A formula used to calculate wage increases to make up for the rising cost of living should be calculated differently for low-income workers, an anti-poverty coalition believes.

The Alliance Against Poverty wants the Cost-of-Living-Adjustment mechanism to be reworked to ensure poorer workers are given a greater boost than those on higher wages.

COLA increases are calculated according to a fixed formula and are given equally to all workers, regardless of their income.

The Alliance believes that this is unfair on poorer workers, as essential foodstuffs and medical items are rising in price at a rate higher than the national inflation rate.

“This means the way in which the COLA is being calculated is very unfair on those with a low income,” the Alliance said in a statement outlining its proposals for Budget 2020.

Malta's inflation rate in 2019 has been marginally higher than the average across the eurozone, according to data, with a food index the biggest contributor to increases.

National living income

The Alliance would also like the upcoming budget, which is due to be announced on October 14, to introduce a national living income, rather than limiting legislation to having a minimum wage.

Adjustments to the minimum wage were not denting poverty problems, the Alliance said, and those on the lowest of wages could still not afford to live a decent life.

Any introduction of a living income model would however have to be done with the ultimate aim of increasing consumers’ purchasing power, rather than just bumping up wages.

“If income is increased but prices rise at a higher rate, people’s purchasing power will decline rather than increase,” they cautioned.

Childcare and pensions

The Alliance would also like free childcare services to be extended to children of stay-at-home mothers who however live in precarious or undignified conditions, and to significantly bump up pensions and medical provisions for the elderly.

Many medical services which senior citizens had to fork out money for were becoming more and more expensive and forcing people into precarious financial states, the Alliance argued.

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