Around 86,500 ‘vulnerable’ people will soon receive an additional cost of living adjustment payment, the government said earlier this week.

A total of €16.2 million will be distributed among 45,000 households of low-income families and persons. As part of the new mechanism, the average amount families will receive is €643, with the lowest amount such families can receive being €100.

This additional payment is over and above the normal COLA payment that employees receive. The two COLA mechanisms are seperate. The normal COLA mechanism will see workers receive almost €10 more per week next year as a result of this year’s inflation. That will leave an impact on businesses for sure, but realistically speaking people need those funds right now.

This new additional mechanism that the government has announced is meant to specifically help low-income families cope with rising inflation.

Indeed inflation has been rising not only in Malta, but all over, and is having an impact on people’s purchasing power.

All those who are receiving social benefits and who earn less than the average income will be benefiting from this mechanism, and cheques will be issued once a year with recipients varying from year to year, based on their income in that particular year, the government said. Such a bump for those who are most in need is very welcome.

One must note, however, that the finance minister did say that through this aid the rate of poverty will decrease by 1%. By no means is this a large amount, but every little helps.

The fact that the government is focusing support on those who need it most is an important point to make. Up until now the government’s directed efforts to combat inflation have been through general subsidies.

Those subsidies are helping people and businesses right now – currently through the energy and fuel subsidies for instance. While the energy subsidies provided peace of mind to families and businesses, there had been some debate as to whether the government should subsidise fuel, with some arguing that if it did not it might reduce people’s dependence on private vehicles, and that government could use this time to improve public transport instead. There are arguments to be made on both sides of this point.

One thing that the government must keep an eye on is the country’s debt. Supporting the country through such subsidies long-term could have repercussions. The country’s debt must be kept at manageable levels. At the same time, everything possible must be done to ensure that people’s heads are kept above water. It’s not an easy balance to keep.