FOI insists wage compensation for inflation should not apply indiscriminately

Press contributors, mainly from the political field, have taken the Malta Federation of Industry to task for insisting that it should no longer be mandatory on private employers to pay compensation for inflation on top of wage increases negotiated with trade unions in collective agreements.

Last week's media release by the FOI had two purposes. Firstly to create awareness about the level of the minimum wage in Malta when compared to a number of EU countries and to the majority of candidate countries with whom we have to compete. Secondly, to propose that the cost-of-living increase be applicable to minimum wage earners only.

The FOI had to correct some wrong impressions in the media and it was explained that the FOI is not engaged in any exercise to erode local employment conditions.

At no stage did the FOI even as much as hint about a removal of the minimum wage concept (although this has been done in certain countries with beneficial effects to the economy).

In its press release, the FOI made a distinction between those workers who are on the minimum wage and those who have a collective agreement. It was very clear that industry was objecting to paying the cost-of-living wage increase on top of wage increases negotiated by collective agreements.

The reason is simple: enterprises should only pay the increase agreed with the trade unions and this should include any compensation for inflation.

The FOI has, neither in the press release under discussion nor in any other statement, ever hinted that "removing the minimum wage could solve the country's competitiveness". If this country is to discuss the issue of competitiveness collectively, an element of maturity is called for.

The FOI reminded the public about one important development that everyone seems to be ignoring: that only a few months ago all major trade unions signed a collective agreement with Government on behalf of 33 per cent of Malta's workforce employed in the public sector agreeing that the cost-of-living increase will not be awarded in addition to negotiated wage increases, but shall be part of such increases.

The FOI considered that private employers were being discriminated against because of an anachronistic law and insisted that this could prejudice the future of private enterprises.

The FOI commented on a liberalised trade environment (unlike what it was when the law was passed). Malta now has to compete with manufacturers and service providers across the world.

Malta's industry can either consolidate its competitiveness or fall back to third-world status. Employers in Malta are not taking advantage of low wages because the situation in the labour market is quite tight and shortages are reported in a number of areas.

This on its own drives wages up without the need of collective agreements or cost-of-living increases.

Everyone should also bear in mind that this country cannot escape the hard facts of life. Firms are struggling to be more efficient, increase productivity through better management and better machinery and integration of information technology.

There is an unending effort to reduce costs, whatever their nature. However, one cannot say that wages and workers' conditions of employment can be excluded from the problem of competitiveness because these constitute an integral and important part of industry's costs.

The FOI must therefore continue to insist, for the reasons given, that the question of compensation for cost-of-living increases be limited to minimum wage earners.