The European Commission’s recommendations for Malta to accelerate its pensions reform and amend its cost-of-living-adjustment by the end of next year was a call for the government to “face reality”, the Malta Employers’ Association said.

“The commission is bringing to light situations which our members face but which government sees differently,” the association said in a statement. MEA said it agreed with the recommended measure to index retirement age to mortality age. This was being adopted by other countries and was a realistic way to ensure that the retirement age reflected changing demographics.

Perhaps the most radical and contested recommendation is the one related to wage indexation. MEA has been claiming for years that the cost-of-living adjustment mechanism is outdated and could result in a loss of competitiveness.

The association said this was also being discussed at the Malta Council for Economic and Social Development but it was evident that the government and unions would resist – for political reasons – the removal of automatic cost-of-living increases, despite advice given by the experts.