Around this time of the year, one particular news item perpetually resurfaces - the COLA. The yearly cost of living adjustment makes up for consumers' purchasing power erosion in the previous twelve months. This is a transparent process and is arithmetically computed. The COLA is based on the Retail Price Index (RPI), which uses weighted values to measure price fluctuations in goods and services across Malta over the last year.
The applied methodology has been agreed between the social partners. Unions and employers'representatives sit on the Retail Price Index Board with the official side, and scrutinise the incoming data on a monthly basis. The weekly wage increase is not awarded at the drop of the hat. However, owing to the political drivel and promises by the PL when in opposition, many are now disappointed with the weekly wage increase of €0.58c for 2015. Thousands of workers and pensionersliving on very tight budgets wereexpecting a more generous and benevolent increase. The "living wage" PL proposal has long been shelved.
As in previous years, the wage increase for the coming year was announced well before the Minister of Finance addresses the House with the Budget incentives and initiatives for 2015.
The COLA mechanism has served its purpose well, but it is now time for the social partners to revisit and tweak where necessary to ensure that Malta's competitiveness is not eroded while wages are adjusted in the fairest way possible to combat inflation. The price index should better reflect the spending patterns and shifts in consumption.
The COLA formula is not theresult of any political decision, neither of the current nor of the former finance ministers. It is an agreed formula between the social partners which has avoided uncertainty and unwarranted speculation in the labour market for a good number of years.
Although the wage increase for next year is expected to be as little as €0.58, the instrument through which this is established should not be politicized. Although the PN may be seriously tempted to follow the same footpath adopted by the PL when in Opposition, thiscourse of action should be resisted. It was highly unethical, irregular and irresponsible for the PL to take to the streets on an issue which impacts directly on the macro and micro economic performance and employment levels. Though it is easy tounderstand how tempting it must be for the PN to use the same manoeuvre andsimilartactic adopted by the PL when in Opposition to contest this trifling wage increase,for the sake of credibility and for the common good this should be avoided.
Instead, the PN should show true leadership qualities, vision and foresight by proposing adequate improvements to the Retail Price Index. The simulated trump card played by the PL when in opposition should not be played by the PN. The stakes are simply too high.
Having penned this line of thought it is nonetheless pertinent to note that,earlier this month,informed sources leaked information that the cost of living adjustment was expected to be €1.16 weekly for 2015. This was not confirmed by any of the social partners, except for a bold statement by For.UM leader Mr Paul Pace who, like a bullet, went on record suggesting that the wage increase for 2015 should not be less than €2.50, irrespective of inflation or deflation. He even claimed that the proposed €1.16 was highly discriminatory against private-sector workers and pensioners. "The amount is not only too low, it is a gross injustice".
One wonders what stand Mr Pace, For.UM leader, would be taking now that the COLA for next year is expected to be as little as €0.58c. One hopes that Mr Pace is in a position to substantiate his claim by professional studies. If not, it would simply be another flippantcomment.Mr Pace was however right at least on one count. Vulnerable people should be assisted, either in cash or in kind.
The small wage increase for 2015 vindicates those instances when during the previous legislature the COLA mechanism, based on the RPI, produced similar results. Unless the social partners agree to adopt a different model on which to base wage increases due, then the COLA should not be used by political parties to gain political mileage. It is short-sighted and not in the best interest of political partiesto use this instrument to their advantage when a small wage-increase is awarded. After all, things have a way of coming back to bite. Trigger-happy unions may opt to use the COLA to gain some space in the media, but political parties should act responsibly.
The COLA and other current affairs including the outcome of the first PN General Conventionwill be discussed next Sunday during the programme hosted by Kevin J. Micallef on F Living Channel.