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“We should accept all ideas,” the MEA Secretary said of the expected rise in COLA.



Joseph Falgia, Secretary-General of the Malta Employers Association (MEA), said the country was “b.Answer all the ideas at this stage by answering the questions related to the expected rise in COLA next year.

He was contacted by the newsroom after the Times of Malta reported that the annual living cost adjustment (COLA) could reach € 8 a week next year. This may be a shock to some of the companies he said.

He emphasized the need for discussion and stated: It’s just dogmatic and the existence of COLA should give it and shouldn’t explore other ideas. It can have a very negative impact on some companies, especially those operating in the low value sector. “

Farrugia said he was not calling for a stoppage of COLA, but for a mature discussion. Among social partners in the best way to move forward.

In answering the question, he emphasized the concerns that inflation is causing. “In the case of the first push of inflation Production costs will increase due to increased labor costs, etc., which will be reflected in the second price increase. This, in particular, can have a negative impact on the competitiveness of many companies.

It was reported that the cost adjustment (COLA) could rise to 8 euros a week. How will this affect your employer? Is MEA planning to discuss with the government and seek any subsidies or assistance when such levels are reached?

We are closely monitoring the situation.

It is clear that inflation is rising in both Malta and many other countries. Indeed, government-issued subsidies to stabilize energy prices and some commodities such as wheat would otherwise help to increase inflation.

The € 8 a week mentioned is the result of an automated mechanism based on the retail price index and, as expected, is reflected in a much higher COLA than we are accustomed to in the last 15 years or so. .. Therefore, it will be a shock to some companies.

Some companies are hedging the increase in COLA and should already be planning as the increase in living expenses is well established as part of the increase in collective bargaining agreements.

Are you talking about government agencies here?

Not only in the private sector, there are some collective bargaining agreements that incorporate increased living expenses into the increase in collective bargaining agreements.

However, having an expected COLA of 3 euros a week is one thing, so we need to see how the union reacts to this, which is now 8.

We also need to determine how much this will lead to the spillover effect of inflation.For the first push of inflation Production costs will increase due to increased labor costs, etc., which will be reflected in the second price increase. This is a real danger, as a surge in wage prices can generally affect aggregate demand as well. Higher prices can lead to lower purchases, especially if their disposable income is reduced. To make matters worse, it can negatively impact the competitiveness of many companies.

Especially for export-oriented companies, care must be taken to maintain competitiveness between Malta companies and other companies.

You cannot lose your competitiveness at this stage. You may ask, “What can I do?” Well, as I said, it’s an automatic mechanism. For those who have said for years that they don’t really reflect prices, my standard answer is based on a retail price index based on household surveys, so it’s not feasible. Hmm. .. I must consistently say that this is still the case today.

But there will be financial intervention, which will protect the most vulnerable people in the first place. So, for example, pensioners do not earn wages, but are still affected by rising prices. For example, some low-income groups tend to have more basic food. In the coming weeks or months, governments need to intervene to find ways to focus primarily on vulnerable people and families, rather than raising living cost adjustments (COLA) altogether. I think there is. Affects overall competitiveness.

Are you saying that COLA is not given to all workers?

At this stage, I think we need to accept all the ideas. Obviously, all sorts of agreements need to be reached with other social partners: unions and governments. So this is as many challenges as we did when we started the Covid epidemic. We need to find a solution that works for the best interests of everyone. It’s just dogmatic and the existence of COLA should give it and shouldn’t explore other ideas. It can have a very negative impact on some companies, especially those operating in the low value sector.

But given that COLA reflects today’s living expenses, wouldn’t they be more vulnerable to such a move if they didn’t give workers such an increase?

Yes, of course, but losing a job as a result can be even more vulnerable. Therefore, a very mature discussion is needed here.

If you understand me correctly, one of the options is probably to temporarily change the mechanism to provide an increase in COLA to the more vulnerable, but to the less vulnerable. Said not to provide. Are you considering other options, such as companies that receive assistance or seek financial support from the government instead?

You need to consider not just one option, but some actions that may be taken to maintain your business. Keep in mind that the government’s financial agility at this point is very limited. Very limited due to spending incurred during the Covid-19 pandemic.

There is no surplus budget, and the government has room to move to support businesses in that way.

We are just emerging from a very serious crisis that has evolved into a shortage of basic commodities such as energy and food and high prices due to the collapse from Covid and the war in Ukraine.

I’m not asking for COLA to stop at this stage, but as with Covid, we need to have a mature discussion between our social partners and decide on the best way to do it. When Malta faced other crises in the past, such as the financial crisis and the war in Libya.

Today it is difficult to say whether we are living in a stable era. It seems that one crisis leads to the next.

The Labor Party mentioned in its election manifesto the possibility of changing the COLA mechanism. I wonder if there are any updates or hearings about it.

There are two actions under consideration.One of them Low wage fees. The Low Wage Commission was established in 2017 and is not required to review the minimum wage every five years.

The next revision is scheduled for 2023, so the next recommendation is scheduled for 2023. There is a low wage committee meeting to deal with the minimum wage. Inflation has made it a very delicate time. The average inflation rate in the euro area is 8%, and we imagined that Malta would inflate more than 5% three years ago, keeping in mind that some countries in the EU are also considering inflation. I couldn’t do that either. 15% -18%. THis situation is very serious.

In addition, the government was also looking for a revision of COLA, or a separate indicator for the low-income group. But then nothing has come out yet.

I don’t know if this is really the right time to go in that direction.

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https://www.independent.com.mt/articles/2022-06-09/local-news/We-should-be-open-to-all-ideas-MEA-Director-General-says-on-projected-COLA-rise-6736243584 “We should accept all ideas,” the MEA Secretary said of the expected rise in COLA.

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