Maltese workers might need to delay retirement to maintain living standards

Malta’s low pensions might lead today’s workers to have to remain in employment past their retirement age if they are to maintain the standard of living they became accustomed to, Jobsplus CEO Clyde Caruana has said.

Caruana said that, given that pensions in Malta are only 1.2 times the poverty line, meaning that pensioners are not very far from the income level delineating poverty, workers might choose to continue working even when they reach an elderly age. Comparatively, Spain, a fellow Mediterranean European Union member state, has pensions which are 1.7 times the poverty line.

The only alternative to this, he said, would be for the government to substantially increase pensions, which would require either a much higher economic growth rate than the country currently enjoys, or that taxes are increased.

Caruana was speaking on Thursday at a forum on the silver economy and active ageing, organised in collaboration with the Department of Gerontology and Dementia Studies and the Centre for Labour Studies.

The aim of the conference was to kick-start a discussion on how the government can encourage more senior citizens to keep working, if they are fit and willing to do so.

Out of around 115,000 elderly persons in Malta, 15,500 of those aged 61 and over, and 3,500 of those 65 or more are still in employment, which is below the EU average.

Caruana said that, over the years, the numbers are increasing. While 42% of males aged 60-64 remain in the labour market in Malta - below the EU average of nearly 50% - year after year, the gap is closing, with the 18 percentage points gap in 2008 being narrowed to just eight points.

The best performing in this class are the Nordic countries. In Sweden, which has a retirement age of 61, 70% of those aged 60 to 64 are still in the labour market. 

Caruana, however, underlined that the reason more elderly persons were remaining in employment was mostly due to the fact that the island's population was increasing, leading to a greater cohort of people of pensionable age. The number of persons who actually decided to keep working out of the own volition – a lifestyle choice – accounts for a smaller portion of the increase than that which is explained by population growth.

“At face value, it seems the Maltese still opt to retire from the labour market, if they can do so,” Caruana said.

But he pointed out that, in the future, there might be factors which force people to remain in the labour market for longer.

“The bottom line of this is that, given that the number of pensioners in Malta is still low and that pensioners are not so far away from the poverty line, in the future, if current employees what to continue enjoying their standard of living, they will have to stay in the labour market.”

“It’s highly likely that many people will have to remain in the labour market out of necessity rather than anything else,” he added.

More measures to encourage senior citizens to remain in employment

Addressing the conference, active ageing parliamentary secretary Anthony Agius Decelis said the government was keen to open discussions on which measures it could introduce to help elderly people, who are healthy and willing to keep working, to go on and do so.

“Our country’s economy is expanding at a rate we never experienced before, and it seems like jobs are actually chasing workers,” Agius Decelis said, “This brings with it new opportunities – there are various sectors which are experiencing a shortage of human resources. To address this, the government has put in place various measures, such as free childcare, to encourage women to enter the workforce.”

The country, however, he said, needed to go over and above this. “A number of the 115,000 senior citizens in Malta are classified as 'young old' and are fit to work if they choose to do so – but they might need some encouragement.”

“We respect any elderly persons who decide to retire and enjoy their life at home with their families. But, for those who want to work, we recognise that being employed gives people dignity, keeps them in contact with society, and benefits them financially,” he highlighted.

He remarked that some people might go through a difficult period after retirement, since it can lead to a cultural shock. “We need to discuss how we can help our retired people to re-socialise when they leave the working world and enter a new situation.”

The government had transformed the way it viewed older people, looking at them from a social perspective rather than one related to their possible health needs, he underscored.

“As from the last budget, the government took the initiative, through various measures, to facilitate the situation for older people who feel they can keep working.”

He said there were other measures which were in the pipeline – such as the possibility of reduced hours and partial retirement, overtime relief, shift adjustments and a longer leave period.

“This forum can kick-start a wider discussion on the participation of the elderly in the employment sector,” he added.