The European Commission’s recent Autumn Semester Report endorses Malta’s economic and social policies and highlights the country’s achievements in these two areas. It confirms that the twin-pronged strategy of high economic growth coupled with sound public finances has worked to deliver results that are superior to the average performance in the eurozone.
In its overview of progress in Europe, the Commission called on the EU and its Member States to take decisive and concerted policy actions to deliver “inclusive and sustainable growth”, focusing on investment, productivity growth, and inclusiveness while continuing to ensure macro-financial stability and sound public finances. Malta has significantly delivered on all fronts.
Following the deterioration in public finances, Malta was, in 2012, subjected to the Macroeconomic Imbalance Procedure by the Commission. Through corrective measures enacted in 2013, Malta managed to turn the tide.
In this autumn’s Alert Mechanism Report, 13 Member States were found to have macro-economic imbalances and will be subjected to in-depth reviews. These include countries such as Germany, France, Italy, Ireland and Sweden. Malta is not one of them.
Malta was one of 10 Member States that were found compliant with the Stability and Growth Pact when the Commission reviewed its draft budgetary plans for 2019. This means not only that Malta’s 2019 Budget is acceptable, but also that it poses no risk of significant deviation from medium-term budgetary objectives. In other words, bar a serious international recession, Malta’s socio-economic strategy looks set to continue delivering.
The scoreboard for Malta had 10 indicators that were either better than average or on average, and two indicators that were weak but improving
However, solid economic growth and sound public finances are not ends in themselves, but a means for the government to ensure that the State can continue to deliver improvements in social services. The Commission refers to the fact that six per cent of the expansion in GDP next year will be accounted for by measures targeted at increasing pensions and social benefits, and at supporting Gozitans.
The Autumn Report also gives prominence to the performance of the different Member States in building a fairer Europe and strengthening its social dimension.
The Social Scoreboard for 2017 shows that Malta had a better score than average in seven indicators, namely the income quintile ratio (also known as the S80/20 ratio), the rate of people at risk of poverty and social exclusion (AROPE), the unemployment rate, the long-term unemployment rate, the rate of children aged less than three years in formal childcare, the rate of self-reported unmet need for medical care, and the rate of individuals’ level of digital skills.
The income quintile ratio shows how the ratio of the income received by the 20 per cent of the population with the lowest income has improved, in comparison with the total income received by the 20 per cent of the population with the highest income. This means that income is being distributed more fairly.
The AROPE rate in 2017 dropped by almost a full percentage point (pp) to 19.2 per cent (4.8pp from 2013), meaning that 2,576 fewer people were at risk of poverty and social exclusion (17,000 less from 2013).
Malta also scored on average in four indicators, namely the rate of young people not in employment or education or training (NEETs), the employment rate, the net earnings of a full-time single worker, and the impact of social transfers on poverty reduction.
Malta’s performance in two other indicators, namely early leavers from education and training, and the gender employment gap, were deemed to be weak but improving.
Overall, the scoreboard for Malta had 10 indicators that were either better than average or on average, and two indicators that were weak but improving.
In its comments on the social impact of the 2019 Budget the Commission stated that the Budget measures “continue to build on distributional policies enacted in recent years with the aim of strengthening social cohesion and social justice, while supporting the appropriate conditions for the economy to continue growing and creating jobs”.
The Commission’s Opinion also stated that “in particular, the (social) measures are targeted at increasing the disposable income of low and middle-income earners, families with children, sustaining affordable housing and reducing the risk of poverty among elderly by enhancing their income and supporting the provision of long-term care”.
The Commission’s acknowledgement is most encouraging as it underlines the fact that the strategy of economic growth for social results is working and can be relied upon to promote sustainable improvement in living standards.
Frans Camilleri is an economist and former journalist.