The Cost of Living Allowance (COLA) next year has been a widely debated topic.

 

The COLA is expected to rise to over €8 next year, possible even €10 or more. There is no doubt that such an increase is needed by workers, especially those who have been struggling to make ends meet in recent years. But here is the problem. Those who were doing ok are now also struggling. The increase in prices which are mainly due to outside factors is having a serious impact on people. Those wanting to conduct some works at home are thinking twice, when buying groceries people are noticing the price hikes… its very worrying.

The COLA increase is needed to level out these issues.

But then there is the other side of the coin. Some businesses will struggle with paying such a COLA next year. Those businesses whose income has been impacted by the international situation, or who have not yet recovered from Covid-19, will face issues. But such problems should not and cannot be the burden of the workers, who are themselves being directly impacted by inflation.

The president of the Malta Chamber of Commerce Marisa Xuereb has warned that granting the Cost of Living Allowance (COLA) increase to everyone will lead to widespread price increases and more inflation.

“The moment we spread COLA across the board, prices will rise across the board, and will rise substantially,” Xuereb said. “The people worst affected by this will be the lower income groups, because they will receive the COLA today, prices will go up tomorrow, and they are simply back to square one,” she added. This is why, she said, means to limit inflation from other sources and not just energy as the government is doing are needed, and why the Chamber is proposing that the COLA is limited to those who have not received a raise in the last year.

She paints a bit of a worrying picture, as businesses would want to maintain their profit margins to make up for the increase in wages. On the other end of the argument, people have been complaining about low COLA increases for years, yet the mechanism wasn’t changed, so why change it now when it favours the workers?

This is not an easy issue to tackle. The Prime Minister has said that the government will not be touching the COLA mechanism. The country has supported businesses throughout Covid, and rightfully so. Businesses should, in turn, help out employees in these trying times and, if the COLA rise will mean less profit for businesses, then so be it. But perhaps if certain businesses will risk going under purely because of the COLA rise, maybe the government can create some schemes to help them out.

At the same time we must remember that government finances have taken a beating. It is not easy to find a solution to this problem. One must be found that ensures that workers are not the ones who suffer.