Wages will increase by a minimum of €5.24 a week to reflect the inflation rate over the past year, due to the the annual cost of living adjustment (COLA).

The figure is the lowest cost of living adjustment in the last three years, down signifcantly from a record €12.81 last year.  In 2022, COLA was €9.90 a week but the rise was just €1.75 in 2021.

COLA is awarded to all employees and is paid by employers as part of their workers’ salary. It is worked out on a fixed formula based on the cost of a basket of products. 

The payment will still be taxed over the coming year, despite calls by several social partners and the Nationalist Party, who said if the government failed to cut COLA tax, the budget would have been “in vain”.

Finance Minister Clyde Caruana said the fiscal system around COLA should sstay because it had "worked well" for the last 30 years.  

100,000 families to benefit from additional COLA payment 

Furthermore, approximately 100,000 families with lower incomes will benefit from a higher increase due to the extension of the additional COLA supplement, introduced in the 2023 Budget.

The amount received will also depend on the number of dependent children in each family, ranging from an extra income of €100 to €1,500 a year. 

The benefit will be paid in two tranches, with the first payment will be made in December, and the second in the middle of next year. The government will be investing €48 million in this financial support for poorer families. 

Simultaneously, the minimum wage will increase from the current €213.54 per week to €221.78, starting on January 1. This figure - a rise of €8.24 - includes the cost-of-living increase but is exempt from income tax. 

This second increase in as many years is part of a four-year plan to improve minimum wage levels which was announced last year.  

It will continue to rise annually, with a cap of an additional €10 by 2027.