COLA increase set to be at €1.16 per week

The cost of living adjustment (COLA) for 2015 is expected to be of €1.16 per week, the lowest it has been since 2011, according to media reports.

Budget 2014 had seen a substantial increase to €3.49 per week. Social partners predict the low COLA increase due to low inflation and four months of deflation in a row.

Malta's COLA binds private employers to effect the necessary inflationary increases to salaries, guaranteeing a standard wage increase and also keeping industrial peace.

In spite of employers’ continuous lobbying to abolish COLA, the mechanism may have been one of the factors that made wages in the Maltese private sector, stable.

A report by industrial relations expert Saviour Rizzo to the European Industrial Relations Observatory shows that over the last four years, the mean hourly labour cost in Malta went up by 9.3% to €12.30. But this rate remains far below the mean hourly rate of €23 in the EU states, and €28 per hour in the eurozone.
According to Rizzo this means that the mandatory annual wage increase based on the COLA mechanism, about which the European Commission had expressed a measure of alarm, has not caused “a surge in wages in Malta compared to the other European countries.”

The European Commission has repeatedly told the Maltese government it should desist from tagging the COLA increase to inflationary movements, and instead award the mandatory salary increase only when there are productivity gains.