The impact of the €5.82 weekly wage increase on the payroll bill should vary between two and three per cent for manufacturing companies and hotels, leading audit firm PricewaterhouseCoopers has revealed.

The increase in a company's wage bill in 2010 would range between 2.1 per cent for a manufacturing firm employing 468 workers to 3.3 per cent for a supermarket with 82 employees.

The cost of living adjustment (COLA) will have a direct impact on all businesses, however the scale of the impact on specific sectors would differ depending on their underlying revenue and operating cost structures.

The findings are in line with government studies on the matter. In fact, in a presentation to social partners on Friday, before the Budget, Finance Minister Tonio Fenech said the estimated impact on different sectors ranged from about two per cent to 2.5 per cent.

The news dampens fears ex-pressed by business leaders before the Budget on the perceived negative impact of a high wage increase.

Based on the inflation of the past 12 months, the COLA index stipulated a legally-binding weekly increase of €5.82 for 2010. At one point, the index even indicated a wage increase above €6.

The analysis did not factor the increased costs brought about by the higher water and electricity tariffs, to be introduced on January 1, because they have not been announced yet.

The analysis did not go into the impact on small retail businesses, which could be expected to face much bigger difficulties, especially in their cash flow.

The Malta Employers' Association had expressed serious reservations on the COLA increase and even warned of job losses.

When asked whether their fears were justified, the minister insisted the government "always expressed sympathy with the MEA's position". "This is the reason why we allocated €2.5 million as a reserve fund to support industries in need," Mr Fenech said.