Minimum wages have dropped by 5% as inflation rises

Malta’s lowest paid workers have seen the value of their wages fall by 5% this year, an analysis by the European Trade Union Council, based on Eurostat data shows.

The study is based on the change in the real minimum wage between the summer of 2021 and that of 2022 after taking inflation rates into account.

An earlier study by Eurofound had already established that Maltese minimum wage earners had seen a 3% drop in their incomes between January 2021 and January 2022. The latest study indicates that the situation has worsened in the second quarter of 2022.

In this period the statutory minimum wage in Malta have risen by 0.9% but the rate of inflation has increased by 6.1%, resulting in a 5% drop in real wages.

But while minimum wage workers in Malta have experienced a drop in income, they have been spared from far higher inflation rates in the rest of the continent. In fact, at 6.1% Malta registered the lowest inflation rate among the 21 countries analysed.

But Maltese workers also received the second lowest increase in the minimum wage after Latvia.

The study shows statutory minimum wages have risen by an average of 6.9% over the last year in the 21 EU countries which have a minimum wage, compared to just 0.9% in Malta. But, in the same countries, the rate of inflation has increased by an average of 12.4% compared to 6.1% in Malta.

The worse-off in the study are minimum-wage earners in Latvia, whose minimum wage remained unchanged while facing an inflation rate of 19.2%.   

Real statutory minimum wages have also fallen dramatically since last summer in Latvia (-19%), Poland, (-11%), Slovakia (-9%), Czechia (-8%) and Lithuania (-8%).

The least impacted are French workers, who face an inflation rate of 6.5% while benefiting  from a 5.8% increase in their wages.

Earlier this week MEPs greenlighted new EU rules on minimum wages to tackle in-work poverty. Members states will have to verify the adequacy of statutory minimum wages taking into account purchasing power and the cost of living.