We have been told that we are heading towards another record Cost of Living Adjustment when the budget for 2024 is presented later this year.

The chief executive officer of the Malta Chamber of SMEs, Abigail Agius Mamo, told this media house, in an interview published in The Malta Business Weekly last Thursday, that as things stand now the weekly raise that employers will be obliged to pay their employees as from 1 January 2024 will be around €13.

This has not been finalised as yet, more weeks have to pass until a final decision is taken some time in mid-October or early November. But it is likely that the weekly rise will be more than the €9.90 that was given out as from the start of this year. Whether it will reach €13, go beyond that or is a little bit less is not yet known.

In the run-up to the presentation of the 2023 budget, employers had expressed their concern that the hefty rise in the COLA was going to hit some businesses hard. They had suggested that the mechanism is changed to reflect today’s situation, given that it was set up decades ago when circumstances were different. They had also come up with ways as to how they thought things should change.

For their part, unions had insisted that the COLA is given out in full, arguing that there had been years when the increase in weekly wages amount to less than €1 per week, and just as much as the unions had accepted that when it had happened, they expected employers to recognise that inflation had hit workers hard in 2022 and that therefore they should be compensated for it. They also said that they were ready to discuss the way forward.

Since then, nothing has changed much. Or, at least, we have heard very little on the matter. The constituted bodies that form part of the Malta Council for Economic and Social Development have not discussed the matter publicly, although we are sure that they are concerned about the situation, and that they have possibly dealt with the issue among themeslves. Even the government, which forms part of the MCESD, has been publicly tight-lipped on the matter.

But time is rushing by and we are getting closer and closer to when a decision will have to be made. It is likely that, once again, the current mechanism will be used to establish the COLA, since no agreement has as yet been reached to adjust it. This would mean that a year would have been “wasted” in this regard.

It must be understood that the €9.90 weekly rise we had this week contributed to the inflation we experienced this year, as the extra costs were passed on to the consumer. It is therefore likely that a €13 weekly rise will next year also lead to inflation, given that the price of products and services will go up again as businesses try to make up for their extra costs.

It is a vicious circle that will continue unless things change.