In your report ‘One in three adults can’t make ends meet – study’ (November 23), the journalist chose only to emphasise a few negative aspects of an otherwise interesting and positive study, the first of its kind in Malta and based on parameters set by OECD.
Granted that bad news always sells more than good news, the fact is that 64 per cent of all adults in Malta had a good enough income to meet their living expenses, and that this compares quite well with 66 per cent of all adults in the 30 countries surveyed in the OECD. Moreover, if those who do not have any income (practically all youngsters) are excluded, the percentage goes up to 66.2 per cent.
It is also pertinent that 11 of the 16 countries, which had a lower percentage than Malta of those adults who cannot make ends meet, are rich countries.
One important result from the analysis is that Malta’s percentage is adversely affected by the fact that a significant number of women are still not participating in the labour force and, therefore, their ability to make ends meet is hindered. In fact, only 60 per cent of women did not have a problem in making ends meet, and this would have been higher were it not for the fact that a higher proportion of women did not have any income.
This shows why the government has been giving high importance to measures to activate women’s participation in the labour force, and continues to build on the success achieved so far.
Another significant observation is that the ability of adults to make ends meet improves considerably once they start working and earning better salaries. In fact, while only 32.4 percent of adults below 19 have not experienced a problem in making ends meet, this percentage goes up to 71.3 per cent when adults are 40-49 years old. Even pensioners fare reasonably well, at 65.5 percent who can make ends meet.
It is obvious that many adults in Malta do not pay enough attention to budgeting and that most people are either not planning for their retirement or not planning properly enough
The report by the Times of Malta is wrong when stating that the financial situation of more than half of respondents limited their ability to do things important for themselves or that half of the respondents are not happy with their present financial situation. These figures were not referring to the total respondents surveyed (1,013) but to 330 respondents who reported that in the previous 12 months faced a situation (not necessarily regularly) where their monthly income was not enough to meet their living expenses. Half of 330 respondents represents 16 per cent of all those surveyed.
But also in this context, an interesting observation is the response of people to situations where they cannot make ends meet. A good 86.4 per cent (of the 330 respondents) cut back on their spending, confirming that the Maltese are still able to cut their coat according to their cloth. Another 20 per cent decided to work more overtime or earn extra money, again highlighting a positive response. The ones who resorted to the credit card were 37.3 percent (not 40 percent as reported by this newspaper).
Having said that, it is obvious that many adults in Malta do not pay enough attention to budgeting and that most people are either not planning for their retirement or not planning properly enough, often relying on savings accounts which turn out to be woefully inadequate for their retirement years.
It is primarily with this in mind that the Ministry for the Family, Children’s Rights and Social Solidarity has launched the Retirement and Financial Capability Strategy and conducts regular campaigns about budgeting and saving.
Of course, more needs to be done and, as such, the purpose of the seminar was to flag the initiatives already underway, and to harness the support of the private sector, NGOs, constituted bodies and the education authorities in notching up the efforts to create a greater awareness on money management and the need for retirement plans. We would welcome the Times of Malta and other newspapers educating their readers about this through regular articles.
Adults’ ability to make ends meet should continue to improve in the future through the various measures announced in the recent Budget, such as the increase to all pensioners, the increase in children allowance and in-work benefit, the incentives for public servants to continue working beyond retirement age, the new Savings Bonds for those aged 62 and over, and other enhancements in social security pensions, among many others.
Apart from the introduction of Third Pillar Pensions, the government is now going to increase the annual tax credit available to employers and employees in respect of voluntary occupational pension schemes or retirement schemes from 15 to 25 per cent, together with an increase in the maximum tax credit from €150 to €500.
Claudia Cuschieri is a government spokeswoman, Ministry for the Family, Children’s Rights and Social Solidarity.
This is a Times of Malta print opinion piece