The General Workers Union will never accept any changes to the way the cost-of-living adjustment (COLA) is worked out unless unanimously agreed by social partners, its general secretary has warned.

Josef Bugeja was reacting to a projection that wages will rise by a record €13 per week next year.

Bugeja believes the wage rise should be awarded every six months instead of every year, to compensate for inflation in a more timely way.

The mechanism cannot be changed without unanimous agreement- GWU general secretary Josef Bugeja

The wage adjustment awarded at the start of every year is worked out on a fixed formula that considers the prices of a basket of goods and services, many of which have soared in recent months.

COLA was introduced in 1990 after an agreement between social partners.

With inflation fairly stable, it has hardly ever exceeded €4 over the past 10 years but employers are this year paying €9.90 a week based on last year’s inflation figure. The projected €13 a week increase for next year has employers especially worried about the adverse effects it would have on business.

The director of the Malta Employers Association has called for the introduction of a COLA mechanism that would leave the calculation unchanged but would even out the spikes over a number of years.

Josef Bugeja is protective of the COLA mechanism as it works right now.

Union open to 'better ideas'

But Bugeja, who heads Malta’s largest trade union, insisted that any changes to the mechanism were unacceptable, although the union was open to discussions if anyone had a better idea.

“So far, our internal projections have not given us the €13 you reported. But whatever the figure, the mechanism cannot be changed without unanimous agreement. We must remember that this is a retroactive compensation so workers must receive it,” he said.

He said if anything, the GWU would propose awarding the COLA every six months rather than on an annual basis. This would alleviate the financial burden of inflation on workers, pensioners and their families in a timelier fashion.

“It’s fair compensation. While I understand employers, this is compensating for money already spent. We will never accept any downgrade in workers’ standard of living,” he said.

Farrugia said the COLA projection so far excludes the fact that energy prices are being subsidised. If those subsidies were removed, COLA would exceed the €25 mark and cripple a good number of businesses, he warned.