Budget expected to improve living conditions

Average household gross income rose by 10.3% to €38,210 in 2020, whereas average household disposable income grew by 9.7% to €31,270. Statistics issued by the National Statistics Office reveal that the situation faced by Maltese families during the pandemic contrasts sharply with that in other EU member states.

Most of the increase in household income (93%) was employment income, which was 2.2 percentage points above the 2019 level. The rest of the increase was due to a mix of higher family and children allowances, sickness and disability benefits, and education allowances. 

This builds on other achievements achieved, including a drop in the rate of people at risk of poverty and social exclusion by one percentage point in 2020.

Statistics about the living conditions in 2021 will be issued in the third quarter of next year, however, the indications are that they will at least have maintained their 2020 level.

Most of the increase in household income (93%) was employment income, which was 2.2 percentage points above the 2019 level.

Looking ahead, there is confidence that living conditions will continue to improve. The Maltese economy is forecast to grow quite strongly in 2022, above the EU rate. Employment levels are expected to remain at record levels, complementing the heavy reduction in unemployment.

Budget 2022 contains proposals benefiting different classes of pensioners, the elderly, families with children, people with a disability, those with a low income, and those whose pensions or allowances were affected by anomalies which built up over the years. To the whole package must be added various reforms being envisaged in the framework of social assistance, which will also have a favourable effect on living conditions.

COLA and pensions

Once again, the Government has augmented the Cost of Living Allowance (COLA), which was calculated to be €1.75 per week. In addition to this increase, pensions across the board (retirees, widows, invalidity and non-contributory) will be increased by €3.25, a rise of €5 per week. This will benefit some 95,000 contributory and non-contributory pensioners, so that they will have received an annualised per capita rise of €1,313 over a five-year span. The expense of this measure is around €24m.

Service pensioners will benefit from a further increase of €200 in the amount exempted for the purpose of calculating their social security pension, such that the exempted sum will now reach €3,066 per year. Furthermore, those over 72 years, or who will reach this age next year will receive an additional improvement because their commuted pension will now be fully ignored in the calculation of the social security pension. These two measures mean some €3m more invested in their pockets.

Addressing past anomalies

But the Government’s action is not just about giving an annual increase. Budget 2022 also tackles anomalies which arose over the years.

Currently, widows who are ineligible to a retirement pension are given a survivors’ pension amounting to five-sixths of the two-third pension paid to their late spouse. But survivors who are eligible in their own right to a retirement pension are given the full two-thirds pension entitlement of their deceased spouse. As from 2022, over 12,000 widows will gradually see their pensions gradually adjusted to catch up with the norm. Through this measure they stand to benefit from an average weekly enhancement of €5 in their pension rates.

Another anomaly was that pensioners who retired after 2008 get a Cost of Living Bonus lower than that given to people who retired before. In its 2017 electoral manifesto, the Labour Party had promised to correct this anomaly. It will do so now, with a phased roll-out over a number of years until a uniform rate is attained for all pensioners. This was because of the substantial expenditure this correction entails, which in 2022 alone would amount to €2.5m for some 43,000 pensioners.

As from 2022, over 12,000 widows will gradually see their pensions gradually adjusted to catch up with the norm.

A major measure is the revision of the supplementary assistance paid to low-income pensioners, other elderly persons, and persons in employment with children not 16 years of age. Some 29,000 persons will see an improvement varying between €260 and €338 annually in their income. Government will spend €5.6m on this measure.

The In-Work Benefit Scheme introduced in 2015 to enhance the income of low-to-medium households was a game-changer for social justice. The payable rates will once again be increased next year and income thresholds will be extended. For married couples the threshold will be widened from €35,000 to €50,000; whilst the thresholds for the other two categories will be extended to a maximum income of €35,000. The payable rates for the new income brackets will be €200 per child; and the rates for the current brackets will go up across the board by €100 per child.

Improving living conditions of persons with disability

Persons with disability have benefited from various grants, allowances and other services which over the past few years have made a huge difference to their living conditions. This year, amongst the measures that will further improve their condition, are an increase of €260 per annum to 1,700 households where there are children under 16 years with a disability so that their allowance will have almost doubled since 2013; and an increase of €200 annually to some 450 parents who have to stay at home to care for children with severe disability.

One of the most important promises in the 2013 electoral manifesto was to address grievances and anomalies which had affected thousands of persons over previous years in the public service and the public sector. Millions of euros have been paid to such employees over the past few years. Next year, labour corps members who were enlisted before 1979 and later employed in the public service or the public sector; former port workers; employees who were engaged in the public service after successfully completing apprenticeship courses; ex-employees of the Gas Board, and ex-apprentices with the Malta Electricity Board ─ around 5,200 workers ─ will once again be called upon to apply to receive payments totalling some €10m.

For more information on how these measures will be applied, people are encouraged to visit the one-stop shop in their locality.

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