I am so relieved to learn that the Finance Minister was misreported. I felt it in my bones, as I know him so well.

The cost-of-living adjustment (COLA), a term purloined from the USA where it still exists today, is a purely social concept not an economic one.

Twenty-five years ago, having served previously as president of the Federation of Industry, I was asked to represent the General Workers’ Union on a board representing all the social partners and detailed specifically to replace the haphazard way of calculating the annual statutory increase that was intended solely to protect low earners from a drop in their real wages and, hence, in their standard of living. As befitted Malta.

During the lengthy discussions, it was unanimously agreed that the economy would not be hurt. At the same time, all parties agreed to the need of a compulsory statutory yearly increment in a non-socialist market economy. Hence, the formula finally established in 1990.

We avoided wage-indexing at all costs; instead we devised something that economists with a social conscience (Keynesians like me) would certainly not dispute. Nobody, in fact, did then. The raise, given equally to all levels of salaries without distinction, was computed at the level of a semi-skilled worker, the next higher from the minimum.

There is no room for tampering with COLA through any ‘escape clause’ based on national productivity, a purely economic concept that would suit an indexation, but not COLA.

Otherwise, this would be transformed into SOLA – standard-of-living adjustment.