The risk of in-work poverty in Malta is among the lowest in the EU and Eurostat data shows that the risk of in-work poverty after social transfers has been decreasing in the last years. The number of minimum wage earners has also decreased.
The working poor are a section of the population who are at risk of poverty in spite of having a job. They can be employed or self-employed. However, their income falls below 60 per cent of the median earnings of those in full-time jobs. Having a job and being poor may not be simply due to low wages but because wages are not sufficient to maintain the income of the household in which they live. Equally, a person can earn a very low wage but not be at risk of poverty because the income of other household members is sufficient to raise the overall household income above the poverty threshold.
Young people, and in some cases older workers, are more likely to be employed in low-paid jobs. Likewise, more women have the tendency to be employed in lower-paid jobs than men, even though statistics show us that, if they are in work, they are on average less likely than men to live in households with a poverty level of income. Lone parents and migrants in many countries are also particularly vulnerable to being working poor, since they tend to combine various adverse characteristics; to be in low-skilled jobs with low rates of pay and live in single-earner households.
The risk of in-work poverty in Malta for those aged 18 and over in 2007 was among the lowest, at four per cent, when compared to the EU25 (member states prior to enlargement in 2007) average of eight per cent. This applies to both women and men across all ages. While educational achievement decreases the risk of poverty, those with a low education in Malta also incur lower risks. For example, while in the EU25 a person with low education has a 14 per cent chance of in-work poverty, this decreases to six per cent for persons with such qualifications in Malta.
Single parents with dependent children, at 15 per cent, are the most vulnerable group at risk of poverty in Malta, although this is still lower than the EU25 average of 18 per cent. Maltese women aged between 55 and 64 have a higher risk of poverty than younger women; while on the contrary Maltese men aged 55 to 64 have lower risks of poverty when compared to younger men.
No data is available on the scale and nature of in-work poverty of those who are self-employed or on immigrants in Malta. The majority of immigrants, especially boat people arriving from Africa, tend to work in the informal economy. Unions and NGOs in Malta report that such workers are often given low pay with poor working conditions.
There is little data and research available on trends in Malta. However, Eurostat data reveals that the risk of in-work poverty (after social transfers), decreased from six per cent in 2000 to four per cent in 2007. Through a parliamentary question on minimum wage workers, it was also revealed that the number of minimum wage earners (in full-time jobs) decreased from 6,799 in 2000 to 2,250 in 2004.
Both unions and employers in Malta agree that the minimum wage plays an important role in ensuring social cohesion in the Maltese society.
However, much of the local debate does not focus on the issue of in-work poverty. The generation and retention of jobs often receives much more attention by the social partners and by the media in general.
Employers in general take a cautionary approach to wage increases although they are not against the cost-of-living allowance (COLA) for those who truly need it, like those on minimum wages. In general, employers respect the minimum wage levels of those working in the formal economy. The same cannot be said for those employed in the informal economy, especially irregular immigrants who are often given very low wages with bad working conditions. Maltese unions are denouncing these practices and are calling on the government to check this abuse on the part of some employers especially those in the construction industry. Seasonal and home workers are also more prone to abuse when they work in the informal economy.
The government has a combination of fiscal and other measures to address the issue of the working poor in Malta, targeted mainly at families and workers. These include an exemption from income tax for low earners and a supplementary allowance where the yearly income declared is less than €9,966 in the case of a couple and less than €7,799 for single persons (excluding social security contributions).
Households whose income is €23,923 or less are also entitled to receive a higher rate of children’s allowance. The government has also introduced an energy benefit which is also applicable to households whose income is less than €7,795.76. The aim of this benefit is to mitigate the impact that the surge in oil prices had on the higher water and electricity bills introduced from October 2008.
There are no studies available in Malta which may be able to give indications whether the number of working poor has increased during the present recession. However, it is natural that during a recession employers have an upper hand when negotiating wages. Thus one needs to keep a watchful eye to ensure that the threat of in-work poverty does not increase.
The author lectures at the Centre for Labour Studies, University of Malta and is the national correspondent for the European Working Conditions Observatory (EWCO) at the European Foundation for the Improvement and Living and Working Conditions.