Issue link: https://maltatoday.uberflip.com/i/1510271
12 EWROPEJ maltatoday | WEDNESDAY • 25 OCTOBER 2023 RIGHT: I suppose I shall have to preface this article with a gentle reminder – to myself, as much as to my readers – that mathematics has never really been my strong point, at the end of the day. So when I read an online in- terview with Finance Minis- ter Clyde Caruana yesterday morning – specifically about next Monday's budget – I more or less expected that some of the figures he would bandy about, would strike me as be- ing somewhat slightly… well, WRONG, to be perfectly blunt. And yes, yes: I know it's a little presumptuous of me, to ques- tion the calculations of such a seasoned 'economist-mathe- matician' (all the more so, giv- en that everyone else - includ- ing the interviewer - seems to have simply accepted all Caru- ana's figures, without so much as batting an eyelid…) But then again: it's a bit like having (or not having, as the case may be) an aptitude for, say, 'music'. Everybody knows that a certain amount of 'mu- sical talent' is an essential pre-requisite, for anyone aspir- ing to be a musician. But let's face it: you don't really need much of an ear at all, to in- stantly realise when someone else is singing 'off-key'.... Well, it's the same with num- bers, up to a certain extent. I may lack the skill to solve com- plex mathematical problems, myself… but I can still imme- diately notice, when someone else's answer happens to con- tradict certain visible realities, on the ground. Like, for instance, the precise number of pensioners living in Malta, right now. I stand to be corrected, of course: but as far as I remember, the latest Cen- sus revealed that the number of people in the '65+ years- old' category, amounted to 19.3% of the entire population (in turn, estimated at rough- ly '550,000'), in 2022… giving us a total of 'roughly 106,000' pensioners in Malta, last year. Granted, this does not in- clude people who receive State pensions for reasons other than 'retirement'; and even if it did, the percentage itself will no doubt have increased a little, since last year… as it has consistently increased (by around 0.2-0.3% per annum), for the past few decades, with- out fail. But still: if Clyde Caruana's computations are indeed cor- rect… it means that the num- ber of pensioners living in Mal- ta must have somehow shot up to around '184,911' – from '106,000' last year, if you'll re- member – in the space of just 12 months! Or does it? Because this is where I always used to screw up, in all those Maths exams at school (i.e., I always used to assume that everyone else, except me, got all the answers 'wrong'; until, of course, I fi- nally received my exam re- sults…). So bear with me, while I go over the sums a little in my head. As I recall, Clyde Caruana told Times editor Herman Grech yesterday that: "COLA increases […] will add around €100m to the cost of pensions." Now: the precise wording is important, there. The Finance Minister uses 'Addition' – one of the four major operations of Arithmetic, alongside 'Sub- traction', 'Multiplication', and 'Division' – to explain the ef- fects of this year's Cost-Of- Living Adjustments, on his government's recurring wel- fare expenditure. Effectively, this means that the figure of €100 million rep- resents the amount by which the 'cost of pensions' has actu- ally increased, as a result of the COLA refunds… and NOT the total amount that the expend- iture will reach, after those re- funds are factored in. It's complicated, I know – mathematics always is – but in purely arithmetical terms (and always according to Caruana's calculations), this works out as: '100 million = cost of pen- sions MINUS (not plus) the COLA increases'… Hang on, wait. I'm making this way more complicated than it actually needs to be. So let me rephrase that, in the simplest way I possibly can: What it means, in a nutshell, is that this year's COLA in- creases for pensioners amount to exactly '100 million euros'… in and of themselves. And, well, this is the part my brain has been trying to grap- ple with, ever since. For unless I am much mistaken: in last year's Budget, Clyde Caruana had told us that while the Cost of Living Adjustment for 2023 worked out at €9.60 a week… the COLA increase for pen- sioners would be capped at on- ly €2.60, per pensioner. And while the €9.60 is to be paid out by Maltese EMPLOY- ERS, not the Maltese gov- ernment (that's an important detail, by the way: so keep it in mind for a future article) – with the pension increases, it works the other way round. What our Finance Minister is effectively telling us, then, is that this additional expense of '€2.60 per week, per Maltese pensioner', amounts to a stag- gering '100 million euros': in and of itself. Which also implies that – one sec, while I open up my calcu- lator app - '2.60 x 4 x 52' should give us the total government expenditure, per annum, on each individual Maltese pen- sioner. (The answer, by the way, is '€540.80'.) So for the Maltese govern- ment to end up spending E100 million, just on COLA in- creases for ALL Malta's pen- sioners… well, work it out for yourselves. '100 million divid- ed by 540.80 equals… 184,911'. And that gives us the precise number of people who will be claiming a State pension in Malta, by next year alone. Hmmm. Sorry to sound so sceptical, but… is that even physically possible, to begin with? Or is there something I'm not quite seeing, in all this? Reason I ask is that: for the past six or seven years, the rate at which Malta's population has been physically ageing, has never once exceeded the 1% mark. Between 2020 and 2021, for instance, the '65+ years old' age-bracket swelled by only 0.6%: from 18.87, to 19.13%. And it was broadly the same (and often, a lot less) in all preceding years. Are we to understand, then, that the same national age- ing rate has suddenly shot up – just like that, from one mo- ment to the next – from an annual average of '0.5%'… to well over SEVENTY-FIVE PER CENT [75%], in a single year? in other words: from 106,000 in 2022, to 184,911 today?) Now: just like I've already ad- mitted to having always been rather crap at Mathematics, when all is said and done… well, I was never much good at being a 'demographic statis- tician', either. So who knows? Maybe it IS possible, after all, for such a giant chunk of an entire country's population, to That's a whole new definition of 'Pensions Time Bomb'… Raphael Vassallo