Finance Minister Clyde Caruana confirmed that work on a second Cost of Living Allowance (COLA) mechanism that was promised in the last budget for low income groups has been concluded.

The minister is referring to a measure in the last budget, when the government had pledged that it was to start meeting stakeholders to discuss a new mechanism to help vulnerable families, that works independently of the COLA in circumstances where inflation rises by a lot. The government was to bear this burden.

"We have the numbers, we know how it is going to work. In the coming days I will call the stakeholders again to share this additional mechanism with them. I can assure you that when the time comes in the next budget, I will not only be able to announce how the mechanism will work, but it will also be put into effect. So rest assured what I have promised in the last budget speech will be implemented this year."

Caruana was asked about the regular COLA mechanism. The Malta Chamber of Commerce recently put forward a proposal that workers who have received a raise in their workplace should not be given the full COLA, whilst the full COLA should be given to low-income workers.

"The mechanism as we all know it had been agreed upon in the 90s and this has worked well throughout these decades. This year, of course, due to the circumstances around us, the COLA will be quite exceptional and in the next Budget speech I will read the rate which must be given in full to employees," Caruana said.

Caruana said that if the employer wants to make changes to the mechanism, they have to discuss these changes at shop-floor level with the unions.

Regarding warnings from the Chamber of Commerce, who had said the rise in COLA will put a burden on employers, Caruana was asked whether the government predicts an increase in unemployment if wages become unsustainable due to the COLA rise, as well as if government will have a contingency plan in place.

"No, I do not envisage that we will have repercussions on the Maltese labour market. The strong numbers speak for themselves so I do not anticipate nor forecast any adverse effects taking place as a result of a COLA which will be on the higher side this year," Caruana said.

Caruana also reiterated that if the government did not act as boldly as it did with keeping energy prices stable over the past months, then the inflation rate in Malta would've been far higher than it is now.

He said that the COLA rise would have also been double what it would've been now, adding that it would've been highly likely that the COLA itself would have been higher than €20 per week. 

Budget cuts

Recently Junior College announced that it will offer flexi-programmes to all students who would like to work more hours alongside their studies. The minister was asked about how many 16 year-old students are becoming breadwinners, and if the government is considering financial support to these families and addressing the root causes of this.

"Throughout the past years there has been an increasing trend, and students are becoming more emancipated, and it has become difficult to juggle work and studies. We have increased the threshold for students to allow them to work more hours if they would like to, and at the same time retain their stipend," Caruana said.

Asked on budget cuts for ministries, where Ministers were asked to make €200 million in budgetary cuts, Caruana said that government must make sure that the targets set for this year are reached. He confirmed that so far, around €100 million in budget cuts have already taken place and government is in the process of identifying more ways to save money.

Caruana said that the free public transport for all pledge will continue to move ahead as scheduled as announced in the last Budget.