An agreement to increase the minimum wage by €8 per week by 2019 was signed by unionists, social partners, and political leaders earlier today.
The increase, over and above the cost of living adjustment, will equate to more than €400 per year in two years’ time, and was heralded as “a victory for common sense” by Prime Minister Joseph Muscat.
Opposition leader Simon Busuttil meanwhile said that although he was on board with the agreement, this was “not enough”. A new government led by him would respect the agreement, he said, adding that this increase should be seen as a step on a journey and not the final destination.
READ: Minimum wage to rise by €8 a week by 2019
The Malta Council for Economic and Social Development drafted the agreement after lengthy discussions, with all parties eventually getting on the same page.
Just under 4,000 people are currently on the minimum wage, which is €736 a month.
During today’s signing ceremony, at the President’s Palace in Valletta, Dr Muscat announced that tax bands would be adjusted to ensure that the increase “would remain in people's pockets”.
A few years ago, he added, such an agreement would have been unthinkable.
“This was considered out of bounds, if major industrial disputes were to be avoided,” Dr Muscat said. Economist Gordon Cordina, who carried out the studies that informed the agreement, has said the increase was the furthest the social partners could stretch without endangering the country’s competitiveness and jobs.He said the increase would not address poverty in its entirety, adding that other measures would have to be taken to target certain pockets.
Speaking at today's signing ceremony, MCESD chairman John Bencini said social partners held some 20 meetings over the span of a few months to hammer out the agreement. The minimum wage increases every year, like all other wages, with the cost of living adjustment. However, what poverty campaigners have been asking for is a distinct adjustment to increase the minimum wage.
The agreement does deliver on this but falls short of many expectations.
Importantly, the agreement will also stop the minimum wage from freezing, thanks to the introduction of a new mechanism that will review the minimum wage periodically.
What the agreement entails:
* Minimum wage earners who have completed a first year of employment will be entitled to mandatory €3 per week increase in their second year of work and another €3 per week in the third year.
* These increases are over and above annual COLA increases
* Increases will be backdated to January 1, 2017, for those who have completed a first year of employment.
* Employees earning more than basic minimum wage will also get proportional increases in the second and third year of employment to put them on the same level as the new minimum wage.
* COLA increases for 2018 and 2019 will be boosted by a temporary supplement of €1 per week. All workers will benefit from this temporary boost.
Union leader’s reaction
Malta Employers’ Association head Joe Farrugia told the Times of Malta that while employers would have preferred the status quo, this was a fair solution.
UĦM Voice of the Workers CEO Josef Vella said they were particularly satisfied that their proposal for a mechanism which would stop minimum wage freezes had been taken on board.
GWU General Secretary Josef Bugeja said many problems facing workers had been addressed, and while more can always be asked for, reaching an agreement was what counted.