Minimum wage out of step with average wages in Malta

Malta is a part of a small group of six countries where rises in the statutory minimum wage, have not kept up with the growth in average wages between 2009 and 2021.

The other countries in this group – Belgium, Germany, France, Ireland, and Luxembourg – all have a much higher minimum wage than Malta’s.

A report by the European Foundation for the Improvement of Living Conditions shows that in countries with comparable minimum wages like Portugal and Slovenia, the growth in minimum wage was considerably higher than that for average wages.

Overall statutory minimum wages have increased faster than average wages in more than two-thirds of EU countries, which means that in these countries the lowest-paid employees have experienced higher wage growth than the average employee.

Among these countries, Eastern European member states stand out for the exceptional growth in their minimum wages: Romania, Bulgaria, the three Baltic countries, Hungary, Poland, Slovakia and Czechia.

In other countries, where increases were smaller, minimum wage growth was still considerably higher than that observed in average wages. This was particularly the case of Spain where minimum-wage earners benefitted from a substantial increase enacted by a governing left-wing coalition in 2019. Other countries in this group were Portugal, the UK and Slovenia. Greece is the only country where the minimum wage level fell, although average wages declined even further.

How minimum wages compare

Between 2020 and 2021 the minimum wage in Malta increased by only 1.1%.  Despite this low increase, at €785 Malta’s minimum wage remains considerably higher than in eastern European countries like Bulgaria, Romania, Hungary and Latvia.

But other eastern European countries like Poland and Slovakia are catching up fast. Slovenia, which has seen a sharp increase in its minimum wage over the past decade, has surpassed Malta’s and now has a minimum wage of €1,100 a month. In 2009 Slovenia had a minimum wage of €589 a month, which was lower than Malta’s €630. Now its minimum wage is €315 higher than Malta’s.

Portugal, whose minimum wage in 2009 was €115 lower than Malta’s, is now level with Malta; while Spain’s minimum wage is €323 higher than Malta’s. Malta’s minimum wage is now just €27 higher than in Greece, a debt-ridden country whose minimum wage was cut in 2012 and subsequently frozen until 2019.

Luxembourg has the highest minimum wage in Europe (€2,202) followed by the UK (€1,903), Ireland (€1,724) and Belgium (€1,626).

Of the 22 EU countries which have a statutory minimum wage Malta has the tenth highest.

All across Europe, minimum wage rises for 2021 were more modest than for 2020. The median minimum wage increase in 2021 was 3% (in national currencies), compared to 8.4% in the previous year.

This suggests that the pandemic has slowed down the ongoing process of strong minimum wage growth and minimum wage convergence across EU countries.

Curiously, despite its relatively low wages, Maltese wages were more likely to follow the pattern of older richer member states than those in Eastern Europe.

During the past decade, growth in minimum wages has been modest among the older member states that have the highest minimum wages: Belgium, France, Germany, Ireland, Luxembourg and the Netherlands. On the other hand, there has been remarkable progress among countries that have the lowest rates, which have at least doubled those rates over the period.