Hourly labour costs jump during first quarter

Hourly labour costs during the first quarter were 2.4 per cent higher than in the same period last year, according to new data released by the EU’s statistics arm.

The growth was slightly lower than the average in the euro area, which saw a 2.6 per cent increase. However, Malta’s cost of labour rose significantly compared to the 0.4 per cent increase in 2010 over the previous year.

The rise in the cost of work, which includes salary and taxes, comes amid recommendations by Brussels that Malta should review its wage indexation mechanism, known as COLA, to tie wage increases to productivity.

This measure is opposed by the government and the unions but supported by the Central Bank and the private sector, which argue that the current mechanism could undermine the island’s competitiveness.

Industry, the most fragile of Malta’s economic sectors, experienced the largest increase in labour costs, according to Eurostat, swelling by 4.1 per cent over a 12-month period.

On the other hand, the cost of labour in construction went up by 2.8 per cent while in the services industry the rise was of just 1.6 per cent.