One may excuse readers, who may have forgotten how shopping by housewives in the US has vastly developed since the early 1950s and 1960s. Today, it reaches high levels of bounty and affluence, spurned by the re-election of Donald Trump and his slogan “Make America great again”. Likewise, in Malta, we dread past years of poverty, rationed food and long queues of jobless workers in the 1970s. Today we can rejoice and triumphantly welcome a thriving economy, which boasts full employment aided by the recruitment of thousands of third country nationals. The latter signed up for superior work conditions in Malta, after facing meagre wages and difficult living conditions in East Asian countries. Most, were lured by licensed temping agencies which bagged a cool sum – charging them for work permits, finding them temporary shelter and jobs. So, are we classified as the isle of milk and honey – where equality reigns? Not so quick.
Data released by the Central Bank of Malta shows that the richest 10% in Malta own practically 90% of Malta’s business wealth (equivalent to €11.6bn). The overall amount of debt (including mortgages and other personal credit) of households in the bottom half of the net wealth distribution is estimated at €6.7bn (fourth quarter of 2023), accounting for 65.6% of total household debt in Malta.
The wealthiest 10% alone, not surprisingly, account for half of the level increase in net wealth since 2010. Yet, on a positive note, cash is everywhere as economy floats on €25bn of idle depositor money. Notice, how Bank of Valletta (BOV) marked a significant milestone, with the listing of its €100m 5% Unsecured Subordinated Bonds (2029-2034) on the Official List of the Malta Stock Exchange (MSE).
As expected, this bond was quickly over-subscribed in days. The occasion was celebrated with the picture of the CEO enthusiastically seen at the Ringing of the Bell ceremony, hosted at the MSE in Valletta. Also, encouraging are tourism forecasts. Ryanair is currently forecasting overall passenger movements will climb to over eight million next year.
The tourist season has been very rewarding last year (albeit at a lower per capita return) as we picked up the slack suffered during the 2020-2022 period. At the same time, sadly, not all tax payers are rendering to Caesar the true coin. Malta has the second-highest VAT gap – an estimate of the overall difference between the expected theoretical VAT revenue and the amount collected.
Malta’s accession to the EU in 2004, has opened the flood gates to myriad regulations, that if religiously followed, can be expected to guide our leaders to follow scrupulously good governance, save the environment, encourage meritocracy and maintain a higher moral rectitude. Progress was achieved yet a number of unsolved scandals and hints of corruption at the courts keep the Opposition party active and protesting in Parliament.
A recent IMF report warned that despite impressive growth, Malta’s physical and public health infrastructures are creaking under rapid population growth. St Luke’s, an abandoned and sadly deteriorating hospital, is in urgent need of refurbishment. The debacle of the Vitals/Stewards three hospitals’ fraudulent concession needs to be addressed. Last year, the courts found the deal to be fraudulent.
This has cost us millions. More sins of our economic success include a shortage of skilled and high-tech workers. A sombre mood persists due to job scarcity, especially in the retail, wholesale, importation, and distribution industries, which is also evident in sectors like professional offices. The property sector is comparatively buoyant, even if their lucre rarely makes headlines, fortified with the news by the NSO indicating that the number of signed promises of sale has remained steady compared to previous years.
Internationally, particularly in the US, one notices aggressive, almost belligerent “disruptors” appearing virtually out of nowhere, dominating new markets or driving long-established top firms to ruin with radical business models lacking industry experience. In Europe, the latest AI Act, introduces the concept of classification of the risks posed by the use of an omnipresent AI system. Simply put, there are four tiers of risks, the highest of which applies to those uses that are considered unacceptable for people’s security and fundamental rights, such as social scoring. The second, and perhaps most significant, tier identifies “high-risk” AI systems, subjecting them to a myriad of ongoing obligations, including testing, risk mitigation, human oversight, data governance, cybersecurity, accuracy and detailed documentation. Finally, the third and fourth tiers consist of limited-risk systems where minimal transparency requirements are imposed to strike a balance between innovation and regulatory oversight; and minimal/no-risk AI systems, where voluntary codes of conduct are encouraged.
The prohibition on banned AI systems is slated to be enforced later, with the act anticipated to be fully operational by the second and third quarters of 2026.
In conclusion, the nostalgic picture of US housewives buying staples from an open-air truck in Manhattan, reminds us how today, the procurement of family needs in Malta, has vastly improved by the opening of mega discount stores; each competing to offer a wider product choice. Cheers, buoyed with the magic of AI technology, Malta hopes to sustain an economy with full employment, reduce inequality, foster meritocracy and sustain good governance.
