Raising minimum wage may destabilise labour market - MEA

Simply raising the minimum wage carries the risk of destabilising the labour market leading to a loss of jobs.

This could work against the interests of the vulnerable groups which the measure will be supposed to help, the Malta Employers Association said in its official reaction to the report by Caritas about social policy measures that are required to ensure a decent living to Maltese families.

The MEA proposes 11 policy measures through which the social partners could make a concerted effort to minimise the number of families living in relative poverty in society.

These measures compliment many of those proposed by Caritas and focus on enabling vulnerable families to be able to increase the family income.

The MEA said it acknowledged the findings of the Caritas report that families with children needed a certain amount of income to be able to afford basic needs

A salient point in the Caritas report was that, whereas among families with two parents and two children, only three per cent were unable to afford the essential basket of goods and services, this figure shot up to 53 per cent for single parent families.

"The implications are that such families are clearly in greater risk of poverty than others.

"The MEA finds that a two income family, even if both parents earn a minimum wage, would be in a position to earn more than the €200 which, according to the Caritas report, is necessary for a decent living."

The MEA document looks into the pros and cons of raising the minimum wage.

It points out that for a family with two children, the minimum wage, plus bonuses plus children's allowances was close to €200 a week.

It concluded that the determination of wages was linked to productivity and should not be linked to a basket of goods.

The MEA's document can be read in the pdf link below.