The Cost of Living Allowance for 2023 will be €9.90, the highest it has ever been since its inception in 1990, Finance Minister Clyde Caruana announced in his Budget speech this evening.

This will be given to all workers, pensioners, and those on social benefits.  Stipends will also increase on a pro-rata basis.

There has been much speculation about exactly how much the increase would be, particularly as Malta – like the rest of Europe – faces heavy inflation.

The speculation that the COLA could hit up to €10 had led to business lobbies stating that it would not be sustainable, and warning that the increase would be immediately put onto consumers as businesses battle the increase in salaries as a result.

However, the government almost immediately said it would be sticking to the current mechanism, and this was confirmed by Caruana in the Budget speech this evening in Parliament.

“As an economist I think that we cannot spend that which we do not have.  But as a Labourite, I believe that our society is judged also on how much we help those who can cope with the least,” Caruana said in his speech.

This is why, he said, the government had remained strong when faced with calls for amendments to the Cost of Living Allowance (COLA) so that it can be reduced this year. 

He says that the government wanted to show that it will continue to support workers against inflation, like it is supporting businesses with their energy bills and through the wage supplement during the Covid-19.

At €9.90 it is the highest single-year increase since COLA was introduced in 1990.

The previous record high was in 1990 itself when COLA stood at €6.99.  Since then, the allowance has only exceeded €5 on three occasions – in 1995, 2006, and 2010.

Both last year and in 2021, the increase was of €1.75.