MEA Director General stresses need for ‘mature discussion’ among social partners following COLA increase speculation
Director General of the Malta Employers’ Association (MEA) Joseph Farrugia is calling for a discussion among social partners on the best way forward, following the news that the Cost-of-Living Adjustment (COLA) that is awarded annually could reach €8 per week next year.
Farrugia said that the MEA is ‘closely monitoring the situation’.
The Times of Malta had reported that the COLA could rise by that much next year. Farrugia, contacted by this newsroom and asked about the situation, said that the country is just emerging from a very serious crisis, “which now has evolved because of the fallout from Covid and the war in Ukraine, into scarcities and higher prices for basic commodities such as energy and food.”
He said that one would need to see the extent to which this will lead to a ripple effect in inflation.
“If the first push of inflation results in higher costs of production, such as through increased labour costs, then it will be reflected in a second round of price increases. That is the real danger, because having wage prices spiral could also impact aggregate demand in general, as at higher prices people may purchase less especially if their own disposable income would have gone down. More dangerously, it could have a negative impact on the competitiveness of many enterprises.”
He said that there could be fiscal interventions, whereby the government would, first of all, protect those who are the most vulnerable. “So, for example, pensioners don’t earn wages but they are still affected by price increases. There are also low income groups who may be more prone to increases in basic food items. I believe that in the coming weeks or months, we should try to explore means through which, rather than having an across the board increase in the Cost of Living Adjustment (COLA), government can intervene to focus mostly on vulnerable people and families, without affecting overall competitiveness.” He said that he is not calling for a suspension on the COLA, but for a mature discussion among the social partners on the best way forward.