Budget 2026: Cost of Living Allowance will be 'less than €5' a week
COLA will be lowest in four years, Clyde Caruana revealed
Finance Minister Clyde Caruana has confirmed that the Cost of Living Adjustment paid out by employers based on the previous year’s inflation, will be less than €5 per week next year.
Caruana shared the news at a business breakfast organised by Times of Malta on Tuesday, a week ahead of the 2026 Budget announcement on October 27.
It will be the lowest cost of living adjustment in four years, down from €5.24 this year and the record €12.81 in the previous budget. In 2023, COLA was €9.90 a week but the rise was just €1.75 in 2022.
Caruana pointed out that Malta is one of the few member states in Europe where employees are compensated for inflation and said the mechanism is fulfilling its purpose.
COLA has been criticised by employers for being unpredictable and the PN has prevously called for it to be tax free.
Speaking at a Times of Malta business breakfast, Caruana was challenged about inequality between low and high earners.
"I disagree that the gap between the have and have-nots is increasing," he said, saying Malta is on the low end of the Gini coefficient scale, a measure that represents the income or wealth inequality within a nation.
While the COLA increase is lower than in previous years, Caruana said pensions would "definitely see a hefty increase" in the government's fiscal plans for 2026.
However, he seemed less keen to push private pension schemes this year, compared to previous years.
"I’m not going to rush through the changes that need to be done," he said.
"I want to be more than 100% convinced that what we are doing is in the utmost interest of the people who are going to contribute. I’m not 100% convinced by the discussions we’ve had so far."
In a quickfire round of questions by interviewer Herman Grech, Caruana said "families" would be the biggest beneficiary of the budget.