The GWU’s report and inflation
Two events related to the country’s standard of living were given some prominence in the media over the last few days. They are directly connected because they both highlight important issues that need attention. The first was an address by the Finance Minister to the members of the Malta Council for Economic and Social Development. Clyde Caruana did not have good news about inflation, saying that it will take years before it returned to the normal levels of 1-2 per cent we had become used to.
The second was a report which was compiled by the General Workers Union, which strongly indicates that households today need much more than the minimum wage in order to lead a decent life. With inflation rising to extraordinary levels since the start of 2022, and which is still above the normality, matters will get worse, particularly for people on the lower ends of the social scale.
The Covid-19 pandemic, apart from the difficulties it created for the health sector, was a contributor to economic woes which eventually led to unprecedented levels of inflation across many countries, including the European Union and also Malta. But while the health situation has been brought under control – although, we must say, people continue to be taken to hospital with the virus and some are still dying – the economic repercussions are still with us.
To make matters worse, we then had Russia’s invasion of Ukraine, a war that now has lasted more than 18 months and which is unlikely to end anytime soon.
As the minister explained, the return of inflationary levels to what they were before 2022 will not happen in the short term. In the meantime, the world has had to adjust to the new realities.
The rise in prices has meant that people have had to make choices in their pattern as consumers. They have cut down on things they buy, or go for cheaper brands. And, while many have more or less retained their lifestyle, albeit with some adjustments, there are others who have slipped closer to the poverty line, or else have become part of that group who is below that line. It is also clear that the gap between those living comfortably and the others who do not make ends meet with grow further.
This gives the GWU report even more significance, given that it has established that the minimum wage is nowhere near the National Living Income, which is the basic amount that is needed for people to survive. This report has also been presented to the MCESD, the same social partners who have heard the minister speak about how it will take years for inflation to return to normal levels.
It is therefore clear that much more needs to be done by the government.