The Minister for Economy, Silvio Schembri, said that if all stakeholders involved in the Cost of Living Adjustment (COLA) agree to change the mechanism, then the government will not stop them.

“If the stakeholders of the same mechanism are open to discussions and modifications, the government will definitely not stop those discussions. However, the discussions must take place amongst all the stakeholders. If there is an agreement [to modify the COLA], just like there was an agreement for the current mechanism, then the government definitely won’t stop that agreement,” Schembri said.

Inflation in the past months has led to speculation that the COLA will be between €8 and €10 in the upcoming budget.

He said this in response to MEA’s proposal to change the current COLA mechanism which plans to stabilise the COLA and minimise the impact on businesses year on year.

The proposal is for a minimum and a maximum COLA amount which can be given out per year – from €2.50 to €6 a week – for a five-year period. And then in the sixth year, the balance will be paid out, where if it is owed to the employees it will be over and above the COLA for that year and if owed to the employers will be reduced from the COLA of that year. MEA is proposing that this will be implemented for budget 2024.

The MEA published the results of a survey last week revealing the impact of inflation as well as the predicted COLA on businesses. The survey found that for 55% of the respondents, the COLA rise will result in a significant increase in costs which will affect competitive business.

“The government has already made their position very clear, the COLA amount will be given using the same system which was agreed upon,” Schembri said referring to the upcoming budget.

He also said that the Prime Minister, the Minister for Finance and stakeholders such as General Workers Union, for this budget the COLA mechanism is not going to change.

When asked whether the budget will include incentives to support SMEs who might be struggling because of the drastic increase in COLA, he said that the budget will be a social budget.

“One thing we cannot say about this government is that it has not been there in times of need,” Schembri said.