[WATCH] Low-income earners to get additional compensation, Finance Minister says

Low-income earners will get additional compensation to counter inflation after a second cost of living adjustment mechanism targeting this group has been created, Clyde Caruana said.

The Finance Minister said the new COLA mechanism, which is over and above the existing structure, was promised in the last budget and will start being implemented from the next budget.

The new mechanism particularly targets lower-income groups, which are disproportionately impacted by higher inflation.

Caruana said that he will be meeting with stakeholders in the coming days to share details on how this new mechanism will work.

“We have the numbers, we know how it’s going to work,” he said. “I can assure you that when the time comes in the next Budget I will not only announce how the mechanism will work but it will be put into effect.”

He said that the regular COLA will remain as is, and admitted that the figure will be “quite exceptional” compared to previous years.

“When I reveal the rate, that rate must be given in full to employees. If employers want to achieve some changes, they have to discuss those changes at shop-floor level with unions. As minister of finance, the COLA I will be reading in the Budget speech has to be given in full, as it has been in past years,” he said.

In its pre-budget document the Malta Chamber of Commerce, Enterprise and Industry proposed that employees that receive a pay rise in 2022, should not receive the full COLA increment, but only the difference between the COLA increment and their pay rise. But on Saturday, Prime Minister Robert Abela said in an interview on One Radio that the COLA mechanism will not change and the compensation this year will be substantially more than previous years.

Last year, the COLA was set at €1.75 a week for all workers, pensioners, students, and people receiving social benefits. The mechanism was agreed between all social parties back in the 1990s and is based on inflation as measured by the Retail Price Index. Workings show that at the current rate of increase in inflation, the adjustment will be around €10 per week, the highest in decades. The wage increases will come into effect in January.

Caruana had announced during last year’s Budget that government will be drawing up a new mechanism that will work independently from the COLA when inflation rises sharply to address the needs of the most vulnerable strata.

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