Malta: the rich got richer in decade of unprecedented growth

The share of total national wealth owned by the richest 5% of the Maltese population increased from 33% to 40% between 2010 and 2017, data from the European Foundation for the Improvement of Living and Working Conditions (Eurofound) this week showed.

The share of total national wealth dropped for the bottom 50% from 14% to 10% in a sign of growing inequality.

And the proportion of individuals just below Malta’s average net wealth also increased, from around 72% in 2014 to nearly 77% in 2017.

The Europe-wide study shows Malta was one of five countries with “a clear trend of increasing wealth inequality” over the last seven years, a period characterised by accelerated economic growth and a property boom that was spearheaded by the Muscat administration after it was elected in 2013.

Moreover in 2017, the average net wealth of the richest 1% amounted to €3.35 million – while the poorest 20% possessed an average net wealth of €10,000.

In measuring wealth, the Eurofound study used household wealth per capita (total household wealth divided by the number of people living in the household), under the assumption that benefits, not purely financial, are shared, both with partners and with dependants.

The data was based on the national Household Finance and Consumption Survey, a survey of private households coordinated by the European Central Bank in 2010, 2014 and 2017.

The Eurofound analysis points at a clear trend towards increased inequality in Cyprus, Greece, Malta, the Netherlands and Slovakia, while a smaller increase was noticeable in Estonia, Finland, Hungary, Portugal and Spain. In contrast wealth inequality decreased in Austria, Germany, Ireland, Latvia and Poland.

The analysis suggests that wealth inequality has grown more in those countries that initially had low inequality. But despite this increase in wealth inequality, Malta remains part of a group of eastern and southern EU member states still registering the lowest levels inequality like Poland, Slovakia, Slovenia, Lithuania, Greece, Italy and Croatia.

In contrast, wealth inequality is the highest in some western European member states: the Netherlands, Germany and Austria.

Cyprus, having the third highest wealth inequality, was an exception to the southeast-versus-west divide in wealth inequality.

The study shows that the average net wealth in Luxembourg (€375,288) is almost 20 times higher than the average wealth in Latvia (€19,249). The second richest country in terms of average net wealth is Cyprus (€182,741), followed by Belgium (€164,573), Malta (€158,468) and Ireland (€137,553). The poorest countries in terms of average net wealth after Latvia include Hungary (€30,227), Poland (€33,933), Slovakia (€36,593), Greece (€37,388), Croatia (€38,915) and Lithuania (€40,847).

The study also shows that Malta has the smallest number of people with a negative net wealth, that is when the value of their assets and property is lower than the value of their liabilities. The proportion of such people in 2017 was the lowest in Malta (0.3%) and the highest in the Netherlands (10%).

In Malta, foreigners were less likely to be in the bottom 50% of the population than in other countries. While in the entire EU, 66% of individuals born in another country were in the bottom 50%, less than half of foreigners living in Malta belonged to the poor half of the population.

And while close to 50% of non-EU foreigners living in Malta were in the bottom half of the population, 42% of those born in other EU countries fell in this category.

The Eurofound report denounced an enormous gap in wealth in the European Union where the gross assets of those in the top wealth quintile of 21 EU member states were 60 times larger compared to those in the bottom wealth quintile.

The report suggests that regularising wealth declaration in the EU could be a way of promoting social justice by minimising hidden wealth and combating tax evasion.