Malta

Showing significant gains in recent years, Malta falls into the upper-middle ranks (rank 18) with regard to economic policies. Its overall score in this area has improved by 0.6 points relative to 2014.

The pandemic arrested years of strong growth, spurring a sharp contraction in GDP in this tourism-dependent economy. However, growth surged back in 2021. The state provided relief to enterprises and individuals, with measures including vouchers, wage support and rent subsidies.

Due to government support, the employment rate actually rose by 2.7% in 2020. By late 2021, the overall unemployment rate was just 3.6%. Youth unemployment rates are also low in cross-EU comparison. Companies are reporting skills shortages and growing reliance on foreign labor. Work permit rules for non-EU nationals have been relaxed.

The state posted very large deficits of 10.1% and 12% of GDP in 2020 and 2021. Debt is expected to reach 63.6% of GDP in 2023. Tax evasion and money laundering remain problems. However, the country is addressing the issues; a new financial-crimes unit has led to a number of high-profile prosecutions. R&D spending is low.

With a number of reform needs evident despite ongoing improvements, Malta falls into the lower-middle ranks (rank 29) with respect to social policies. Its score for this measure has improved by 0.9 points relative to 2014.

School drop-out rates are worrisomely high. A program dealing with the issue has been published.
PISA scores are lower than the OECD average. A consolidated social-benefits scheme supports those with low incomes, and healthcare and education are available free of charge.

The government implemented a substantial relief program during the early COVID-19 years. Rising rental and food prices are an increasing social welfare issue. A large number of families benefit from free childcare, which has helped boost the labor market participation rate. The gender employment gap remains large, however, and women remain the primary caregivers.

Until recently, pensions were not indexed to inflation, leading to considerable erosion of value. The pandemic exposed weaknesses in the healthcare sector, including insufficient hospital capacities. However, the response was strong, with ad hoc facilities established. The country had the world’s highest vaccination rate in 2021.

With challenges shaped by its island geography, Malta scores relatively poorly (rank 34) in the area of environmental policies. Its score on this measure has improved by 0.3 points relative to 2014.

The renewable-energy share remains very small, with a goal of reaching an 11.5% renewables share by 2030. The plan is to reduce greenhouse gas emissions by 19%, also by 2030. Energy-sector emissions have dropped by 63% between 2005 and 2019, thanks to the launch of a direct connection with Sicily, as well as a domestic shift from heavy fuel oil to natural gas.

Overall, more focus is being placed on solar power, electric cars, car sharing and free public transport. However, emissions in the transport sector have risen by 22% since 2005, and there is growing dependence on air conditioning.

Overdevelopment is hurting the environment despite a statutory permitting process. Enforcement of rules has not been strict. The country is party to a large number of multilateral environmental agreements, but is not a leader in global environmental protection initiatives.

Showing a number of evident gaps, Malta scores relatively poorly in international comparison (rank 32) with regard to the quality of democracy. Its score in this area has improved by 0.5 points relative to 2014.

A recently passed law governs political-party donations, but the enforcement mechanism is effectively toothless. Gender quotas have been created for parliamentary lists and for the electoral commission. No provision for overseas voting is available, which proved more damaging as the pandemic hampered travel.

Defamation laws are used to target journalists. Political parties own some media outlets. Government pressure on the media increases during election years. Civil rights and political liberties are generally respected. Discrimination on the basis of political affiliation remains a problem, and women are underrepresented in many social areas. Racial profiling is a concern.

Though anti-corruption measures have been strengthened, outside observers have called for stronger money-laundering regulations. Conflicts of interest remain common. There is little transparency in allocating public contracts. A new, less politicized judicial-appointments process has been implemented.

Despite growing core-government steering capabilities, Malta falls into the lower-middle ranks (rank 27) with regard to executive capacity. Its score on this measure has improved by 1.0 point relative to 2014.

Strategic-planning capacities have improved in recent years, with more experts supporting the process. Spurred by recent policy failures, the Prime Minister’s Office has expanded its coordination and monitoring of line ministries, in part through central control of permanent secretaries in the ministries. Coordination between the PMO and the ministries increased further during the pandemic.

RIAs are today compulsory, and are gaining in quality following strong training programs within the public service. The country is a leader in the area of government digitalization. NGOs regularly complain about a lack of consultation, especially for environmental matters.

The quality of implemented projects has improved, particularly in the area of road works. Funding for tasks assigned to the municipal level is often inadequate. The country faces substantial international pressure to update its regulatory and enforcement capabilities, particularly in the areas of financial crime and the environment.

Reflecting several notable weaknesses, Malta performs relatively poorly (rank 30) in the area of executive accountability. Its score on this measure has improved by 0.1 point relative to 2014.

The part-time parliament has insufficient resources and comparatively weak executive-oversight powers, though a recently passed act gives it greater control over budget decisions. The audit office is independent and active, while the ombudsman is highly esteemed but has limited powers. The data-protection authority is effective and independent.

While media competition has improved public access to information, media tend to be highly polarized, with coverage dictated by their business-sector owners or ties to specific political parties. Infotainment programming remains widespread. A large amount of policy information is easily accessible, but many citizens get low-quality information from social media.

Political parties are giving members a growing voice in the selection of leaders, but decisions are made by official organs. Economic-interest groups are usually capable of formulating relevant policies, and consulted closely with the government during the pandemic. Non-economic groups have acted proactively in a number of various policy areas, often drawing on external academic support.