Caritas calls for revision of COLA mechanism

As Caritas launch their yearly minimum budget report, the church organisation is calling for a revision of the COLA mechanism to better reflect modern-day living.

The report, titled 'The Minimum Essential Budget for a Decent Living', focuses on the minimum budget required to live a simple yet decent life in Malta. Different budgets are drawn up for three different household types: two adults and two dependent children, a lone adult with two dependent children, and an elderly couple.

Distinct from previous years, the 2020 report adds regular visits to a general practitioner, a laptop and smartphone, and a wi-fi router to the minimum basket of goods, among other items.

Overall, a household with two adults and two children requires €13,946.78 to cover all essential costs to live a decent lifestyle. A single parent with two dependents requires €11,038.12, and an elderly couple needs an income of €8,156.57.

Caritas included an additional augmented minimum budget, which covers costs relating to eating out, commercial rent, and a private car.

With these costs included, the minimum budget nearly doubles across the board. A two-adult two-children household requires a yearly income of €25,003.28 to cover all material necessities, and a lone parent with two dependent children needs to earn €21,974.62. An elderly couple would need €17,900.07.

The report further delves into the additional costs faced by households that include a person with a disability. In the case of coeliac conditions, extra food costs would have to be taken into account, while even wheelchairs may at times cost up to €7,000.

Compared to previous reports, food costs experienced the highest increase over the time. This is in part due to inflation, but also a result of the introduction of new items to the budget.

Households receiving one national minimum wage, the Tapering of Benefits scheme and other allowances or benefits tend to reach the minimum essential budget, but households on social or unemployment assistance fall below the threshold.

However, Caritas noted that families whose income rises about the budget still face a variety of challenges. Elderly couples may face hidden costs if they regularly provide dinner to visiting relatives, while a lone parent might struggle to make time for their children.

In light of these findings, Caritas recommends a revision to the COLA mechanism so that it can reflect the true cost of living in contemporary times. At an EU level, they suggest that the at-risk-of-poverty benchmark, currently standing at 60% of the median income level, should be increased to 70%.