Update 4.07pm - PN reaction

The Prime Minister and Alternattiva Demokratika have reacted positively to a Caritas report which found that the minimum wage is too low and leads to poverty.

Dr Muscat said proposals for a gradual increase in the minimum wage and a study on income adequacy had been noted and he welcomed debate on these important issues.

"Now that we have the figures in hand, we can say that we need a raise in the minimum wage. It is not enough for families on one minimum wage and even for those who are on tapering benefits," Caritas director Leonid McKay said.

The research study, entitled A Minimum Essential Budget for a Decent Living, followed up, a similar one carried out by Caritas in 2012 and focused on three low-income household categories: families made up of two adults and two dependent children (aged between 10 and 15), a single parent family with two dependent children and an elderly couple.

Mr McKay stressed that the basket of essential goods was an extremely frugal one, and based on the assumption that the families were in good health and did not need a special diet.

The study also assumed they such families use free public health services, including primary health centers, lived in social housing and used and public transport.

Given the extreme conservative nature of the basket of essentials used in the study, the problem of poverty was therefore shown to be even more acute.

The yearly necessary budget for a family consisting of two parents and two children to live decently was found to amount to €11,446.

However, such families on one minimum wage who also received in-work benefits and other allowances, get €9,353 - meaning that such families in Malta do not have enough money to scrape through the bare essentials, Mr McKay said.

Families on unemployment benefits earn even less: €7,463.

Meanwhile, the yearly calculated budget for a single parent and two children to live a decent life was estimated at €9,197. Yet such families who were unable to work and are on unemployment assistance earn a measly €6,965.

Foodstuff absorbed the largest share of the budget of the essential basket. Food prices also saw the biggest growth since the 2012 study. While the weekly cost of food for a family of two adults and two children cost €107.14 in 2012, it now costs €119.44.

Caritas called for the raising of the statutory minimum wage slightly but annually for a period of three years (in addition to COLA). The Church NGO also called upon ten government to address the financial situation of low income earners who are renting private dwellings and not benefiting from any subsidies.

Further assistance and incentives should also be developed to facilitate access to healthier, fresh food by low income households and accompany this by practical nutrition advice.

The minimum wage is currently €168.02 monthly.

AD REACTION

Alternattiva said the minimum wage does not guarantee the decent living which every person, irrespective of their work, deserves. 

"A country which says that it is doing well economically, is at the same time tight fisted with the poor who earn the minimum wage," AD said.

The minimum wage has never been reviewed since its introduction in 1971. 

AD spokesperson Mario Mallia insisted: "AD supports the recommendations of the report that the difference between the minimum essential income a family needs for a decent quality of life, and the national minimum wage, is reduced over a reasonably short period. The minimum wage should be raised to reflect the income necessary for a decent and dignified life."

"Increasing the minimum wage would mean raising the general economic
wealth since the increase would mean more spending in the economy by
more people."

"AD feels that by simply giving out benefits government is subsidizing cheap labour and encouraging austerity. The difference in income between the current minimum wage and dependence on benefits is not such as to persuade the dependent to seek employment. It does not pay to work since both dependency on social benefits, as well as on the minimum wage, the risk of poverty still remains considerably high. In both cases the revenue is not enough not even for the essential
minimum."

"AD also agrees with Caritas that those who genuinely cannot work because of different forms of disability should be guaranteed a decent and dignified life. It is a shame that the benefits for these people are more akin to charity than to the
necessary to ensure dignity and social justice for the deserving." 

'Muscat has failed to eradicate poverty' - PN

The Nationalist Party said that the study was proof that the government had "completely lost its social conscience", as poverty was on the rise. 

"The most troubling thing about this report is that rising cost of living is affecting the poorest far more than the government's official statistics suggest," the PN said.