Malta’s welfare system keeping 100,000 people from being at risk of poverty – report

Malta’s welfare system shielded just shy of 100,000 people from being at risk of poverty, according to the latest statistics on material and social deprivation released by the National Statistics Office (NSO).

Over a third of Maltese residents would be at risk of poverty without Government assistance, a rate which in 2021 increased for the first time in years as a perfect storm of issues left many unable to cope with rising prices.

The 36.2 per cent of people who would be at risk of poverty if household income was their only means of subsistence is higher than the 35.1 per cent registered in 2020, which was the lowest level in years, steadily dropping from 37.9 per cent in 2016.

For 2021, this represents 183,813 people in this category – a higher amount than previously seen, even when the rate was higher, due to the increase in population Malta has experienced over the last years.

These figures do not take into account any social transfers within the welfare system, which drastically reduce the amount of people at risk of poverty by almost 100,000, to 85,754.

However, the EU-SILC survey, which collects and produces statistics on income and living conditions, takes into account other indicators, such as risk of exclusion from society through material or social deprivation.

Persons are considered to be at-risk-of-poverty or social exclusion if they are in at least one of the following states: at-risk-of-poverty, severely materially and socially deprived, or living in households with very low-work-intensity. These were estimated at 103,329, corresponding to 20.3 per cent of the population living in private households.

At-risk-of-poverty

For 2021, the at-risk-of-poverty threshold, set at 60 per cent of the national equivalised income, was calculated at €10,222.

This was the first time the threshold topped went over the €10,000 mark.

The largest share of those at risk of poverty, 28.1 per cent, was registered among elderly persons aged 65 and over.

Deprivation indicators

The material and social deprivation indicator aims to capture the social dimension of poverty and therefore its coverage goes beyond the material dimension. Apart from items such as the ability to replace worn-out furniture and worn-out clothes, this statistic measures social pursuits, such as leisure activities undertaken regularly and meeting with family and friends.

Severely materially and socially deprived persons are considered as such if their household cannot afford at least seven items out of 13 material and social deprivation items.

In 2021, 27,334 persons, equivalent to 5.4 per cent of the population living in private households, were estimated to fall in this category.

Materially and socially deprived persons are those who cannot afford at least five deprivation items. These were estimated at 9.8 per cent of the population, an increase of 0.4 percentage points from 2020. Across the 13 material and social deprivation items, the most prevalent deprivation item was the inability to pay for a week’s annual holiday away from home, accounting for 33.1 per cent of the population in private households.

Low-work-intensity households

The third aspect of the at-risk-of-poverty or social exclusion indicator relates to very low-work-intensity households, defined as those in which the adults (aged 18 to 64) worked under one-fifth of their work potential in the year preceding the survey. In 2021, the low-work-intensity rate was calculated at 4.1 per cent of the private-household population.