Minimum wage spin

Just as much Joseph Muscat has been exposed as a calculating and unprincipled strategist by ditching the half-baked 'living wage' and promising not to raise the minimum wage, the PN spin of a minimum wage freeze smacks of deceitful spin.

The truth is that the minimum wage has been in the deep-freeze since the 1970s when it was introduced by a Labour government.

It has only been adjusted by successive Labour and Nationalist administrations through the COLA (cost of living adjustment) mechanism which is pegged to the annual inflation rate.

Muscat never suggested he would remove COLA but made it clear that as prime minister he won't increase the minimum wage over and above the annual cost of living increase.

The sad truth is that successive Nationalist governments have perpetuated precarious work conditions through a public procurement system which awards contracts to the lowest bidders, with no consideration to the social aspect of employment. This saw many contracts for cleaning and security services being awarding to companies which pay the minimum wage.

In a nutshell, this is another case of the Nationalist pot calling the Labour's kettle black.

But Muscat has only himself to blame for exposing his party to genuine criticism from various quarters ranging from independent trade unions like Forum to the Greens. On the other hand his decision was immediately applauded by the Malta Employers Association.

Instead of standing in defence of these workers, Muscat committed himself not to raise the minimum wage over and above the COLA mechanism, betraying the fact that he takes the working-class vote for granted while seeking to court the business classes at all costs, even that of ignoring the plight of the most vulnerable categories.

A 2010 Caritas report says the minimum wage should be raised from €158 to €180 a week because it is falls short of the minimum needs of a family. Other studies suggest the minimum wage is barely €15 above what a family receives from welfare benefits while not working. This simply encourages welfare dependency.

Muscat's suggestion that economic growth is more of a priority than raising the minimum wage suggests that he has already endorsed the "trickledown" ideology associated with the political right-wing and that he is averse to any hint of income redistribution characteristic of centre-left parties.

Even the centrist US Democrats have made raising the minimum wage one of their main battlecries, exposing a serious limit on Muscat's progressivism: he will propose or say nothing which sours his relationship with the business class, something already evident in his constant pandering to the construction industry. 

Perversely, Muscat has linked his decision not to raise minimum wage over and above COLA to his promise to decrease utility bills. In this way minimum wage earners, who probably are already the least wasteful with energy, will end up paying the price for the reduce energy bills of more affluent consumers. And this exposes a socially regressive tendency in new Labour's way of thinking.

The Caritas study shows that utility bills represent less than 6% of the minimum consumption bill of a family composed of two adults and two children and just 5.4% of that of a single-parent family. On the other hand the same study recommends a 14% increase in the minimum wage.

At this stage, Muscat may have painted himself in a corner where as future PM he will either have to betray his electoral promises, or literally accept anything to kick-start the economy and lower utility bills, irrespective of the environmental, fiscal or social costs.

Two fundamental blunders may have been committed here. The first was to appear somewhat shaky by forsaking his own previous proposal of a non-mandatory living wage, set at a level above minimum wage, which would have been only enforceable in awarding public tenders to those companies who employ the living wage. After forgetting about the living wage for 12 months, Muscat has now declared he won't raise the minimum wage, exposing himself to the criticism that his policies are based on electoral calculations in which the self-employed and segments of big business have a pivotal role.

His second political blunder is that he has given a golden opportunity to this government to outflank him from the left, by raising the minimum wage cosmetically and slightly above the COLA adjustment in the next budget - something we have yet to see whether it will indeed take place.

This is the only way through which the PN can give substance to its billboard campaign, even if in so doing it risks alienating big business and some of its top sponsors known for paying their employees the minimum wage. Still, if the PN does increase the minimum wage over and above COLA it would have scored a political coup.

Moreover while the PN has went overboard in linking the proposal to the 1980s wage freeze, it was the General Workers Union which gave credence to the PN's campaign by ditching its own proposal for a minimum wage raise to dance to Muscat's tune. This was reminiscent of the union's servile relationship to the PL in the 1970s and 1980s. Rather than a wage freeze, current events suggest a remarriage between party and union in which the former will dictate terms to the latter.

Ultimately, the losers in this clash of strategy and spin are those cleaners and security workers who can't make ends meet. Still as Muscat well assumes, many of these will still vote Labour anyway.