This year's exceptionally high cost of living adjustment (COLA) must be paid in full to all employees, Finance Minister Clyde Caruana said on Tuesday.
He said the COLA mechanism was agreed upon in the 1990s and worked well throughout the decades, and employers must continue to give employees the full rate, as they have done in the past.
"In the budget speech I will read out the rate, and that rate must be given in full to the employees," he told reporters at the end of a joint press conference with the Irish Finance Minister and Eurogroup president Paschal Donohoe.
"If employers want to achieve some changes, they have to discuss those changes, even perhaps at shop floor level, with the unions."
He declined to comment on the possibility of slashing income tax as a way of keeping money in workers' pockets, without burdening employers with the need to pay a full COLA. That idea was floated by the Malta Employers Association.
COLA is expected to hover around €10 per week this year.
Earlier this month, in its pre-budget document, the Malta Chamber said employers should not have to pay the full cost-of-living-adjustment for workers whose salaries went up this year.
Instead, workers who have received some form of pay rise should only receive the difference between that increase and the 2022 COLA, it proposed.
Caruana's insistence on all workers getting the full COLA indicates that the government does not agree with that idea.
Nor does the Nationalist Party. PN finance spokesperson Jerome Caruana Cilia told The Malta Independent that everyone should, at minimum, receive the full amount.
A record COLA expected this year
According to the workings of a fixed formula that takes into consideration the minimum wage and the past year’s inflation, the COLA will likely shoot from the current €1.75 to around €9.10 and is likely to reach around €9.90 by the time it is announced in the October budget.
The COLA, awarded to all employees, is worked out on a formula that considers the prices of a basket of items and services, many of which have spiralled this year.
It is paid by employers as part of their workers’ salary.
Over the past 10 years, with inflation fairly stable, COLA hardly ever exceeded €4, and since 1990, it has only gone beyond the €5 mark on three occasions.
No budget date yet
Clyde Caruana said the budget speech will be held in October, as usual, but the government has not yet decided on the date, saying there is still a lot more work to be done before it can be tabled in parliament.
"Given the exceptional challenges we have ahead of us, I want the numbers to be fair and factual, and that requires a lot of work that still needs to be done," he said.