Gap between rich and poor is growing

Businesses are rarely satisfied at the volume of trade done over the festive period. It will not be surprising at all therefore if, as in other years, they will report a lower sales volume this year as compared to that in other years.

Well, times change and the present circumstances are not exactly all that heartening to encourage consumer spending. The contrary is the case. Yet, the political parties, ever so keen during the year to preach of economic difficulties, as seen from their own respective angles, do not mind during the festive season to try and squeeze a bit of extra cash from their supporters for their parties’ spending machines.

Whatever the circumstances, though, people are still inclined to spend that little extra over the Christmas period to enjoy yuletide in the best way they know. Put against this background, news that Malta closed the wealth gap with the European Union last year may have been cause of some cheer for some but not for others who have either found themselves out of a job over the past year or who, for one reason or another, have had their living standard reduced.

Those caught in the poverty trap would have even greater reason to consider the news with great scepticism.

When Malta joined the European Union in 2004, the island was well below 75 per cent of the EU’s average GDP per capita but the figure rose to 83 per cent last year.

According to the latest figures, Luxembourg remains by far the richest member state with a GDP per capita of 271 per cent, nearly three times the EU average (100 per cent).

Closing the gap means that the island is moving ahead, which is one of the reasons why the people wanted to join the EU in the first place – to help speed up economic growth and improve their living standard.

The European target is high but, despite the country’s smallness and difficulties, progress has been made. Other countries that have a higher living standard than that in Malta have not had the same rate of progress in the wake of the difficulties that arose following the financial storm that broke out in 2007-2008.

The sharp rise in the utility rates has had a strong impact on the spending power of many families. However, there is another important point that has also to be kept in mind. This is that wealth being generated locally is not percolating in equal measure through all strata of society. Those working in lines that are doing well will invariably be better off than others working in sectors that are economically depressed or whose net profit is low.

In fact, according to the latest figures, the number of Maltese at risk of poverty rose again last year and the gap between rich and poor has widened.

People considered “at risk of poverty” are those living in a household whose total income is below 60 per cent of the average in the country after adding social benefits. Last year,, the figure was 15.5 per cent of the population.

The income disequilibrium problem will not be solved overnight but over time. Moving on to higher-earning business lines or other economic activity, as the country has been doing in recent years, is a challenge that the country would have to continue facing in the bid to bring about a higher living standard for all.