Higher in-work poverty despite resilient economy

A report by the European Trade Union Institute (ETUI) has found that in-work poverty is on an upward trend in Malta, despite the economy’s fair resilience under COVID-19 and improving job figures.

Full employment is a milestone for an economy, but as more and more people enter the active labour force, some are increasingly finding themselves toeing the poverty line. Between 2010 and 2019, the in-work at-risk-of-poverty rate increased by 12%, from 5.8% at the start of the decade to 6.5% last year.

This puts in-work poverty at an all-time high.

Increasing numbers of workers are resorting to temporary contracts, with the percentage of employees on these contracts almost doubling over a decade. In 2010, 5.3% of workers were temporary employees within their workplace. Now in 2019, temporary employees make up 9.1% of the workforce.

People take on temp work for a variety of reasons – 2.4% of workers said they opted for such a contract because they could not find a permanent job. Another 1.5% said that they did not want a permanent job, while 1.9% said they were in education or training. For a majority 3.3% this was simply a probationary period.

Pioneer in gender inequality

In 2019, the female employment rate stood 20.7 percentage points below the male employment rate at 65.8%. This puts Malta at the forefront of gender inequality in the labour market, at least by the EU’s standards.

But it’s not all doom and gloom – the female employment rate has been rising rapidly over the years, consistently clocking in at a higher rate every year. Male employment is also on the rise, but at a rate that’s far less rapid.

Employment prospects aren’t as hopeful when one moves up the career ladder. Using statistics from the European Institute of Gender Equality, the report points out the Malta also ranks worst in sex equality among corporate boards. Among the largest quoted companies locally, women make up roughly 10% of board members, resulting in a corporate gender gap of 85.6%.

Although Malta ranks worst in this respect, this is still a marked improvement compared to recent years. On average, between 2015 and 2017, women made up only 7.2% of all board members

Central bank projections

Unemployment is predicted to rise to 4.1% this year from 3.4% in 2019, according to this week’s Central Bank Economic Projections, and is expected to remain above its 2019 level in the near future.

Rather than boiling this down to fiscal measures, which have been highly supportive of employment, the Central Bank says that rising unemployment is in part mitigated by an envisaged drop in the labour supply resulting from migrant outflows and an increase in inactivity – especially among older workers more severely impacted by the pandemic.

The wage supplement scheme provided a lifeline for struggling industries when the pandemic hit, but the scheme is expected to push compensation per employee downwards. For the duration of the scheme, government and employers will continue to pay workers a lower-than-average wage throughout the scheme, but once this expires wage levels will begin to normalise.