A significant increase in the gap between the rich and the poor has been observed in Malta over a seven-year period between 2010 and 2017, a study has concluded. On the other hand, Malta stands out in the EU as having the least number of people who have negative net wealth (the term used when the value of the liabilities exceeds that of the assets) with just 0.3% of the population.  

These trends emerged from a study titled ‘Wealth distribution and social mobility’ which was carried out by Eurofound – an EU Agency for the improvement of living and working conditions.

It transpires that “there is a clear trend of increasing wealth inequality in Cyprus, Greece, Malta, the Netherlands and Slovakia”. A deeper analysis reveals that in 2010, half of the Maltese population accounted to 14% of the country’s wealth but by 2017 this rate had gone down to 12%. At the other side of the spectrum the opposite happened as the rich got richer. While in 2010 the richest 5% possessed 33 per cent of the country’s wealth, their overall share in just seven years rose to 40%. In other words, almost half of Malta’s wealth is in the hands of 5 per cent of the population.

This trend coincided mostly with a period of robust economic growth which started after 2013 when Labour was elected to government. However, this is a rather worrying signal of uneven distribution of wealth.

The study also investigated the average net wealth of the population. Malta placed fourth with €158,468. This figure is calculated by dividing the net worth of the household (assets minus liabilities) with the number of inhabitants. Undoubtedly, the very high rate of home ownership in Malta impacted heavily on the result. Luxembourg topped the list with €375,288 which is 20 times as much as in Latvia where average net wealth is just €19,249.

Other important findings:

  • The largest proportion of self-employed persons are within the wealthiest 20 per cent segment of the EU
  • A quarter of European citizens own a second property, three quarters own a vehicle and slightly less than half own valuables
  • Across the EU the top 20% possesses 60 times more assets than the bottom 20%
  • Deposits are more important for the poor while other assets like shares, bonds and mutual funds are more important for the wealthy.
  • Countries with a higher incidence of home ownership (like Malta) have lower prevalence of wealth inequality

Article 174 of the Treaty on the Functioning of the EU sets the objective of social cohesion and reducing the disparities between the levels of development of the various regions. UHM calls on government to take stock of this study as there is now empirical evidence that the wealth being generated is not being distributed across the board. Such concern confirms the warnings sounded by this union that the economy was relying too much on cheap labour rather than value added.