Recently, many countries have been giving increasing attention to Quality of Life as an indicator of wellness in society. This follows a long period where the level of the Gross Domestic Product was the be-all and end-all of economic and societal success.
Malta has not been an exception. Since Independence, successive governments have measured their success by the trends in GDP. This is rather understandable, given that we were in a situation where we had to catch up with other, more developed countries in Europe.
The high economic growth rates experienced between 2013-2019 managed to push the Maltese people’s GDP per capita up to 97% of the EU average in 2020, from 87% in 2012.
Some people seemingly forgot that one of the touted benefits of membership of the EU was that, by joining the huge trading bloc, we would share in the bloc’s economic growth and achieve a better standard of living. They started complaining that we should forget about GDP and talk about quality of life.
The reality is that both are important. It is futile to talk about quality of life when economic growth is so low that people barely have the basic necessities of life. But it is perfectly understandable that, when a stage is reached where most of the population has an adequate standard of living, then quality of life assumes greater importance.
We have reached that stage, so much so that Prime Minister Robert Abela has been saying that “It is time to shift from GDP to Quality of Life (QOL), from economic production to general well-being as the key policy target. Liveability, equality and human development will now take centre stage.”
Liveability, equality and human development will now take centre stage.
The EU has developed a framework of nine dimensions of the quality of life. The framework was endorsed by an expert group on quality of life indicators, who have looked at a variety of risks that may threaten the material conditions and safety of individuals and households.
Losing one’s job, health problems, or ageing are examples at an individual level, while events at a national or even global level, such as the global financial and economic crisis may also have an impact, resulting in a sudden deterioration of economic conditions and a fall in living standards for a wide cross-section of the European population.
In addition to economic aspects that may affect a person’s quality of life, there are many non-economic risks, such as violence and/or crime, which may endanger an individual’s physical safety. Whether these risks materialise or not, the subjective perception of such a threat may lead to feelings of insecurity which can effectively undermine a person’s quality of life.
One of the dimensions in the EU framework, the sixth one, concerns economic security and physical safety. It is the subject of this article.
In 2018, almost one in every three people (32.2%) in the EU reported being unable to cope with unexpected financial expenses. At the peak of the global financial and economic crisis, the share of the population that was unable to face unexpected financial expenses had been 37.1% in 2010, with this share gradually rising to 40.4% by 2012, before a period of six years of consecutive decreases.
On the basis of this measure, in 2018 more than half of the population reported being unable to pay for unexpected financial expenses in three of the Member States: Latvia (55.3%), Croatia (52.9%) and Greece (50.4%). At the other end of the range, less than one quarter of the population faced such difficulties in Belgium, Czechia, the Netherlands, Sweden, Austria, Luxembourg and Malta, where the lowest share was recorded, at 13.9%.
Across the EU, the share of the population that was unable to face unexpected financial expenses dropped by 4.9 p.p. between 2010 and 2018. An increase was observed in 12 of the EU Member States, with this share rising at the fastest pace in Greece (up 23.8 p.p.) and Estonia (15.0 p.p.); these two were also the only countries with double-digit increases.
Among the Member States where a lower share of the population faced such risks in 2018 than in 2008, the biggest reduction was recorded in Hungary, where the share of the population unable to face unexpected financial expenses fell by 34.3 p.p.; there were also double-digit falls recorded in Bulgaria, Poland, Malta, Czechia and Slovenia.
These statistics are all related to a notion of economic vulnerability concerning situations in which individuals, households or subgroups of the population are exposed to risks as a result of having insufficient resources to cope with the consequences of unexpected situations. The economic vulnerability indicator may be used to identify those groups in society that are unable to withstand the potential damage that may be caused by an adverse (financial) shock.
As may be expected, a higher proportion of the population that was living below, rather than above, the poverty threshold was unable to face unexpected financial expenses. In 2018, almost two thirds (65.4%) of the EU-27 population that was living below the poverty threshold faced such risks, while the corresponding share for people living above the poverty threshold was less than one third (25.5%).
As already shown, overall economic vulnerability is generally less prevalent in western and Nordic Member States. However, it is interesting to note that the risk of economic vulnerability in many of these countries was often considerably higher among people living below the poverty threshold than it was for people living above the poverty threshold.
For example, in Malta, the share of the population that was unable to face unexpected financial expenses was 4.3 times as high among people living below the poverty threshold (38.5%) as it was among people living above the threshold (8.9%), while in Belgium and Sweden the same ratio was only slightly lower, at 4.1 and 4.0, respectively; ratios of at least 3.0 were also recorded in the Netherlands, Czechia, Austria, Luxembourg and Germany.
One might say this was the least positive result achieved by Malta, despite having the lowest share of vulnerable people in the EU, both in terms of people above the poverty line as well as those beneath it. In fact, the share of vulnerable people below the poverty line in Malta was 60% lower than that in much-richer Germany.
Overall, these results confirm the effectiveness and efficacy of the Government’s socio-economic strategy in lifting the majority of people towards a better quality of life.