The increase in wages and the revised tax bands announced in the budget do not favourably impact the gap between the statutory minimum wage and that of a worker with an income close to the national average wage/salary. On the contrary, the gap after the budget has widened. Perhaps the chart here can illustrate this better.

The debate on the statutory minimum wage has long been on the national agenda. Studies by Moviment Graffitti, the Alliance Against Poverty, Caritas, and the GWU itself confirm that the minimum wage is not enough to provide for the basic needs of this class of workers (and pensioners).

One could concede that the gap in incomes could be irrelevant if the minimum wage is sufficient for a decent living. But it is not, and the widening of the gap makes it worse.

Then there are the EU statistics which state that while our GDP is among the highest in the countries bordering the Mediterranean, our minimum wage is the lowest among these same countries.

How can we reconcile this anomaly when we are told that the economy was never so strong?

The government is also aware of the situation. In fact, last year, the minister set up the Low Wages Commission (LWC) to advise how the statutory minimum wage can be increased to ensure a decent living for these workers.

The LWC came up with two figures for 2025: the payment of COLA of €5.24, which is based on the obsolete 1992 agreement, and an increase in the basic minimum wage of €3. Nobody knows how the LWC arrived at this latter figure but, as the chart shows, it is clear that the LWC has missed its objective. There is still more work to do to arrive at the terminus ad quem indicated by the minister.

The increase in the wage gap has been caused by the new tax bands. The take-home pay of a worker on the average income will increase by €607 as a result of the new favourable tax bands while a worker on the minimum wage will not benefit from the new structure, hence the increase in the gap.

The only way now to reduce the gap to what it was before the 2025 budget is to give a one-time compensatory increase in the statutory minimum wage. And this of course costs money.

But such a payment would not be enough as the minimum wage in recent years has lost its purchasing power. This was due to the government’s failure to acknowledge that the COLA mechanism based on the 1992 living patterns had become obsolete.

People have lately been buying other essential things which are not included in the current list. As a result, the yearly COLA increases in the minimum wage are being worked out on the wrong premise and so over the years were unable to move upwards pari passu with inflation; thus, the minimum wage lost its purchasing power.

The COLA mechanism was an excellent idea. To a certain extent, it was also inflation-proof. So in addition to the compensatory increase mentioned above, the government now needs to do what it failed to do in recent years, that is to update the list of essential items in the COLA mechanism. And this of course also costs money.

The gap in incomes

Because of the money involved, it is not surprising that the government, employing more than 50,000 full-time persons, seems to be in agreement with the powerful employers’ and developers’ lobbies, which say that further wage increases are not only unaffordable but even catastrophic! In times when the economy is going strong, when we are importing thousands of third-country nationals, these claims by businesses are simply not credible.

These claims cannot be accepted by the government at face value without an in-depth investigation of every claim to check against tax evasion and unexplained wealth.

On the other hand, if the government does not have the money, why is it giving exorbitant remunerations to chairpersons, consultants and chief executives (some of whom are only part-timers) that exceed that of the president of the republic? How can these officials sleep well at night when those on the minimum wage are underpaid?

When will the prime minister clip the wings of profligate ministers who squander money without control as if there is no tomorrow?

The only way now to reduce the gap to what it was before the 2025 budget is to give a one-time compensatory increase in the statutory minimum wage- Joe Pace Ross

Why give allowances and subsidies for fuel, etc., indiscriminately to all, including those who do not need support? Why is the government assisting private schools financially when their patrons have no money problems?

Yes the money – and huge amounts of it – will be there if the government acts with the diligence of a bonus pater familias. Enough to help those genuine employers who cannot afford to pay a decent wage to their employees. Enough to narrow the gap.

Money is not the problem. The problem is the distribution. In any case, the worker must not carry the burden resulting from this kind of financial administration.

The way forward is as simple as it is obvious. The government must take remedial action as indicated above. Thereafter, it must legislate for a statutory wage adequate for a decent living instead of preferring to be the benevolent overlord handing out public money sporadically for vague reasons; payments that do not qualify as income for bank home loans or for pension computations.

There is also a feeling of uncertainty regarding these handouts. Why must minimum-wage workers be left askance wondering how much the next cheque will be for, and when or if it will arrive?

Why not incorporate these handouts in the statutory minimum wage? On whose side is the government?

The more the government procrastinates, the more minimum-wage earners will suffer, the more will the gap widen. The onus to help the less fortunate weighs heavily on the government’s shoulders. The means to do this are – or should be – there in our coffers. The time to act is now.

Joe Pace Ross is a retired bank executive.