Are young Maltese worse off than their parents?

People tend to accumulate wealth as they grow older. But is the wealth gap between today's youth and their parents widening? Recent data suggests that despite the higher wages, higher property prices and a more lavish lifestyle are among the factors which may explain a rising intergenerational inequality gap.


This article is part of an ongoing collaborative series by Spunt.mt and Lovin Malta.



Recent increases in income levels have benefitted younger age groups the most:


However, the story changes when we look at wealth. Wealth consists not only of one’s income but also all assets held, minus any debt owed. And as a result of higher property prices, an increasing wealth gap is emerging between parents who own real estate and their children incurring higher debts to purchase their homes.


But why is this?

Less attainable high-paying jobs

It sounds obvious, but high-paying jobs tend to need high levels of education. In fact, people with higher education generally have higher net wealth. However, Malta has one of the highest early school leaving rates in the EU and one of the lowest-achieving rates in reading, mathematics and science. Worryingly, 73% of children coming from low-education families remain with low education levels themselves.



Higher property prices

Even though today’s youths are earning more, higher property prices mean that the share of their income that goes to paying back home loans is increasing faster than their wages.



A More Lavish Lifestyle

Data also shows that younger generations spend more per year on dining out, and this trend is on the rise


Young Maltese are a minority

As the largest age group in Malta, baby boomers carry strong voting power. Boomers enjoyed a lifetime of favourable government policy, both in their youth and in their older age. This is hugely beneficial when it comes to building wealth.


The Prince Charles paradox

Inheritance is a large wealth source. However, as life expectancy increases, older people are leaving less behind to their children, and this only happens when the latter is already pretty old themselves.


Boomers made their own fortune

Being a large age group, there are more boomer engineers and scientists to invent new technologies, more boomer workers that can bring about economic growth, more boomer consumers that sustain economic income, and more boomer entrepreneurs that create investment opportunities.


It’s no surprise that during the boomer years, the developed world saw the highest economic growth rates. And a booming economy is the best way to get rich.