The line between safeguarding the country’s competitiveness on the cutthroat global stage and ensuring workers and their families are able to make ends meet is a very fine one indeed.

It is, in fact, a tightrope the government treads every autumn when it sits down to calculate the cost of living adjustment to be granted through the budget.

Every year, unions and employer bodies collide on the subject. And this year the clash can be expected to be more intense than usual. On the one hand the country’s comparatively high rate of inflation is taking a certain toll on workers and their families. But, on the other hand, employers have been hit, and hit hard, by the financial crisis rocking the business community this and last year, as well as, if not more so, by the ensuing and practically all-encompassing international recession.

If the mechanism governing the cost of living adjustment is followed to the tee in this year’s budgetary process, employers could be looking at a record adjustment of e7 per employee per week – a prospect leading some foreign investors to consider pulling out of the country should it materialise.

The fine line between the country’s competiveness – a healthy level of which at the end of the day ensures unemployment levels do not reach the double digit region – and workers being able to make ends meet for themselves and their families – which is a more urgent and pressing priority at least as far as they and their unions see it – has become all the more finer.

Compounding the state of affairs this year is the fact that it is in the employment-intensive industries employing low-skilled workers that the annual cost of living adjustment has the most pronounced effect on businesses’ bottom lines. But it is also the low skilled, and consequently low paid, workers in those industries that benefit most from the cost of living adjustment.

Companies are struggling to make cost adjustments to their operations, and workers are increasingly struggling to make ends meet.

The situation, this year more than ever, places the finance ministry in a very delicate situation – does it safeguard competitiveness or does it safeguard standards of living, or does it attempt to do both?

The International Monetary Fund, as reported in today’s issue, has urged the government, again as it did last year, to scrap the cost of living adjustment. It has sought to find the middle ground by suggesting productivity-linked wage increases to be established at enterprise, rather than government, level. But such productivity-linked wage increases, or performance reviews in simpler terms, should already be a regular feature in any company serious about its employees and their output.

The IMF does add that discussions in the pipeline on the new public sector collective agreement should set a conservative benchmark for the private sector’s own adjustments. But, this begs the question – what if productivity falls in any given year?

At yesterday’s conference on inflation, the government and Opposition at least found common ground – the Opposition declared it was against the productivity linked wage increases the country’s industrial concerns are lobbying for, and the government confirmed the cost of living adjustment is here to stay.