Malta Chamber calls for tax-exempt subsidies, warns against ‘suicidal’ wage hikes

The country is on a path to implosion, they said.

 

The Malta Chamber of Commerce asked the government to reconsider its strategy for tackling inflation, calling their current strategy “suicidal at worst,” potentially putting the country “on the path of implosion”.

By next January, the government’s Cost of Living Adjustment (COLA) mechanism is expected to increase wages to almost €13 per week following massive increases in inflation felt across most countries. The mechanism is linked to the cost of living measured using the Retail Price Index.

In a press release on Tuesday, the Chamber said a revision of lower-income tax brackets allowing for wage subsidies to be fully tax-exempt would “improve the purchasing power of lower income groups without fuelling a wage inflation spiral.”

The Chamber warned against the planned “series of wage hikes… [which] will accelerate inflationary expectations” and limit the government’s ability to respond to unpredicted economic changes.

The Chamber said Finance Minister Clyde Caruana’s warning of continued inflation issues, despite “other countries expressing hope that inflation will be tamed,” is “no surprise” if the government’s approach “ignores fundamental economic principles and puts our country on the path of implosion.”

In their statement, the Chamber explains it does not make sense to compensate people for increases in the cost-of-living through COLA, just to divert part of those increases into government coffers.

“These are significant [COLA] increases that are not being matched by productivity increases,” it said, noting how the mechanism is based “strictly on basic pay”, which “grossly underestimates both labour costs for employers and take-home pay.”

“Increasing minimum wages is not a silver bullet,” the Chamber said, claiming it risks an inflation spiral and calling for “extreme caution.” It said such a series of wage hikes “is naive at best, suicidal at worst.”

Commenting on Malta’s blanket subsidisation of energy costs, the Chamber said Malta’s “inflation rate, excluding energy, is substantially higher than the EU average, particularly in services”, calling it a reflection of a “very tight labour market” which is “necessitating the employment of people in jobs for which they lack the desired skills and qualifications.”

While the Chamber said Malta “has the lowest percentage of full-time workers on minimum wage in the EU,” The Shift has reported how one-sixth of Malta’s workforce earns under €1,000 per month and around 2,300 full-time workers earn the minimum wage of just €835 per month.

Malta’s economy relies heavily on low-paid jobs that employ foreign workers who are statistically more at risk of poverty. While Prime Minister Robert Abela has pledged that the government will reduce the number of foreign workers, the mushrooming of low-paid jobs remains unaddressed.

Malta’s low wages are felt in an increasingly unaffordable property market and compound issues created by an increased cost of living, especially inflation in necessities.

                           

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5 Comments
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makjavel
makjavel
4 months ago

The first implosion was after the last COLA adjustment.
The final collapse will happen after the 2nd COLA adjustment.
The only good thing that will come out of this is a clean sweep of the invasion by the TWC and of the Mafia.

Last edited 4 months ago by makjavel
Stevie magri
Stevie magri
4 months ago
Reply to  makjavel

Mhux hekk, we reduce government income from taxes, so the chamber members won’t fork out money . This after all the covid and fuel subsidies

Ray Farrugia
Ray Farrugia
4 months ago

When it comes to improving the workers’ lot these bodies always come out with a campaign of fear mongering. Two things they know best how to do, oppose decent increases in wages and beg for subsidies under one form or another.

Caroline Muscat
Admin
4 months ago
Reply to  Ray Farrugia

Really? Do you own a company? Do you have families who depend on your success? All the Chamber is saying is that things need to be balanced. Otherwise, companies close down and those families are without income. While the wage situation needs to be addressed, the government can’t keep wasting millions it is spending to keep itself in government and shove the burden on employers who are just coming out of COVID and price hikes having to revisit their business models through no fault of their own. Or they can join the rest of the population working for the government. And who do you think will pay for that? You. It is the government’s job to improve the workers’ lot. And it has prioritised everything but that. Meanwhile, they certainly improved their bank accounts.

Carmelo Camilleri
Carmelo Camilleri
4 months ago

The pationers still hooked under the inflation

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