Government encourages unions to reopen discussion on alternatives to the COLA mechanism – Scicluna

The government has no issue with unions reopening the discussion on alternatives to the cost of living allowance (COLA) mechanism, and in fact encourages them to do so in their dedicated fora at the Malta Council for Economic and Social Development (MCESD), Finance Minister Edward Scicluna said on Tuesday.

Monday’s budget saw the COLA set at €3.49 per week, but this will also be complemented by a €15 or €35 cheque for everyone, depending on whether they live in a single-person household or not. The reasoning behind this additional bonus is that the government felt that price increases across certain products may not have been fully reflected in the increase.

Asked by The Malta Independent whether, given this, the time was ripe for a discussion to be reopened on whether the COLA mechanism is most adept for Malta, Scicluna said that unions and employers are free to open a discussion on this at the MCESD.

He stated that the discussion had already been opened in the past between unions and employers – the government itself an employer – and noted that these employers had accepted that the minimum wage should only be fixed for one year.

Scicluna said that after a year earning minimum wage, a person will receive a €1 per week increase over and above the COLA adjustment in the first year, as well as the second year, which provides further financial help and compensation.

“If the unions want to reopen the discussion though, we are ready and we have no issues – in fact we encourage the discussion to take place in their respective fora,” Scicluna said.

The COLA mechanism was first introduced in 1991 with the intention of being independent of the government. Its increase is not chosen or determined in any way by the government, but is set automatically by a set mathematical formula which takes into account factors such as inflation over the previous 12 months, with the agreement of the social partners in the MCESD.

There have been calls for the discussion into whether the COLA mechanism is adequate for Malta to reopen, with UHM CEO Josef Vella telling The Malta Independent in an interview last week that this discussion should reopen and that even if it is decided that the mechanism should be retained, the weightings within the formula should be adjusted.

An alternative to the COLA mechanism could be the living wage, which is generally based on geographical factors but which can, in Malta’s case, be based on other indexes and statistics to reach a yearly adjustment which could be more adept to the realities in Malta, Vella had noted.