The Malta Independent on Sunday reported that no discussion has yet taken place – and there is as yet no hint of when it will start – on the planned revision of the Cost of Living Adjustment (COLA) mechanism.

 The spike in the COLA this year meant that businesses around the country needed to increase the salaries of each employee by nearly €10 per week, which is a significantly high adjustment to make. One must keep in mind, however, that this amount is what employees are entitled to after the inflation that was experienced in the country last year. Let’s be honest, in Malta’s current economy employees really do need this amount to be able to keep up with the rising prices in the country. One must also note that if the government wasn’t absorbing the rise in energy and fuel costs through its subsidies, the COLA would have been higher. 

But the spike has brought with it the idea of possible talks to tweak the COLA mechanism for the future. While employers would likely want to find a way to avoid such a year on year spike, employees could also find a way to gain… let’s not forget how everyone would complain when the COLA was just €0.58, or when it was €1.75, and how this was not really helping with costs in the country. 
So there is some room for balance to be found, but what is for sure is that unions and employers alike would need to come to an agreement for any changes to the mechanism to be made. There cannot be a situation where one side would dictate to the other. That would be unacceptable. 

Realistically speaking, a solution would need to be found where employees aren’t the ones who end up bearing the brunt of inflation. In the long run, that doesn’t benefit anyone, as if employees lose their purchasing power, then businesses will also suffer. 
A proposal had been put forward by the Malta Employers Association, which perhaps could end up being discussed within the MCESD. It suggested last year that the Cost of Living Adjustment mechanism should be modified to a minimum of €2.50 and a maximum of €6 per week for a period of five years. Then, any amounts accrued in favour of employees or employers will be awarded on the 6th year and beyond. 

There are likely other solutions to be found that could emerge through the discussions in the MCESD. While there is no guarantee that an agreement can be found, discussions should take place to try and find a solution that can help benefit both sides. Employees need to keep their purchasing power in order to sustain businesses, but businesses need to succeed in order to sustain jobs.