MaltaToday previous editions

MALTATODAY 27 June 2021

Issue link: https://maltatoday.uberflip.com/i/1387622

Contents of this Issue

Navigation

Page 11 of 51

12 maltatoday | SUNDAY • 27 JUNE 2021 NEWS NICOLE MEILAK THE richest 20% in Malta are receiving 4.3 times more dispos- able income than the poorest 20%, a 0.33 marginal increase over 2005 levels only kept in check thanks to greater redistri- bution of taxes and social wel- fare. A University of Malta study on changes in income inequality in Malta since 2005, has iden- tified the importance of taxes and social transfers, in keeping inequality at bay over the past 16 years. But it also found that education remains the key to en- abling people to keep income in- equality and dependence at bay. The study found that had there been no redistribution of direct taxation and social transfers, in- come inequality in Malta have been more pronounced among the poorest population. In layman's terms, inequality has increased over the past 13 years, but state welfare helped slim down the gap be- tween the poor and wealthy. The authors said that, even without no notable changes, they can see indications that the top 20% earners in Malta are ob- taining a higher proportion of income. Compared to 2005-2009, so- cial welfare measures have had a "mildly neutralising effect" on inequality, but less so has the tax regime. The authors noted that social transfers provided a "greater safety net" for citizens, but tax reforms have eroded tax progressivity over the years. Then in 2018, the authors found that the bottom 20% of the population were earning roughly 10% the total income, while the richest 20% enjoyed 37% of total income. In fact, it's this top 20% that enjoys the highest percent- age of Malta's total income. The study shows that the size of people's households, how much tax is redistributed and social benefits, play an important role in stabilising and redistributing income from the richest to the poorest. The study from the Centre for Labour Studies found modest inequality increasing between 2005 and 2018, but which was mildly neutralised through gov- ernment intervention. "Without policy intervention, the imperfectness of the labour market can result in further in- equality. So an important im- plication for policy is to reduce further barriers to economic in- clusion, as the benefits of growth can easily become battered by its downsides due to the roles of globalisation, technology and market forces," authors Gilmour Camilleri and Melchior Vella said in a presentation of their study earlier this week at the University of Malta. Education and household set-up The educational attainment of the head-of-household was found to be the most important factor for explaining inequal- ity among households, and its importance has become more pronounced over time. The dif- ference in incomes for heads of households with tertiary educa- tion, was "racing away" accord- ing to the authors of the study. Whereas education explained almost 15% of inequality be- tween households during 2005- 2009, the rate increased to 25% between 2014-2018, confirming the variances in income of those with university education and other households heads with primary, secondary and up- per-secondary education. Households with more than one income earner, now more commonplace, were also gener- ally considered more financially secure than single-earner house- holds, thanks to the evolving Malta's richest 20% own 40% of total income 40 35 30 25 20 15 10 5 0 Bottom 20% 20-40% 40-60% 10% 12% Percentage of income Population Income distribution across *Based on Lorenz curve data 60-80% quintile Top 20%

Articles in this issue

Archives of this issue

view archives of MaltaToday previous editions - MALTATODAY 27 June 2021