FOI asks for reconsideration of mandatory cost of living rise

The Federation of Industries made a strong appeal to the government to reconsider the obligatory cost of living increase awarded every year.

It was reacting in a statement to the results of a recent study published by Eurostat that highlighted Malta's minimum wage standing in relation to some EU member states and other candidate countries.

This study reported that Slovenia and Malta had national minimum wages which, broadly speaking, were at the same level as those in Portugal and Spain respectively. The monthly minimum wages in Slovenia and in Malta were €451 and €535 euros respectively. In contrast, in the other accession countries, the monthly minimum wage ranged from €116 (Latvia) to €212 (Hungary).

In order to remove the effect of price level differences, the exercise also converts the monthly minimum wages expressed in the national currencies to an artificial common currency called purchasing power standard (PPS).

When applying these purchasing power parities to the analysis, the picture becomes even more of concern for, in addition to the fact that the monthly minimum wage for Malta remains notably higher than those of the other accession countries, Malta's monthly minimum wage (752 PPS) also ranks higher than those of Portugal (543 PPS), Spain (617 PPS), and Greece (725 PPS).

The FOI said it has repeatedly stressed the importance of a national wages policy that makes economic sense: "safeguarding the competitiveness of our enterprises and therefore workers' jobs".

"In this context the FOI must again state that it does not agree with the law that makes it mandatory on employers to grant each worker the cost of living increase laid down by the government every year independently of and in addition to the wage increases negotiated by collective agreement with the trade unions.

"The FOI seriously questions whether this situation is sustainable in the coming years. It appeals to the social partners to re-assess the position as a matter of urgency if enterprise is to remain competitive and jobs safeguarded in the coming years."