Finance Minister Clyde Caruana is expected to announce a separate mechanism to compensate society’s most needy for the rising cost of living.

Sources said the new mechanism will be separate and over-and-above the cost-of-living adjustment mechanism where those who feel the pinch of rising costs can be compensated separately.

Prime Minister Robert Abela on Sunday described the budget for the year 2022 as a “realistic” one, “designed with the people, for the people”. He said it promised to be “a realistic budget from a united government”.

Monday's will be Caruana’s first budget speech, having been appointed finance minister in November 2020 following the departure of Edward Scicluna, who took on the role of Central Bank governor.

Caruana had hinted at the new mechanism during one of the pre-budget consultation meetings where he spoke about the need to help those with a low income affected by particular circumstances that push up prices.

He said his idea was for the new mechanism to kick in when inflation spikes in a way that affects many people.

Unlike COLA, where the adjustments are funded by the government and employers, whether public or private, the additional payment for low-income sectors, particularly pensioners, will be paid for entirely by the government.

The social partners have long been calling for a revision of the COLA mechanism, arguing it was going largely unfelt.

However, agreement between the government, employers and trade unions on such a revision was difficult to achieve.

Caruana had said that, while employers had a duty to give a fair wage to their employees, one could not expect them to cover price increases in such circumstances.

Imposing such a burden on them would lead to a further rise in prices or people losing their jobs, he had said.

Should all European countries introduce an unconditional basic income?