Malta has seen a substantial reduction in the number of workers solely on the minimum wage, in the past seven years. This has been confirmed in a reply to a Parliamentary Question by Hon Jason Azzopardi, in which Minister Clyde Caruana noted that in 2020 there were 2,447 persons who were paid the minimum wage.
This means that between 2013 and 2020, the year of the pandemic, there was a reduction of nearly 1,200 workers who depended only on the minimum wage. Indeed in 2013 there were 3,635 persons at this income level, or one and a half times the amount of 2020.
In the 2013-2020 period, the number of persons in employment increased from 174,000 to 252,000. Whereas in 2013, two out of every hundred workers received a minimum wage, in 2020 the proportion decreased to one out of every hundred. Simply put, the prevalence of workers on minimum wage has been halved.
Between 2013 and 2020, the year of the pandemic, there was a reduction of nearly 1,200 workers who depended only on the minimum wage.
The reduction in dependence on the minimum wage was sustained even during the year of the pandemic. In fact, while 2,483 persons were on the minimum wage in 2019, last year, the number went down further, by 36.
By contrast, during the 2008 crisis, despite the economic impact being ten times less than that of the pandemic, there was still an increase in the dependency on the minimum wage. In 2008, the persons on minimum wage increased from 2,705 to 3,162. For each six workers on minimum wage in 2008, there were seven in 2009. This is a further confirmation of how detrimental the approach of political austerity adopted by the Government during the 2008 economic crises was for those with the lowest income.
The handling of the COVID crisis was the exact opposite, as the Government introduced the wage supplement, allowing those on the minimum wage to be fully paid by the State. In fact, the amount paid, €800, was even more than the minimum wage.
Another important development was that while the minimum wage had been frozen for a substantial number of years, in 2017, the Government not only raised this wage but introduced a mechanism through which nobody would be left on this wage for more than a year.
Research carried out recently by the Central Bank indicates how the increase in minimum wage in these last years has led to it having better purchasing power. Prior to 2013, this was certainly not the case. The increase given was not enough to keep up with the increase in the cost of living which those on minimum wage were faced with. Conversely between 2013 and 2020 the average price of products and services consumed by these workers increased by 9% while the minimum wage increased by 10%.
In fact, the Caritas research carried out last year indicates that a single parent with two children who receives minimum wage has an income that is €4,000 more than the minimum budget for decent living, when taking into account the wage and other benefits. This is nearly double the positive gap that emerged from previous Caritas research carried out 4 years prior, while the research carried out in 2012 had shown that these families were greatly burdened by utility bills and other essential needs.
Rather than raise bills and fuel prices, and reduce the expenditure of children’s allowance as the previous government had done in 2008, the current administration reduced the price of fuel, increased the children’s allowance expenditure, improved the in-work benefit it had previously introduced and also the supplement for parents of low-income households.
This is the reason why we’re seeing a reduction in the number of persons dependant on social assistance.