Wage hikes ‘naive at best, suicidal at worst’ - Malta Chamber

The Malta Chamber has warned the government against committing to a series of wage hikes, insisting that this would be “naive at best, suicidal at worst”.

In a statement on Tuesday, the Chamber said that a series of wage hikes over the next few years will accelerate inflationary expectations and restrict policy responses to potential future developments.

‘Increasing minimum wages is not a silver bullet,” the Chamber said. “The risks of fuelling higher and more persistent inflation  are high.”

Instead, the Malta Chamber suggests lowering income tax bands to make sure that the increases in minimum wage that came into force since the start of the inflation crisis are fully tax exempt.

“It does not make sense to compensate people for increases in the cost-of-living through COLA, only to divert part of those increases to the Government coffers. All social partners, whether representing employers or employees, are in agreement on this.”

Last Sunday, the prime minister said that the government is talking with social partners to facilitate an increase in the minimum wage, citing inflation concerns.

However, the Chamber insists that the government should instead find measures to counter inflation.

“For as long as a large enough portion of the population can still afford to pay more for services, any increases in costs, including wages, will result in an increase in prices, and low income earners will find it even more difficult to keep up.”

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