The Malta Independent 14 October 2019, Monday

Unions, employers generally satisfied with proposed €1.16 cost of living adjustment increase

Neil Camilleri Wednesday, 8 October 2014, 10:38 Last update: about 6 years ago

The leading trade unions and employers' representatives are generally satisfied with the COLA increase expected to be announced in the upcoming budget, which is set to be €1.16 per week.

Out of a number of unions contacted by The Malta Independent yesterday, only the For.U.M blasted the "measly" amount and branded it a "gross injustice."

The €1.16 weekly increase is the lowest since 2011. Back then the government had instructed employers to adjust salaries by the exact same amount. In reply to questions by this paper yesterday, a spokesman for the Finance Ministry did not deny the media reports. "The Cost of Living Adjustment (COLA) is automatically set by a mechanism that has been agreed to by the social partners, namely, the trade unions, the employers' bodies and the government and endorsed by the MCESD. As is established procedure, the cost-of-living-adjustment for 2015 will be announced to the social partners ahead of the Budget 2015."

COLA amount reflects economic reality - MEA

In comments to this paper yesterday, Malta Employers Association Director General Joe Farrugia defended the amount by saying that is was calculated with the same mechanism used year after year. Mr Farrugia said the amount reflected the low inflation - sometimes even deflation - registered throughout the last twelve months. "The same mechanism resulted in a €5.82 in 2009. Was that fair? This is not a question of fair or unfair. It is simply the result of an established mechanism we have used for a number of years."

Mr Farrugia also noted that unions have been telling the government for years that COLA increases also have to take into account the country's productivity, but their proposal has always met resistance. "It makes no sense to announce a COLA amount that is greater to what the country, employers can handle. When employers were told to pay a weekly

Minimum increase should not be less than €2.50

When contacted by The Malta Independent yesterday, Paul Pace, the President of the For.UM, disagreed with Mr Farrugia. Mr Pace, who is also President of the Malta Union of Midwives and Nurses (MUMN), said the proposed €1.16 was highly discriminatory against private sector workers and retired persons.

"The amount is not only too low, it is a gross injustice. Through their recently signed collective agreement, civil service employees, including myself, will get an average increase of €10 per week (the sum includes the COLA adjustment). On the other hand, those working in the private sector, especially workers who earn a little more than the minimum wage, and retired persons, will only get €1.16 a week."

Mr Pace insisted that the mechanism used to calculate COLA should be revised because it was creating social injustices. "At the very least, the minimum amount given should not be less than €2.50 a week - irrespective of inflation or deflation. This should especially apply for the most vulnerable."

Referring to the similar €1.16 increase in 2011, Mr Pace said "For.UM has always been consistent" and what it said four years ago is still relevant today. "The fact is that those on the higher end of the salary scale are getting more but those on the lower end are getting less. This is social injustice."

MEA President Joe Farrugia, however, disagreed with the collective agreement argument presented by Mr Pace, and insisted that several companies in the private sector have their own collective agreements while many other workers negotiate their own pay packets with their employers.

GWU still wants two COLA adjustments a year

On the other hand, General Workers Union Secretary General Toni Zarb also did not criticise the amount, which he said was worked out using the usual system. "The same system was used in 2011 when the COLA adjustment was also €1.16. At the end of the day, the mechanism used was agreed upon by all the social partners. For a union, €1.16 will never be enough, but one has to take note of what the employers are saying as well. For them, anything above that amount may be disagreeable."

Mr Zarb said the GWU has once again presented a proposal for the COLA adjustment to be given twice a year, thus reflecting more recent developments in the price of products. "The COLA adjustment is calculated on the cost of a shopping bag. This time round the mechanism must have taken into account things like the rise in the price of gas but also the drastic decrease in utility bills."

When asked if the union was pushing for a revision of the COLA mechanism, Mr Zarb would only say that any changes would have to be approved by all the MCESD members.

On Paul Pace's claims of discrimination between ordinary workers and public service employees, Mr Zarb explained that the €10 average increase includes the €1.16 COLA increase. "Everyone will get the same amount when it comes to COLA. The rest of the amount is the result of the collective agreement."

UHM more concerned with increase in public service jobs

UHM Secretary General Josef Vella said he could not comment on the proposed amount since it was calculated by using an established mechanism. "There were years when the COLA amount was high and there were others when it was low. The same mechanism was used on all occasions. The problem is that the COLA amount is worked out on the 'shopping basket' but different families and individuals spend differently on shopping."

Mr Vella said Union Haddiema Maqghudin welcomes any debate on whether the COLA mechanism should be revised but conceded that coming up with a system that is fair to everyone is quite difficult and the UHM does not yet have any proposals on the matter.

At the moment the union is more concerned with the increase in public service jobs, said Mr Vella. "This is our biggest concern right now. It is as if we are not realising that some of these workers are only interested in job security. It does not suit our economy to employ more people in the public sector," he said, while noting that many factories are desperately looking for low-skilled workers, which are needlessly being employed by the government. "What the country needs is quality jobs, increased productivity and better salaries. Salaries are our biggest problem - they are too low - but they need to be accompanied by an increase in productivity."

The President of the Gozo Business Chamber, Michael Grech, said the chamber had not yet discussed the issue and as such could not give a reaction. He said, however, that the chamber has always believed that, apart from the cost of living, productivity should also come into the equation when working out the COLA amount.

Speaking at a visit to MCAST yesterday, PN Leader Simon Busuttil said the €1.16 weekly increase is "too little." The average wage will increase by less than €100 when there were times in recent years when it increased by more than €500. "Families will still feel the pinch after the COLA increase." 



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