Today, I decided to write about a topic that’s been on my mind for quite some time. True, Malta’s economic narrative over the past decade has been one of expansion, liberalisation, and deregulation. In fact, between 2013 and 2020, Malta experienced a period of neo-classical, exceptional growth. However, beneath the surface of GDP figures and construction booms lies a deepening market failure in key sectors; one that punishes the vulnerable, rewards speculation, and erodes both public trust and our social contract.
During this period, Malta embraced a wave of laissez-faire economics. Planning became lax and accelerated, regulation became reactive, and housing was commodified. The result is a rental and property market that no longer reflects the realities of Maltese incomes. The rent of a two-bedroom apartment now costs upwards of €1,000 per month, while thousands of workers earn less than €15,000 annually. As of Q1 2025, approximately 47,000 people in Malta are employed in elementary occupations within roles such as cleaners, delivery workers, construction labourers, and basic service staff. This group earns the lowest average monthly wage, around €1,293, significantly below the national median of €2,063.
The state’s response to this market failure included a capped rent subsidy formula offering as little as €180 per month for single persons, which is clearly not a solution. It is helpful but not a solution. In practice, it functions more like charity than policy and does little to help individuals feel the effects of trickle-down economic growth and the wealth created by the PL. The problem lies in the formula itself. It subtracts 25% of income from a predetermined schedule of fixed ceilings, failing to account for inflation, location, or actual rent levels. It mirrors the logic used by banks to assess mortgage eligibility and ironically fails both tests. The logic is fundamentally flawed. If a person earning €15,000 annually cannot qualify for a mortgage, why do we expect them to survive in a rental market priced for foreign executives and speculative investors? If a bank concludes that a person is likely to default on a loan, the same affordability logic should apply to renting, especially when the market reflects prices far beyond what low-income earners can sustain. And that’s market failure.
Yet, when the system fails, blame is rarely placed on policymakers. Instead, it is deflected often onto Third Country Nationals (TCNs). The narrative is familiar with right wing politicians claiming that TCNs, or more euphemistically, overpopulation, are driving up rents, crowding out locals, and straining infrastructure. But this is a convenient fiction. The real problem is not TCNs. It is the prolonged, unregulated market that exploits them and then scapegoats them. Selfishly, we want TCNs to serve us, cleaning our homes, staffing our restaurants and delivering our food, and building our towers. However, when rents rise or traffic worsens, we say it’s their fault. This contradiction is not just hypocritical, it is structurally dishonest. TCNs are not the architects of Malta’s housing affordability. They are its collateral damage just like low-income Maltese families and the struggling lower-middle class are.
The truth is that the rental market has become a playground for speculation. Properties renting for less than €800 per month are increasingly uninhabitable. In my profession, we call them “sick buildings”, entailing spaces that offer no hope, no dignity, and no future. Meanwhile, social housing rents have been recalibrated to reflect, albeit distantly, market prices, abandoning the Mintoff-era principle of affordability. And this is indeed painful, because the timing of this revision coincided with a period of high inflation and post-pandemic recovery. It was, in effect, punitive. This double-pocket squeeze, first by the pandemic, and then by inflation, has pushed hundreds of households into a liquidity poverty trap. While the median wage has increased, costs have surged at a faster and more aggressive rate. Unless the government intervenes, the promise of trickle-down economics will remain a myth. The invisible hand does not reach the vulnerable. And the market will not self-correct. As Keynes put it, in the long run we are all dead. Certainly, the PL can create a strong feel-good-factor again, but we must abandon past practices. We must restore proper teleworking for public sector employees and ensure that flexible hours do not remain elusive combined with traffic management. Otherwise, we are not going to create a positive momentum.
What we are witnessing is not a temporary distortion. It is a structural problem that demands bold and principled action, whatever conservative bureaucrats might say. They are not economists, and many of them lack political acumen. In fact, some of the loudest voices in policy circles today sound more like lunatics than strategists. Indeed, many policymakers in Malta are fond of importing foreign models, particularly from northern European states, as if their regulatory frameworks can be copy-pasted into our vastly different socio-economic context. The recent political discourse around a four-day work week, for instance, draws comparisons to the Dutch system, with little regard for Malta’s labour market realities. Policy debate has descended into lunacy, where shallow narratives and performative gestures replace proper analysis. It is, at times, a country where one despairs listening to the noise. Thankfully, we have a finance minister whose interventions offer a rare moment of clarity, and I hasten to add a respite from the lunacy.
For instance, in 2022, the Brussels, Walloon, and Flemish governments introduced a temporary freeze on rent indexation for properties with poor energy performance. The measure was designed to shield tenants from inflation-driven hikes, especially in buildings with a rated D to G under the Energy Performance of Buildings system. The freeze lasted a year and was widely supported by tenant associations, who warned that unchecked indexation would push thousands into housing insecurity. The intervention was not ideological but pragmatic. It acknowledged that market mechanisms alone cannot guarantee fairness, especially during inflationary shocks. And yet, Malta, has no such indexation safeguards. We mirror the liberalisation, but not the regulation. We adopt the pricing logic, but not the social counterweights. This is the danger of selective competition. We borrow the market tools of foreign models but ignore the institutional framework that makes them viable. In Belgium, indexation was paused to protect tenants. In Malta, rents rise unchecked, and subsidies remain capped at levels that no longer reflect reality.
Certainly, Malta can never adopt a culture of laissez-faire economics. Our post-colonial identity was shaped by Dom Mintoff’s vision of a welfare state, one that prioritised housing, healthcare, and dignity. Mintoff understood that economic growth without social protection is a sunken victory. He built institutions that buffered citizens from the volatility of markets. Today, those buffers are eroding. To restore balance, the government must reassert its role as market guardian. That means reforming the rent subsidy formula to reflect actual market rents and income of households. Also, it means investing in affordable housing stock, as promised, and not just luxury developments or industrial zones. It also means recognising that economic growth must be measured not just in cranes and contracts, but in equity and access. The current model has created winners and losers. And unless corrected, it risks entrenching inequality for generations.
The PL under Dr Robert Abela has rolled out a myriad of social initiatives, including miscarriage leave, bereavement leave, pension increases, tax cuts, and dozens of other social measures, but Malta must now decide whether it wants to be a society or a marketplace. Because the two are not the same. Malta’s strength has always been its social cohesion and its ability to balance growth with solidarity. That balance must not be risked. And only bold, principled intervention can restore it. Meanwhile, we eagerly await the upcoming Budget 2026 presentation and speech.
