Working to live
If you’re not earning enough money to live decently, whatever the reasons and circumstances that led you to be in that state, society is morally obliged to intervene to help you. It is simply a matter of justice.
The thing is, that the fair and yearly adjustments to COLA are made on the basis of the salaries that are already in place.
The cold economic definition of a fair wage is compensation for labour against the value of that labour in the market. But the economy is a tool to structure and enable life in the community. It is not the only measure of its success. If the market perceives the value of any labour, however modest, however unskilled, as to be beneath the basic dignity of the person delivering that work, the market would be receding into an economy built on slavery or serfdom.
For decades now our country has adjusted its basic salary framework on a formula of yearly revisions. The COLA (cost of living adjustment) system is not without its merits and some of those merits should certainly survive a reform.
To begin with, COLA is a flat yearly adjustment to all salaries, no matter their scale. This means that in proportionate terms, lower salaries enjoy a greater increase than higher ones. That’s a good thing.
Secondly, the cost of living indicator is based on an index of basic products that every household is expected to need to live decently. Sometimes the range of products that are used as indicators falls out of touch with changes in spending patterns and necessities. But the idea is there and, frankly, it is fair because it is based on how much it costs in the real world to live, rather than setting a ratio of how much poorer than average we are prepared to accept the poorest among us to be.
Thirdly, it is an objective indicator that has diffused tension between governments and other social partners at least on the matter of how to deal with cost of living. Unions and employers are guided by a predictable indicator and know just what to expect to receive and to spend.
The thing is, that the fair and yearly adjustments to COLA are made on the basis of the salaries that are already in place. As Malta’s economy enjoyed a consistent pattern of growth over the past several decades, the community’s wealth, the basic cost of a shelter over one’s head, and the income of the top bands of employees have shot up. This happened at a much faster pace than the rates of increases of salaries that are fixed by tightly structured collective agreements. And at an even faster rate than the rate of adjustment of cost of living measures.
In simple terms, the gap between the richest and the poorest is wider now than it has been for decades. The number of employees paid the minimum wage is modest compared with competing economies, but the gap of their income with even the national average is unacceptably wide.
Even if we were to accept the unfair notion that a minimum wage should be a ratio of the mean salaries in the country (rather than worked out on how much people really need to live), Malta’s minimum wage is at 44% of the mean wage. It should at least be at 66% if we are to strive to meet European expectations.
It is time for change. It is no competitive advantage to employ people who are unable to make ends meet with what they earn. Decently paid employees are better motivated to accept training and skilling because they can only be expected to see the point of putting in an effort to better themselves after their basic living needs are accounted for.
It is time for all people who work in Malta or who have retired here to be guaranteed a monthly income that allows them to pay the rent, stay warm, eat healthy, educate their children and pay for the dentist if an emergency comes up. What use is economic success if we can’t promise that to every one of us?