Social and Economic Policy in Malta. A Discussion of the Social Security System in the Maltese Islands

Submitted Assignment, 2019

13 Pages, Grade: 80.00


Table of Contents


Contributory and Non-Contributory Benefits

Social Security Coverages in Malta

Malta compared with other EU Countries

Implemented Measures aimed at Reducing Dependence on Social Security Benefits

Other Measures




The social security system is aimed towards supporting residents by providing them with financial support as well as maintaining their overall wellbeing and protecting them from poverty (Social Security, n.d.a). In the Maltese scenario this system is regulated under Chapter 318of the Laws ofMalta (Chapter 318, 1987). Basically, the system is based upon regular payments and redistribution to residents benefiting from it (Azzopardi, 2011; Gemma, n.d.; Integration, 2014a). Residents pay contributions to the government, in which the government uses such contributions to pay for residents’ benefits. Not everyone pays contributions, for instance full-time students and married individuals whom are not gainfully employed are exempted from paying. On the other hand, residents between the age of sixteen and pension age are required to pay these contributions (Integration, 2014a; Kagan, 2019).

Contributory and Non-Contributory Benefits

Malta’s social security system provides two basic schemes for which benefits are paid, these being; contributory benefits and non-contributory benefits (Integration, 2014a; Social Security, n.d.b).


These are benefits that residents receive to which they have already contributed to. For residents to be considered as eligible to receive contributory benefits, they need to be contributing to social security payments as either employed or self-employed individuals (Integration, 2014b). Then, contributory benefits are given to insured residents in return. Locally, most of the contributory benefits are allocated towards old age. In fact, according to the National Statistics Office, 76.2% are distributed towards pensions (NSO, 2019). Residents whom have paid taxes during their years in employment would be eligible for this benefit (Integration, 2014b). Other examples oflocal contributory benefits include; survivors’ benefits, disability benefits and sickness benefits (Social Security, n.d.b.; NSO, 2018).


These are benefits given to residents found under what we refer to as the poverty line. Unlike contributory benefits, these benefits are not based on contributions that residents pay but on the assessment of a means test on those residents applying to be applicable for such a benefit (Social Security, n.d.b.; Integration, 2014c). A local example of non-contributory benefits are family and children allowances in which there are different kinds like for instance, the disabled children’s allowance. This allowance is given to parents who have children under the age of sixteen that suffer from an impairment (Social Security, n.d.b; Integration, 2014c). Additionally, other examples include; social exclusion, supplementary allowances and in-work benefits (Social Security, n.d.b).

The upcoming figure shows the contributory and non-contributory benefits alongside the different areas in which such benefits are allocated towards. Locally, the total amount outlaid towards contributory benefits sums up to €584.9 million in which mostly are allocated towards old age (76.2%); whilst non-contributory benefits amount to €141.1 million in which mostly are distributed towards family and children allowances (34.4%). As seen below in figure 1.1, non-contributory benefits are rather equally distributed when compared to contributory benefits (NSO, 2018).

Figure 1.1; Social Security Benefits Expenditure by ESSPROS Functions for January- September 2018

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Locally, the expenditure coverage on social security benefits increased by 3.0% between the months of January to September, of the years 2016 till 2018 (NSO, 2018). This increase was allocated towards the contributory benefits as expenditure towards such benefits increased by approximately €29.3 million, within the last three years. By contrast, expenditure on non-contributory benefits decreased by approximately €0.9 within the same period (NSO, 2018). This is shown in figure 1.2 below. Additionally, figure 1.3 shows this increase of expenditure on social security benefits but from the years 2001 till 2018 (NSO, 2018).

Figure 1.2; Comparative Social Security Benefits; January-September (2016-2018)

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Furthermore, as previously mentioned in the above section and as seen in figure 1.1, most of the expenditure made locally towards contributory benefits are allocated for old age (76.2%) benefits, in other words pensions. This is followed by 19.7% for survivors’ benefits, 2.6% for disability benefits, 0.9% for sickness benefits and, lastly 0.6% for others. On the other hand, expenditure towards non-contributory benefits were mostly allocated for family and children allowances with 34.4%, followed by 20.5% for sickness benefits, 18.1% for old age benefits, 12.3% for disability benefits, 9.8% for unemployment benefits and, lastly 4.9% for social exclusion benefits (NSO, 2018).

Malta compared with other EU Countries In the year 2017, expenditure by the general governments across the 28 European Union (EU28) member states, was mostly allocated towards social security benefits. In fact, amongst these member states, social security was the most important COFOG (classification of the functions of government) division, in which it was dominated by social security benefits (Eurostat, 2019).

The most significant group for which benefits were allocated to was old age, specifically towards pension payments (10.1% of GDP in the EU28) (Eurostat, 2019). This was also evident locally as, most of the expenditure on contributory benefits in Malta, was allocated towards pensions (NSO, 2018). This shows how currently, within the EU, we have a high ageing population (Nerlich & Schroth, 2018).

When compared with other EU countries, Malta formed part of the few other countries, that spent very little ofits GDP on social security benefits (less than 13%). Finland, was the country which allocated most ofits GDP towards social security (24.9%), followed by France, Denmark, Austria, Italy and lastly, Sweden. On the other hand, Ireland was the country which spent the least (9.5%), then Iceland, Lithuania, Romania, Latvia, Malta, Czechia and Bulgaria (Eurostat, 2019).

The following figure 1.4 (extracted from Eurostat, 2019), shows a graph of the total general government expenditure on social protection (% GDP), amongst the different areas of social security benefits, of the year 2017, across the EU28 member states. Besides that, figure 1.5 below, demonstrates a table of the total general government expenditure (% GDP), spent on each area of social security benefits across the EU28 member states.

Figure 1,4; Total general government expenditure on Social Protection (2017- % of GDP)

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Figure 1.5; Total general government expenditure on Social Protection (2017)

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As previously mentioned and as seen in figure 1.5 above, Finland was the country which spent the most expenditure on social protection (24.9%). The area spent most in was, old age with 13.8% and, the lowest area was with 0.3%, towards housing. Even tough Ireland was the least country which spent expenditure on social protection (9.5%), the highest area spent on was also old age (3.4%) and the lowest on social exclusion (0.3%).

Hence, as one can notice, all EU countries spent the most expenditure towards the area of old age, in the year 2017.

Additionally, one should note that expenditure on social security benefits varies according to evolution. This means that during certain periods, one area within the social security might be relatively higher since, it would be undergoing a type of crisis. For instance, between the years of 2007 and 2009, expenditure on unemployment benefits within the EU increased approximately by 0.4% considering that more people were unemployed. However, this then started to decrease by 1.2%, within the following years. Thus, during that particular period, most of the expenditure towards social security benefits were towards unemployment benefits yet, today most of these benefits are allocated to old age since the ageing population is bigger (Eurostat, 2019).

Implemented Measures aimed at Reducing Dependence on Social Security Benefits Malta’s main focus is upon encouraging and sustaining a better quality oflife for everyone, in particular those within society whom when compared to others, are more vulnerable. Consequently, the government has to keep in mind the most vulnerable groups when implementing and enforcing policies, like for instance individuals whom are at risk of poverty and, those that are socially excluded (Fabri, 2019).

There are various policies currently at place aimed at reducing dependence on social security benefits by introducing a more inclusive society in which everyone can benefit from. These measures include in; increasing training opportunities so as to facilitate employment security, increasing the female population within the labour market and, promoting social protection and inclusion through social justice and solidarity (Fabri, 2019). One of the main policies aimed at promoting social inclusion and, thus in return reduce dependence on social security benefits within this area is, the ‘National Action Plan for Social Inclusion’ (Zammit, 2004; Ministry forthe Family and Social Solidarity, 2015).


Excerpt out of 13 pages


Social and Economic Policy in Malta. A Discussion of the Social Security System in the Maltese Islands
University of Malta  (Department of Social Policy)
B.A. (Hons) Social Wellbeing Studies
Catalog Number
ISBN (eBook)
social policy, social and economic policy, Maltese islands, policy in Malta, Malta
Quote paper
Ms Kimberley Bartolo (Author), 2019, Social and Economic Policy in Malta. A Discussion of the Social Security System in the Maltese Islands, Munich, GRIN Verlag,


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