Finance Minister shifts track on COLA revision

[attach id="250358" size="medium"]Finance Minister Edward Scicluna. Photo: Ian Pace[/attach]

Finance Minister Edward Scicluna is backtracking on proposing changes to the cost-of-living-adjustment mechanism, insisting he is personally “proud” of it and the Government has no intention of changing it.

Barely 24 hours earlier, Prof. Scicluna told Times of Malta in a recorded interview that the Government planned to propose changes to the COLA mechanism to better reflect Malta’s productivity and bring it in line with EU expectations.

However, he performed a U-turn one day later when he issued a statement saying the Government did not have this on its agenda and was not proposing any changes.

It said the ministry made its representations in favour of the COLA with the European Commission following pressure to revise it over the past years. The ministry believed the current system should convince the European Commission as it contained flexibilities which social partners should acknowledge.

It added that Prof. Scicluna’s comments were referring to a study conducted by the Malta Council for Economic and Social Development which proposed certain changes on which there was no agreement. The Government is still awaiting feedback from the MCESD on the matter.

However, a transcript of what Prof. Scicluna said in the recorded interview with Times of Malta shows otherwise.

Prof. Scicluna categorically replied with a “yes” when asked whether the Government was planning to reform the COLA.

“We intend to reform COLA to address the concerns of the European Commission. Our idea is to tweak the mechanism particularly in relation to productivity,” he said.

Prof. Scicluna also said he would propose an “escape clause” to the mechanism, which could be used when the economy was passing through a rough period. He made it clear these were just proposals, since an agreement had to be reached with all social partners.

When contacted yesterday after the press statement was released, Prof. Scicluna said he was not happy with the article’s headline, COLA ‘may be changed’, and insisted any questions should be sent by e-mail since this was a sensitive subject.

Replying, Prof Scicluna said: “The policy of the new Government is that the COLA mechanism should stay as it is.”

“I am proud of this mechanism because I was myself involved in its set-up in 1991. So it is obvious that I could not have intended to say yes to a question asking whether I would like to do away with it or change it,” he said, explaining he must have misunderstood the question.

He said his personal view as expressed before the general election was that Malta should not agree with the European Commission to do away with the COLA mechanism. It was not, he said, an inflexible full wage indexation mechanism as depicted by the Commission, and it ensured industrial peace.

“This is the same position which the previous government has been taking in its official documents, especially the previous two National Reform Programmes which we will maintain,” he said.