The cost-of-living adjustment (COLA), awarded annually to compensate for inflation is likely to approach €10 per week by the post-summer budget, up from €1.75.
According to the workings of a fixed formula that takes into consideration the minimum wage and the past year’s inflation, the adjustment now stands at around €9.10 and is likely to reach around €9.90 by the time it is announced in the October budget.
The COLA, awarded to all employees, is worked out on a formula that considers the prices of a basket of items and services, many of which have spiralled this year.
It is paid by employers as part of their workers’ salary.
Over the past 10 years, with inflation fairly stable, COLA hardly ever exceeded €4.
Both for this year and in 2020, the adjustment was of €1.75. Since 1990, it has only gone beyond the €5 mark on three occasions.
When the mechanism was predicting an €8 per week COLA last month, Finance Minister Clyde Caruana had told parliament that, following the COVID-19 pandemic and Russia’s invasion of Ukraine, the cost-of-living adjustment would have hit €16 to €17 a week had the government not absorbed the increase in energy prices so far.
Experts told Times of Malta in May that a high cost-of-living adjustment will adversely affect the country’s competitiveness, particularly in the tourism sector, because it will increase costs for businesses.
They said it will also affect public coffers since the government is the largest employer.
According to employers, the rising cost of raw materials is already a big headache for businesses and they are also having to pay higher salaries to retain employees due to shortages in the labour market.
On Saturday, the Malta Chamber of Commerce, Enterprise and Industry said that employers should not have to pay the full cost-of-living-adjustment for workers whose salaries went up this year.
Instead, workers who have received some form of pay rise should only receive the difference between that increase and the 2022 COLA.
The proposal is among dozens listed in a pre-budget document, proposing ideas for Budget 2023.
Among others, the chamber proposed the introduction of parking meters in urban centres, removing subsidies on any electricity units consumed over and above the eco-reduction entitlement and slashing VAT on restaurants and takeaways to seven per cent to reduce food price inflation.