Editorial

A controversy that arises year after year without fail before the presentation of the budget is that over the wage rise decreed by the government annually to make up for the increase in the cost of living. It is awarded to all workers across the board, even to those whose conditions of work, including salaries, are covered by collective agreements. Perhaps the only difference this year is that it has arisen a bit earlier than in past years.

As usual, two strong opposing forces hold their own with all their might, and irrespective of the heat normally generated in the debate and of any well-reasoned call for a reconsideration of the standing arrangements made over the rise, known as COLA (cost-of-living adjustment), the likelihood is that, for obvious political reasons, no government will change course over the issue, just as no government will ever dare withdraw the summer half-day working schedule for civil servants.

Trade unions see red at any mere suggestion that the rise ought not to be given across the board or that it should be tied to productivity when it is meant to make up for the rise in the cost of living. The sharp rise in the water and energy rates this year adds greater weight to their claim. Seen in its overall dimension, it is a tug-of-war that often produces only losers. For, while many of the firms may well be able to absorb the extra costs, or, ironically, are in a position to blatantly pass them on to consumers, others, including, of course, small hotels and companies in other service industries, may well be forced to lay off workers in order to keep afloat.

Employers once again warn that a blanket wage rise could compromise jobs and threaten the country's competitive edge. They argue that wage increases ought to be linked to productivity or that the wage rise should be given to minimum wage earners. According to the Chamber of Commerce, Enterprise and Industry, since 2006, the rate of increase in wages had already "significantly" surpassed that in productivity, particularly last year. This, it said, increased the unit labour cost in general to the detriment of the country's competitiveness.

If this is correct, it is surely something to worry about because, if the economy reduces its competitiveness, it will naturally be harder for the island to slip out of the recession.

Malta needs to be more, not less, competitive and it is, therefore, in the interest of both employers and employees to ensure that all manufacturing units, as well as tourism and other economic sectors, operate efficiently and competitively if they are to hold their own in such a difficult situation as that they are facing today.

True, competitiveness does not depend solely on the workers' output, or even, for that matter, on the level of investment pumped into firms in the shape of new machinery.

Prohibitive or unnecessary bureaucratic costs come into play as well. A factor that is rarely, if ever, brought up is the level of competency shown by management in both manufacturing industry and tourism. This, too, needs to be given serious consideration by organisations of employers.

Whatever the arguments for or against the rise, the times call for a flexible attitude that would allow for the protection, and, when warranted, an improvement of the purchasing power, and for the safeguarding of jobs in firms that could not genuinely take added costs.