We often hear persons speaking of a pensions time bomb in relation to the fact that because of an ageing population, within a couple of decades, there will not be enough persons working in Malta to sustain the pensions system. It is because of this that the retirement age increased. However, an analysis of Malta’s demographic structure provides more issues for consideration than just the ageing factor and the related pensions system.

A former permanent secretary in the public service and former chairman of the Statistics Authority used to say how interesting demography is – an analysis of the demographic structure can in fact explain a number of social developments. It could also indicate certain economic issues that may arise in future.

The last published data is the demographic review of 2013, although some data has also been published for 2014. Moreover, in certain areas there could have been some significant shifts by 2016, which are, however, still not quantified.

The total population is 425,000 persons, while the Maltese population, specifically, is 400,000 persons. This would imply that the number of non-Maltese living in Malta is around 25,000 but the feeling is that today there are many more. From an economic perspective one needs to appreciate that the presence of non-Maltese has increased the labour force and as a consequence our potential for economic growth.

The majority of the non-Maltese would seem to be males, which gives even more credence to the belief that most non-Maltese persons come to Malta to work - but they also seem to be forming a family here. In fact the official data shows that there are just under 4,000 non-Maltese aged under 20 years of age. The likelihood is that such persons will remain in Malta and seek to find employment here.

Who would end up joining the ranksof the unemployed: the Maltese or the non-Maltese?

So far, our economy has produced enough employment opportunities to satisfy this supply of labour. It is also likely that a significant percentage of non-Maltese persons are in jobs that Maltese may not wish to do. However, the full picture is not as rosy as that. Non-Maltese may be doing work which Maltese workers would be very happy to do as a part-time job such as in catering or construction.

So, non-Maltese may not have taken the full-time jobs of the Maltese, but could very well have taken up part-time employment opportunities.

Another factor to note is the birth rate. We may not have had a one-child policy like China. However, de facto, we still have one-child families with1.54 children born per woman. Eventually this will impact our labour supply. Will we need even more non-Maltese workers to take up the demand being created by employers?

Non-Maltese workers contribute to the economy not only through the work they do but also through what they consume. Effectively they have increased domestic demand. On the other hand has the presence of non-Maltese workers stimulated demand for property so much so that it has pushed up the price to the extent that it has made it unaffordable to young Maltese first-time home buyers?

Non-Maltese workers also increase demand on the country’s physical infrastructure as well as health and education services. Will their contribution to our economy be greater than the cost to meet this demand?

Another pertinent concern is that which questions what would happen if we were faced with an economic crisis. Who would end up joining the ranks of the unemployed: the Maltese or the non-Maltese? Unemployment would tend to dampen wages. Would wages be dampened further if there were these non-Maltese still in our labour force?

The changes in the demographic structure have come in response to a number of factors, mainly the good performance of the Maltese economy and Malta’s EU membership. I do not advocate that we should reduce the presence of non-Maltese on our island. However, we should make an effort to understand the economic implications of such a presence, especially since the indications are that this presence is increasing.