warns economist JP Fabri. 

“Parenthood should not be seen as a sacrifice that undermines career prospects but as a valued choice supported by society,” Fabri writes in his weekly opinion column on MaltaToday. 

According to Eurostat, the EU’s statistical arm, Malta had the lowest fertility rate in the bloc at 1.06 live births per woman in 2023. Bulgaria had the highest rate at 1.81 with the EU average at 1.38. 

In 1980, Malta’s fertility rate stood at 1.99, increasing to 2.02 in 1990 before starting its gradual decline. In 2013, the fertility rate stood at 1.36, dropping sharply to 1.13 in 2021. 

Economist JP Fabri (Photo: James Bianchi/MaltaToday)

Finance Minister Clyde Caruana described the falling fertility rate as the “elephant in the room” and “Malta’s biggest challenge” earlier this month when launching the pre-budget document. 

Caruana was echoing the words of Archbishop Charles Scicluna, who in his Independence Day homily warned that Malta faces “ethnic extinction” because of its low fertility rate. 

Fabri calls the fertility problem “the most profound structural issue” the country faces and warns “an economy without children is ultimately an economy without a future”. 

From affordable housing to childcare services and flexible work arrangements, the reform to address Malta’s falling fertility rate needs to be multi-pronged. And tax reform, Fabri writes, is a central part of this equation. 

“Families need to feel a tangible financial benefit from their decision to raise children,” he says, proposing tax-free income for the first five years after the birth of a first child and direct cash incentives for subsequent children. 

“These measures would not solve the demographic challenge alone, but they would send a clear signal that the state recognises and shares the financial burden of child-rearing,” he says, adding this would make parenthood more economically viable. 

Fabri also proposes savings accounts for children with the state matching contributions to build long-term security and housing schemes linked to family formation. Pension reforms could recognise periods of child-raising as contributory, he says, adding this will protect parents, especially mothers, from gaps in retirement security. 

He insists Malta must place fertility and family policy at the centre of its long-term economic strategy to turn its demographic timebomb into an opportunity “to design a society where family life is viable, dignified and aspirational once again”.