The Malta Employers’ Association director general Joe Farrugia has accused politicians of brazen populism, using the minimum wage as a way to gain voter appeal.

“I believe that the main concern of our politicians is not the welfare of the poor at all: this is a vote-grabbing exercise and they are bidding for votes. If you were really faced with a problem then you would go about it in a scientific manner. You would quantify the extent of the problem and you would try to localise the vulnerable so you can find out how best to help them – rather than risk destablising the entire labour market. Our politicians are just shooting from the hip,” he said.

Mr Farrugia was also adamant that raising the minimum wage was not the way to solve wage inequalities but that rather fiscal measures were the key. However, on this point, he was also less than complimentary about successive governments’ record: “Let me remind you that in Malta both parties agreed to make income tax less progressive. If you really want to address income inequalities, you do not make income tax less progressive as that is a contradiction,” he said.

He explained that the reduction in energy rates, ironically enough, could have affected the vulnerable negatively.

“When the energy rates were reduced in 2013, many people on low incomes already benefited from subsidies. But with the reduction, the retail price index registered very low inflation and consequently the cost-of-living adjustment in the past few years has been very low – not only because of energy rates but also because internationally there was a deflation. We had COLA increases of just 58 cents and €1.16, in the past two years,” he said.

The MEA has been accused of trying to protect its members’ interests by keeping the minimum wage as is, but Mr Farrugia was indignant at the suggestion: “Low wages mean low purchasing power and low purchasing power is bad for business. No one should get the impression that low wages are good news for employers. In many cases, they are not.

“For example, employers are very concerned with the purchasing power of pensioners as we are going to have a growing segment of people out on retirement who have less money to spend, and this will affect domestic demand. Although many companies rely on exports and this would not be an issue for them, we need to be aware that many companies’ livelihood depends on the purchasing power of the domestic market.”

Economist Philip von Brockdorff in an opinion piece today expressed concern that the issue of the minimum wage might not be dealt with through the normal channels of social dialogue. This is an aspect that also worries Mr Farrugia, although the matter is officially being dealt with by the Malta Council for Economic and Social Development, which appointed two economists to come up with reports and recommendations. The economists – Lino Briguglio and Gordon Cordina – presented their reports yesterday morning to the MCESD members who gave only brief inconclusive reactions to the waiting media.

The government is waiting for the outcome of the discussions at MCESD and clearly still hoping for a consensus, with the Prime Minister authorising Louis Grech to meet the social partners individually. But Mr Farrugia is worried that the issue has been confused, saying in an interview that “a number of things are being bundled and jumbled together as it is not clear what the real issues are. Raising the minimum wage is too blunt a tool. A blunt, populist tool.”