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15 maltatoday | SUNDAY • 13 NOVEMBER 2022 NEWS poverty by 5,300 people, almost erasing the impact of income growth on pover- ty." Finally, if only Malta's population had grown in 2018, an average of 2,600 people would have risen out of pover- ty, roughly half the poverty reduction brought about by income growth. "In reality, all four of these drivers have changed and resulted in a net increase of approximately 3,600 people at risk of poverty." Moreover, the interaction between population and inequality has become more pronounced due to the dichot- omous profile of economic migrants, "ranging from professional to elemen- tary occupations." Population growth and the influx of migrants also changes the composition of Maltese households, which in itself is a major determinant of poverty. Household composition and inequality Rapid changes in the composition of Maltese households are also a major factor in analysing poverty rates and resilient inequalities: "We found that inequality risk was mostly attributed to differences in the individual's qualifica- tions, hours worked, occupations and household type." For example, the two researchers found that single-earner and mul- ti-earner households are less prone to live in relative poverty. On the other hand, single-earner households with two or more adults are likely to be twice as prone to relative poverty. Therefore, the transition from sin- gle-earner households to multi-earner households with more than one bread- winner, "have pushed the poverty line through the roof." Additionally, the increase in pension- ers escalated poverty rates simply be- cause they have a higher poverty risk relative to other groups. Even if the poverty rate remains un- changed, the risk of poverty is not evenly distributed across different so- cial classes, and therefore inequality or poverty can easily widen or take on another dimension if we are not care- ful. "This underscores the importance of having policies that are regularly re- viewed to remain effective, as the ben- efits of growth can easily be offset by its disadvantages due to labour market imperfections." The importance of such policies is un- derlined by historical trends explored by the two academics. In another study published by the Centre of Labour Studies in February, the two economists note that in 2018, "the relatively poor were poorer when compared to the sit- uation in the 2005-2009 period with the shortfall in income mainly deteriorating in the 2010-2013 period". Moreover, with the exception of 2010, when household incomes declined amidst a global recession, the pover- ty line (which continued to climb due to an increase in income generally) al- so placed upward pressure on relative poverty. Additionally, the impact of changes in the poverty line also depends on the distribution of the poor — that is, the number of people living just below or above the poverty line. "We also find that during the 14 years, inequality amongst the poor increased, reflecting a larger fraction of the poor closer to the poverty line. By decomposing the change in the number of people at-risk- of-poverty, the increase in the poverty line was the main driving force of pov- erty, and the mean income growth had a neutralising effect upon poverty". They conclude that the recent increases in inequality have "mildly affected pover- ty, with population change becoming a more prominent factor." The role of the state Whilst noting that policy makers have focused on activation policies, such as the provision of childcare instead of traditional redistributive policy designs such as minimum wage increases, these proved less effective in reducing pover- ty rates, simply because those who are most likely to benefit are those who al- ready participate or can participate in the labour market. Moreover, evidence suggests that ac- tivity rates of low-skilled persons re- main significantly below that of their highly skilled counterparts. "As long as the labour market remains socially stratified, poverty risk is likely to re- main or intensify." Camilleri and Vella conclude that while growth remains vital, "we must complement our efforts to increase growth with policies that make more re- sources available to the relatively poor". To some extent, "this can be achieved by focusing on inclusion, specifically by helping people below the poverty line to move up the income ladder faster." Economists Melchior Vella (left) and Gilmour Camilleri (below), co-authored of a seminal study tracking poverty rates between 2009 and 2018 If only Malta's population had grown in 2018, an average of 2,600 people would have risen out of poverty, roughly half the poverty reduction brought about by income growth