Cost of living increase: €6.06 a week
New incentives for exports, training
All employees will benefit from a weekly €6.06 increase from 2009 in cost of living compensation, The Sunday Times has learnt.
The figure, to be announced in the November 9 budget, will be the highest to be given to workers in the past 15 years, statistics show.
The allocation is expected to be welcomed by trade unions, but not by the Malta Employers' Association (MEA), which had proposed that the government should foot half the cost of living allowance (COLA) paid by the private sector.
The €6.06 figure was derived through a specific formula worked out by the Retail Price Index mechanism which measures price changes of different products and services throughout the year through a system of weighting.
Sources said pensioners would pocket the full COLA increase for the third year running, and not two-thirds of it.
During the budget, Finance Minister Tonio Fenech is expected to make it clear that the government is committed to continue offering assistance through Malta Enterprise schemes to companies which find themselves in difficulty.
The government is also expected to unveil new incentives for industry, especially export-based firms, as well as more training programmes for workers.
The MEA had said it was against the current mechanism that linked wage increases to inflation, and made proposals to tackle what it described as the "destabilising effect" of COLA in times of recession.
The existing COLA mechanism provided for circumstances where increases may not be given in full in exceptional circumstances.
MEA's proposals for the government to meet half of the private sector's COLA bill was estimated to cost €12 million. But Mr Fenech had made it clear that with the government deficit expected to rise to around four per cent it would be very difficult for the government to pitch in. An MEA survey published last month claimed that about 20 per cent of companies expect to cut jobs if the cost-of-living adjustment ranged between €5 and €7 weekly in 2010.
The survey was conducted among the association's members and dealt with the impact of COLA on businesses during a recession. Economists contacted at the time had argued there was an element of scaremongering tactics among employers, though they admitted that the fears were partially justified for the export and tourism sectors.
Mr Fenech had told The Times business section that the COLA mechanism brought industrial stability and urged employers not give in to demands by unions for wage increases over and above COLA during negotiations.