Caritas Director Leonid McKay believes that a change in the Cost of Living Adjustment (COLA) mechanism is needed, in that there should be different weightings for different population groups given that low income earners have different requirements and priorities than other sections of society.
In an interview with the Malta Independent, McKay explained that many people would argue for the need for the “basket” on which the COLA mechanism is based to more items that weren’t considered before.
“I disagree with that argument. I don’t think we need to add on items the COLA mechanism takes into consideration, but rather revise it and put the really basic items in.”
Right now, the mechanism focuses on the average consumption patterns of the population, he said.
McKay explained his proposal in further detail, and clarified that, more than a revision of the COLA items, he would go for a revision that would see more than one basket for different population groups.
This year’s budget sets the COLA at €1.75.
“Low income earners have different consumption patterns than middle-income and high-income earners. Today’s COLA reflects the average population consumption patterns, while low-income earners, the elderly, have different consumption patterns. Many low-income earners would have a higher proportion of basic items than the middle-income and high-income earners would. Food for example, would feature more for low-income earners than middle-income earners. If food prices rise, as had happened, it might not feature much in the average basket that the COLA is based on, but if you had a specific basket for low-income earners it would feature more. So the revision I would like to see is one where there are different weightings for different parts of the population, who have different consumption patterns.”
The Caritas Director was also asked for his opinion on the budget. “The budget occurred in a positive economic environment. The country’s finances are on solid ground and we have nearly full employment. Looking at the budget in that context, there are social measures which have an immediate and positive effect, while on the other hand there are measures which ask for us to wait for something that is needed immediately.”
On the issue of housing, He expected a priority to be placed on housing, both on social housing as well as private rent.
“Government looked at every angle to provide social housing. They will build new units, are giving incentives for the elderly who want to move into elderly homes when by right government can take it, and others. Still, I would like to know whether we will have enough social housing for families who have no alternative, and otherwise would end up on the street? If the answer is no, then that is of great concern, as government is doing a lot.”
On private rents however, the Caritas Director expressed concern. “We have been discussing private rent prices for months. Caritas expected imminent policy measures, rather than a whitepaper without timeframes. Now that this is on the agenda, react don’t postpone, it is a policy priority. On the other hand, the housing cost overburden rate – which weighs families who spend more than 40% of their disposable income on housing costs – is still very low in Malta, mainly because home ownership is very high. But there is a section of the population going through a struggle as the demand from rent is increasing.” There is a portion of the population who do not have access to social housing as they do not qualify, and whose only option is to rent privately, he said, while stressing the explosion in rent prices.
“We expected imminent solutions for today’s problem.” He said that government said they would not price-fix, but go for regularisation. “It’s still intervention but not to the extent of price-fixing. I think government was aware that if they went for price-fixing they would paralyse the market.”
Decent and affordable housing is a right, he said. “I’m expecting a whitepaper with real timeframes set in stone. We must at least have affordable and decent housing for families.”
“If we won’t fix the price out of fear of paralysing the market, at least introduce a measure that will not only regulate the rent period, but states that after the rent period expires and rent will be renewed it will not rise by more than 15%.
There were also proposals for small sections of society like for example, Hepatitis C sufferers and Drug users in rehabilitation, who would not go and knock on Castille’s door if they aren’t given anything, and mentioned that government including proposals for these sections of society is positive.
“Another positive proposal is the extra day of leave for holidays that fall on a weekend. You cannot address poverty just with work and social protection, as the family is also important. Free transport for Church and Private schools is also significant for low income earners, and so are free MATSEC and SEC exams in two years’ time.
He noted that government is committed to making work pay, and also noted that government has been working on raising social benefits, but would like to see more of a focus on this.
“Yes an inclusive labour market is an important key to addressing poverty, but on the other hand there is a group of people who, for some reason or another, cannot enter the labour market and earn a wage. They might have mental health problems, have a disability, be too low-skilled etc. These sections need social welfare benefits.”
Asked for his opinion on the proposed minimum wage rise where workers on the minimum wage benefit from a €3 increase in their second year of employment and another €3 in their third year, he said that it is a move in the right direction, but this is not enough.
He explained that over the years, nobody wanted to speak of the minimum wage. “The sceptics, led by the employers, used to win all the time, and thus this is a positive move.”
“We had proposed, back in 2012 that the minimum wage should have risen by 11% over three years. We have moved from scepticism to acceptance that there is a problem. And now there was, at least, an agreement that it will rise.” This rise, he said, is not enough “and I think the fear of a cascading effect, where more wages would need to rise, was a key issue which resulted in the rise being low.” He said that the 11% Caritas had proposed was not met and so it isn’t enough.
Asked if there is a real possibility of a cascading effect, he said “It is a real possibility, but I prefer people having more cash on hand to purchase the essentials. What is more important, just economic sustainability? What about social sustainability? The two go hand-in-hand.”
He said that prices are rising anyway, “so the argument is that it has nothing to do with inflation, which is rising anyway.”
The rise is a positive move, but we believe that it is not enough. I have to say that I was satisfied that government brought the social partners together and at the end of it, they came out with an agreement.”
The Caritas Director was asked about the €2 pension rise, and whether he believes this was enough.
Last year, government had dealt with persons on the minimum pension, he said, and this year the pension rose by €2 across the board. “If we see these over a period of two years, again, it was a positive move, but it was marginal. I am happy that there was an emphasis on pensioners as they are at a higher risk statistically, and also due to the higher needs pensioners have – security issues at home, medicine, etc. It was a positive move, but it was still too marginal. “
He said that statistically, the non-working age population stands a higher risk of poverty, and highlighted that people are living longer, and thus financial needs increase.
The drug scene is changing
Asked whether he believes government needs to do more in assisting people battling drug addiction, he mentioned the organisations around the islands that support such persons, the detoxification facilities and rehabilitation programmes. “When it comes to service provision, particularly when it comes to heroin addiction, Malta is doing very well. But the drug scene is changing, meaning more people with different addictions are knocking on our door – including cocaine and marijuana users – rather than those with problems of heroin. The drug use scene is changing and therapeutic centres need to change as well. Caritas is going through an internal review of its services to also deal with the needs of people with different dependencies today. Caritas has been offering services for many years and we need to change according to the dependencies of the day. The roots are still there, and we are working on our tools, our concepts and approach while retaining the concepts of Caritas and responding to today’s emerging needs.”
Asked about the new forms of addiction, and the Caritas restructuring programme, he said that the highest percentage of people who seek Caritas’ help are heroin users, but that the percentage is reducing, and the cocaine and marijuana user numbers increasing. “We are also seeing people with problems relating to synthetic drugs, new psycho-active substances, especially in youths.”
“On our restructuring, the current programmes last between eight to ten months full-blown residential programmes. We have three major groups we deal with, which are men, women and the prison inmate programme. For men for example, they go through detoxification and stabilisation, and then they move onto the eight month programme.”
“The biggest change we believe we need is on the approach. For example, we cater for people who use stimulants, and cocaine abuse falls into this category. And for such persons you need to provide a more dynamic service that respects their needs.”
“In addition, we want to change the way the programme is divided, not leaving it eight to nine months full-blown residential, but, for example, we would have the first six months full-blown residential and the last three months would be semi-residential where the people gradually go out into the community, not like it is now where there is a shock from the inside to the outside. In addition they will be linked to an aftercare programme that will be more robust than we have now. We believe recovery is a lifetime journey, and aftercare is key. We are investing in aftercare, in the semi-residential programme, and within the programmes for there to be different approaches.”
The internal changes already began, he said.