The European Foundation for the Improvement of Living and Working Conditions, which tracks statutory minimum wages across the EU, has reported that Malta, which ranked eighth in both 2016 and 2021, has fallen to 15th place in a ranking of countries having a statutory minimum wage. Malta is in 7th place among the 12 countries that joined in 2004. It is relevant to note that the ranking I am referring to is in Purchasing Power Standards (PPS), i.e. after adjusting for price differences across countries.
The shift reflects rapid wage growth in several central and eastern European countries, which has narrowed historical pay gaps and significantly changed the EU's minimum wage rankings over the past decade. The EU Minimum Wage Directive has played a major role in these changes.
The EU has been encouraging member states to assess statutory minimum wages against indicators such as median or average wages. According to Eurofound, statutory minimum wages gained real purchasing power in 21 of the 22 member states with a national statutory minimum wage.
Obviously, the Opposition made capital of this announcement. The Opposition, however, is not going to curry any favour with employers and the business lobbies, as they all oppose any rise in the minimum wage. The Government is similarly sceptical, even though the EU directive encourages countries with statutory minimum wages to evaluate their rates using clear reference values (such as 60% of the median wage or 50% of the average wage. Currently, Malta's gross statutory minimum wage is approximately 44% to 47% of the national average gross salary or total compensation.
The Government's reluctance is motivated by several factors. One is that only some 2,300-2,600 people are estimated to earn the strict statutory minimum wage, according to information published by the Ministry of Finance. Any Maltese citizens on the minimum wage would see their wage supplemented by social benefits and assistance which improve their financial situation.
Another factor is that a significant number of full-time workers supplement their earnings by part-time work. The ones theoretically most at risk are workers whose primary job is a part-time one ̶ there are some 37,000 of them (approximately 11.7% of the workforce), but many of them tend to be women with husbands having a full-time job.
More worrying than the number of people on the minimum wage is the fact that an estimated 60,000-70,000 workers declare or receive low earnings near that baseline. But most of these would be third country nationals doing low-paying service jobs. Let's not mince words: the government is hardly not sleeping at night over them.
During the general election campaign, Momentum had proposed to raise Malta's minimum wage by over 60%, to achieve a level where everybody would have an income on which they can live decently. Referencing research by Caritas, the party estimated a decent living wage to be at €368 per week.
Over the years, I myself have written extensively about the need for an increase in the minimum wage. There is extensive economic evidence that a rise in the minimum wage generally has little to no significant impact on overall employment levels. To be fair, some research indicates minor reductions in hours worked or slight job growth slowdowns over several years in heavily impacted industries, such as retail or tradeable sectors. The evidence also shows that there is little negative effect on the employment of young workers.
This is not to deny that there may be ripple effects from any significant improvement in the minimum wage, but the evidence from studies of cross-country data indicates that these effects decline in influence further up the wage ladder. One interesting finding concerns the retail industry, which famously boasts a high rate of employee turnover. Research has revealed that workers quit their job significantly less often after minimum wage increases.
What interests me most as a centre-left person is that studies show that the sharpest wage increases due to raising the minimum wage occur for workers at the bottom five percent of the wage scale, where most minimum-wage workers are most likely to be concentrated. One U.S. study by economists David Autor of the Massachusetts Institute of Technology, Alan Manning of the London School of Economics, and Christopher Smith of the Federal Reserve Board, found that a ten percent increase in the minimum wage raises by 2.9% the 5th percentile wage ̶ that's the earnings threshold where 5% of workers make less than that amount and 95% make more.
The authors conclude that ripple effects dissipate the further one moves up the wage ladder. The same ten percent minimum wage increase raises the wages of workers at the 10th percentile of wages by about 1.6 percent and raises the wages of those in the 20th percentile by a statistically significant 0.7 percent. Wage effects are typically very small and statistically indistinguishable from zero beyond the 25th percentile.
Overall, I think that the government will be remiss if it doesn't improve the minimum wage in the next Budget.
Fisheries need protection
Fisheries in the Mediterranean Sea still face significant challenges, with approximately 58% of fish stocks currently fished beyond biologically sustainable limits. That is down from historical highs of 73% in 2020, showing gradual improvement through regional management, but still high.
Fishing is woven into the soul of the Mediterranean, its culture, and traditions. Over generations, it is how people have come to know the sea and the extraordinary world below the surface. Around 80,000 fishing boats ply the waters of the Mediterranean, providing a livelihood for 180,000 people and supporting an industry worth €4.6 billion.
But Mediterranean fish populations are in deep crisis. Total fish populations have fallen by more than a third over the past half-century. The cause of this ecological crisis: increased fleet capacity, illegal fishing, and catches of unwanted species. If fishing practices doesn't improve, stocks could collapse and that will have disastrous consequences for ecosystems, for communities, and for the economy.
One therefore welcomes the news that the European Parliament has strongly backed MEP Thomas Bajada's calls for stronger and fairer enforcement of international fisheries rules. MEPs approved legislation led by Bajada aimed at strengthening the implementation of internationally agreed fisheries rules, protecting marine ecosystems, and ensuring a fairer level playing field between European fishers and vessels from third countries.
The legislation incorporates into EU law conservation and control measures agreed between 2018 and 2024 by six Regional Fisheries Management Organisations (RFMOs), which play a central role in managing shared fish stocks and establishing conservation and control measures for vessels operating beyond national waters.
Bajada was right to also call for stronger surveillance at sea, including investment in modern monitoring technology and the permanent use of drones for fisheries control. Better technology and resources can ensure that vessels caught illegally fishing, including those from third countries, can be stopped before they are able to escape.
The aquaculture and fishing industry in Malta generated an output of €191.8 million in farmed fish in 2024, representing a slight 3.9% decrease from 2023. The NSO Fisheries Portal recorded a total of 1.8 million kilogrammes of fish landings in Malta, with 93.9% caught by Maltese fishermen.
When one considers that the Mediterranean is home to a particularly high number of living species and holds the highest rate of endemism worldwide, with 20-30 % of its species not found anywhere else in the world, protection of its fishing stocks is paramount.
Good vs bad regulations
We often hear people complain about excessive regulation in the EU, including Malta. In fact, according to European and local business surveys, the percentage of businessmen and companies in Malta who actively complain about or identify regulatory burdens as a major obstacle to economic activity ranges between 16.7% and 25%, depending on the specific study:
As can be expected, excessive regulations have a bigger impact on small businesses. In fact, 25% of Maltese SMEs cite "regulatory obstacles or administrative burden" as one of the top three most serious problems facing their company, according to a Flash Eurobarometer survey, though one must say, this is notably lower than the EU average of 34%.
Nothing surprising here ̶ not when it takes 5-10 working days to incorporate a company in Malta compared to 30 minutes in New Zealand, or when it takes 3 to 8 weeks in Malta to open a bank account for a standard low-risk entity in Malta, compared to 1 to 3 weeks in Slovenia.
A new survey of IMF G20 country teams highlights that impediments to growth are prevalent in three areas: business regulations and labour markets, intra-jurisdictional barriers, and investment barriers. Around half of the G20's advanced economies and three-quarters of emerging markets face constraints from excessive labour-market, product-market, or consumer protection regulations.
However, not all regulations need be obstructive. If regulatory and institutional reforms are well-designed, they can boost economic growth, in addition to generating other beneficial advantages in, for example, good governance. Regulation can also pbe an opportunity to address economic, societal, and environmental risks while delivering positive outcomes that we want to see in our communities. The evidence confirms this.
Reducing unnecessary regulations or making them less burdensome has been on the government's agenda for donkey's years. But real progress on the ground has been less forthcoming. Why? Simply because regulatory reform is still not underpinned by certain criteria. In my opinion, these are that it should support growth, be targeted and proportionate, is transparent and predictable, and it adapts to keep pace with innovation.
Quote of the week
"We can do this to any country we want. We can do it here too." - Kimberly Guilfoyle, the U.S. Ambassador for Greece, warning Greek energy minister Stavros Papastavrou that the U.S.A can collapse "any country we want," after clashing with during a dinner with officials in Athens.