COLA wage increase could reach €6 next year if prices continue the same upward trend
Wages could rise by more than €6 a week next year if the cost of living continues the upward trend seen so far, a leading economist has said.
Philip von Brockdorff, professor of economics at the University of Malta, said the retail price index stood at 4.4% in March and is expected to rise further in April.
“If things continue as they are, the cost of living adjustment (COLA) in the next budget could be over €6,” he said during a chat on TVM News Plus’ Xtra, hosted by Savior Balzan.
Von Brockdorff said rising wages could make some sectors of the economy less competitive, but this was mitigated by strong government intervention to keep energy prices stable.
Keeping energy prices stable has helped eliminate uncertainty, he said, adding however that if energy prices continue to rise, it will be difficult for the government to maintain the same level. Support.
The RPI is the index on which the COLA increase is based. The salary increase that comes into effect on January 1 of each year is mandatory and reflects the inflationary impact of the previous year. Food prices and materials used in construction and housing are the main drivers of inflation.
Von Brockdorff said the European Central Bank is very likely to raise interest rates this year to control inflation. This will essentially make loans more expensive and may slow down business investment decisions.
GWU will request that the COLA be awarded twice
General Secretary of the General Workers’ Union, Josef Bugeja, said the cost of living was eroding people’s purchasing power at a time when many workers were quitting the COVID wage and returning to their normal wage.
He acknowledged that subsidizing energy and fuel was an important factor in removing the impact of inflation. He estimated that without the state subsidy to energy and fuel prices, wage compensation for the cost of living could even reach €12 per week.
Bugeja said his union had requested a meeting of the Malta Council for Economic and Social Development to discuss a way forward against inflation and its impact on families and the economy.
“The GWU will ask for the COLA to be granted in two parts so that part of the adjustment will be granted this year rather than waiting for the full increase in January next year,” Bugeja said.
He added that the union will also insist on helping those most in need, who are worse off due to rising prices.
“We have the advantage in this country that the social dialogue is very strong and to manage the existing crisis, we have to pull the same rope. Everyone has to bear the burden and not just the workers,” Bugeja said.
Earlier in the program, Economy Minister Silvio Schembri said the government’s political decision to dampen the price of energy was aimed at eliminating uncertainty.
“Uncertainty is the worst enemy of business… [despite millions spent] the impact on the economy of doing nothing is much greater because experience has shown us that uncertainty stifles investment,” Schembri said.
Opposition shadow spokesman Ivan J. Bartolo said Malta ended last year with the highest deficit in the EU due to COVID-related spending and called for more effort to attract new economic sectors.
“I will not criticize the money spent, but I would use this time to see what new industries can be created and how to influence and improve the education system and facilitate the process at Identity Malta to make it easier for businesses to bring in workers strangers. “Bartolo said.
On changes to the corporate tax regime, Schembri said it was important that there was cooperation and consensus between the government and the opposition.