Employers should not have to pay the full cost-of-living-adjustment for workers whose salaries went up this year, one of Malta’s leading business lobbies is arguing.

Instead, workers who have received some form of pay rise should only receive the difference between that increase and the 2022 COLA, the Malta Chamber of Commerce, Enterprise and Industry believes.

The proposal is among dozens listed in a pre-budget document published by the Chamber on Saturday, proposing ideas for Budget 2023. The government is expected to announce its budget plans for the next year in October.

Its 18-page document runs the gamut of Maltese society, presenting ideas like introducing 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 7 per cent, to reduce food price inflation.

Inflation and wages

The Chamber said workers who received salary top-ups this year should not receive the full 2022 COLA increment, as their purchasing power has already received a boost. Instead, employers should only be required to pay the full Cost-Of-Living-Adjustment to low-income workers.

Doing so for others would send the economy into a “vicious spiral of wage-cost inflation”, it said, arguing that employers have been raising wages at short intervals due to a tight labour market and rising cost of living.

The COLA is automatically calculated each year and announced during the annual budget. Last year, it was set at €1.75 per week. But that is likely to rise significantly due to rising inflation.  

Energy

The Chamber is unhappy with the way in which domestic energy tariffs are cheaper than industrial ones, describing that as a European “anomaly” that should be rectified.

It is also concerned about the government’s ability to continue to absorb the additional cost of rising energy prices. The government should give business owners at least six months’ notice before it changes that strategy, it said.

Rather than subsidising all energy consumed, the government should also incentivise people to use less energy by removing subsidies on any units consumed over and above the eco-reduction entitlement, it suggested.

The Chamber is also keen to see Malta’s monopoly on energy distribution smashed open, noting that an EU derogation the country obtained in this regard will lapse in 2027. Work should start not to fully liberalise the energy distribution market by that date, it said.

Transport

Road licence fees should be revised to include consideration of how much the vehicle is used, the Chamber said.

It is also time for Malta’s blanket rule allowing free street parking is changed to introduce parking meters in urban centres, the Chamber said.

Procurement

The Chamber placed significant emphasis on the need to overhaul public procurement – a drum it has been beating since 2021.

The lobby group wants authorities to issue a procurement outlook six months in advance and to introduce systems that automatically block bids made by any business that has unpaid tax or social security dues.

Tenders involving raw materials such as copper or fuel should also include a clear, automated mechanism for price revision, given the price volatility of such materials, it said.

Work and pensions

A work-life balance legal notice that revised parental leave rules needs further tweaking, the Chamber said, to ensure no portion of the parental leave entitlement is transferrable to the other parent.  

Plans to make pensions tax-exempt over a five-year period should be accelerated, it said, and workers who qualify for a pension before retirement age and choose to take it should be given the possibility to work on a part-time basis.

Perhaps the Chamber’s biggest proposal in this regard is its call for the capping on pensions to be revised, as the existing cap, set in 2007, has now become stagnant when compared to rising salaries.

Labour market

The Chamber also added its voice to the chorus of complaints about the slow processing of work permits for third-country nationals, saying businesses often receive conflicting information about applications from Identity Malta.

It is also suggesting that Identity Malta grant applicants a three-month interim work permit once they receive notification that they have been approved in principle.

Third-country nationals who are granted a work permit should not have that permit tied to their employer, the Chamber added, and should instead have free access to the labour market.

The Chamber said that platform economy workers whose workforce is exploited should be locked out of fiscal support packages.

And in a nod toward private sector frustration at the public sector, the Chamber said that surplus staff should be seconded to the private sphere, a comprehensive audit of public sector staff be undertaken, and summer half-days abolished. 

"Public sector departments operating on a half-day schedule are detrimental for business, particularly departments such as Customs," it said. 

Read the Malta Chamber's pre-Budget document in full using the link above.