The First Billion

2020 was the first year in history that saw the Maltese Government spend more than a billion Euros on social benefits. This means that one in ten of every Euro generated in economic output during 2020 was handed over to those most in need. 

Official figures seen by show that in the past eight years, the spending on social security benefits increased by over €294 million, or by 38%. The largest absolute increase was in contributory pensions where spending rose by over €200 million. Whereas previous administrations had kept pensions, at best, frozen in real terms, the post-2013 administration has raised overall spending by 51%. In just five years the minimum pension for a single pensioner rose from €130 per week to €149 per week, a significant rise of 15%. If the increase had been limited to the annual COLA, as was the case under previous administrations, the rise would have been half this amount. 

The most pronounced increase in social expenditure was on disability allowances, which have increased by nearly 150% over eight years. This reflects primarily the introduction in 2017 of severe disability assistance, which replaced what was previously called the disability pension. This new benefit, besides being more generous, increased eligibility by 50% and now provides assistance to 3,400 beneficiaries. 

One of the few expenditures that declined over time is that of social assistance. This reflects the success of the government’s active employment policy which resulted in a drop in the number of those dependent on social assistance since more persons went into employment. Even in 2020, despite the pandemic, the number of those receiving social assistance dropped to 4,598 from 4,991 in 2019. That means that one in twelve persons dependent on this assistance in 2019 managed to find gainful employment during 2020. Similarly, the number of single parents in receipt of social assistance dropped from 2,734 to 2,616, with nearly 120 single parents managing to find gainful employment during the pandemic. 

Despite the pandemic, about 500 individuals previously dependent on social assistance were able to, financially, stand on their own two feet. It is worth noting that in the aftermath of the much less pronounced financial crisis of 2009, there had been an increase of 900 individuals seeking social assistance. Whereas in 2010 4.2% of the Maltese population was dependent on this assistance, in 2020 the ratio has fallen to just 1.7% – the lowest in history.

During 2020, the government introduced several measures to boost social security benefits. For instance, 3000 families were given a child benefit bonus together with an increase in their children’s allowance. As a result, spending on these benefits rose by €2.5 million. In contrast, in the aftermath of the financial crisis of 2009, the Nationalist administration had reduced spending on children’s allowance by €2 million.  

As part of its efforts to sustain incomes despite the economic effects of the pandemic, the government increased spending on carers allowance by €2 million and that on the severe disability allowance by €2.3 million. Around 3,300 persons on the in-work benefit, an innovative scheme introduced by the post-2013 administration that boosts the income of those in employment who are on low wages, were given a supplement and increases to their benefit. Eligibility conditions were widened again, such that spending was one and a half times that a year earlier. 

Moreover, in contrast with other economically challenging times in the past, pensioners in 2020 were not ignored. Spending was increased by a record €40 million, one fourth of which went to those on the lowest pensions. Pensions for widows and on non-contributory pensions increased by nearly another €10 million. 

A couple on the minimum pension over the last five budgets have seen their income rise by more than €3,100 or 44% as a result of tax and benefit measures. A couple on the minimum wage with two children also saw an increase of just under €3,100 during the same period.

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