The cost-of-living-adjustment for next year is likely to be one of the lowest in several years due to low inflation, with social partners predicting it will be €1.16 per week.
This is the result of four months of deflation in a row and minimal inflation rate throughout the rest of the year.
The wage increase is worked out using a formula based on the Retail Price Index, which measures price fluctuations of a number of products and services during the yearthrough a system of weighting.
Sources close to the committee composed of social partners and representatives of the National Statistics Office, who are tasked with monitoring prices, said the index had been stable this year.
The committee is calculating that the COLA will amount to €1.16. Although this is not the final figure, which is to be announced in the Budget 2015, social partners do not foresee any substantial change, although the retail price indices for September and October have still to be factored in.
If granted at €1.16, the compensation will amount to €60.32 for the entire year. This is the same as that granted in 2011, when the COLA was the lowest in 15 years, but is a third of last year’s at €3.49 per week. In 2010 workers were given €6.06 – the highest COLA wage increase in 15 years.
Last week, the National Statis-tics Office said the annual rate of inflation as measured by the index in August stood at -0.03 per cent.
The largest downward pressure on annual inflation was brought about by cheaper electricity rates and airfares. The deflation does not worry economists as it is taking place against the background of a growing economy.
Calculated on a full year, Malta’s inflation is still in positive territory, with the 12-month average rate standing at 0.35 per cent in August. But this is one of the lowest averages in the past five years.
According to a recent report carried out by the university’s Centre for Labour Studies, the cost-of-living-adjustment mechanism has brought about stability in wages. The study’s conclusion vindicates the position taken by successive governments in their resistance to changing the mechanism introduced in 1991.
Prof. Scicluna told Times of Malta that the govern-ment had no plans to change the formula used to calculate the annual adjustment.
He said this was an auto-matic mechanism which had been used since 1991 and had “worked”.
Per-week pay rise
2008 - €3.50
2009 - €4.08
2010 - €6.06
2011 - €1.16
2012 - €4.66
2013 - €4.08
2014 - €3.49