The cost-of-living adjustment (COLA) mechanism agreed by the social partners two decades ago has helped ensure stability in industrial relations, which is rightly considered an essential factor in economic growth.

However, the definition of the elements regarded as making up a “typical” household’s expenditure budget has always been vague as it is based on generalisations of what “typical” represents.

The recent surge in inflation has increased pressure on the government to recalibrate the COLA mechanism. Some voluntary organisations have lent their voice to thousands of vulnerable people who fear that the escalating cost of living will make their lives yet more difficult.

Finance Minister Clyde Caruana has commissioned experts to run simulations on what would happen if the calculations behind the cost-of-living adjustment were tweaked to help the poorer households. The preliminary results of these simulations will be presented to the social partners even if it has been indicated that the government will bear the cost of financing any increases. Indications are that a new mechanism could be implemented in 2023.

The country faces imminent fiscal challenges. In the coming months, the government will have to start planning for the unwinding of COVID support schemes for businesses. And it is now generally agreed that fast-rising inflation will not disappear anytime soon.

A probable increase in interest rates by the European Central Bank, continuing supply chain disruptions and escalating geopolitical tensions could put more upward pressure on prices, especially those of food and fuel.

Any planned improvement in social services must be financed through the most cost-effective means, in a way that respects the principles of social solidarity and fair redistribution of the burden of taxation. Therefore, the guiding motivation for the recalibration of the COLA mechanism must be the importance of giving selective support to those in the community that are most at risk of financial deprivation.

The poor include those employed under precarious work conditions, pensioners who depend solely on a state pension, single-parent families with young children and limited income and the physically and mentally challenged who rely on social security.

This broad spectrum of social vulnerability presents a challenging scenario for the experts trying to find a fairer way of determining the extent to which the rising cost of living affects different households. Indeed, it can be argued that there are many “typical” circumstances that expose different families to financial vulnerability.

The finance ministry appears to have given serious consideration to the proposals of Caritas. The government would also do well to rope this and similar organisations into its discussions on future changes to cost-of-living adjustments. These organisations work incessantly to make the lives of the vulnerable more liveable. They are at the coal face of the community and can undoubtedly offer valuable insights into the challenges many vulnerable families face daily.

There will always be some armchair critics who do not know what it means to struggle financially to survive. They will argue that the problems of the poor are often self-inflicted and will quote examples of how some vulnerable people use part of their benefits income to gamble or buy inessential goods.

The voice of these critics should never be allowed to get louder than the feeble voices of the vulnerable, especially those of children and older adults.

The business community does not exist in some separate universe to the financially vulnerable. They have a social responsibility to pay their taxes in full, as and when due, and to provide decent living conditions to all their employees.