Malta wages register the largest drop in EU

A new EU report shows that Malta’s booming economy, with GDP growth well above the EU average in recent years, is not trickling down to wages. Due to uncontrolled high inflation, Maltese households have much less purchasing power than before the 2019 pandemic.

The EU’s Joint Employment Report, published on Wednesday in Brussels, shows that despite the government’s intervention to pump millions into subsidies, particularly in water and electricity bills, Malta still registered a staggering decrease of -4.4 % in real wages in 2023 compared to the previous year.

Malta’s real wage growth is the worst in the EU, at -0.8% on average. This means that even though workers in Malta may be taking home a higher salary than they did in 2022, the high cost of living is quickly eating away at these gains, leaving them with less purchasing power than when they were earning less.

Moreover, while real wages in Malta are not expected to improve, those on the minimum wage are the worst hit, possibly becoming much poorer.

According to the EU’s study, between January 2022 and July 2023, those on the minimum wage suffered a decrease in their purchasing power of almost 10%.

“In Malta, no additional discretionary updates have taken place since January 2023, and as a consequence, the persistently high inflation has continued to erode minimum wages in real terms,” the EU report notes.

The same situation was only mirrored in Croatia, Ireland, and Portugal. In Malta, the situation may improve slightly this year with the introduction of an increase in the minimum wage but inflation is still expected to remain above the EU average.

While many Maltese workers are not on the minimum wage, most third-country foreign workers, who now amount to more than a third of the country’s workforce, earn either the minimum wage or just slightly above it.

Apart from their low income, this economic model, introduced by the Labour government, also keeps average Maltese wages generally low despite registering above-average economic growth.

According to the EU study, in 2023, wages in Malta had the same purchasing power as those earned by salaried employees in 2018.

The EU’s report confirms a local KPMG study issued last March. The study found that Maltese real wages—wages after accounting for inflation—have stagnated over the past few years and fell in 2023.

“Wages in Malta grew by just 1.5% in 2023 – the lowest rise in the EU – with inflation eating up this increase and more, and have remained practically at 2018 levels at real levels,” the KPMG reported stated.