In the run-up to the budget for 2023, presented in October, there was so much discussion with regard to the Cost of Living Adjustment.
The COLA increase primarily addresses inflation, with employees being given a weekly rise in salary based on the prices of a pre-established set of products and services. The increase is given in the following year, based on the inflation of the previous year.
When it became clear that, as a result of the hefty inflation that we experienced since the start of 2022, the COLA was to reach unprecedented levels, employers started calling for a revision of the system.
They accepted that the COLA needed to be €9.90 per week per employee for 2023, but said that a minimum and a maximum should be established so as not to jolt the private sector so substantially. There had been times when the COLA was less than €1 per employee per week, and so the minimum should be somewhat higher than that too, it was argued.
Three months have passed since then, but there is no talk of a revised COLA system. We have started the New Year and, as reported by The Malta Independent on Sunday, there is no hint of when a discussion is to take place among the stakeholders.
By stakeholders we mean the constituted bodies represented at the Malta Council for Economic and Social Development – employers, unions and the government.
It could be that the reason for this is that the MCESD was looking for a new chairman. It had been announced late last year that James Pearsall was to be replaced, and this must have thrown the council into some form of limbo. Now that, this week, we learnt that the MCESD will have a new chairman – David Xuereb – it would be a good idea if the council put this COLA revision high on its agenda.
It would be wrong to arrive midway through the year with no agreement in place. If, say, inflation in the next six months is on the same wavelength as that in 2022, then the unions would be more reluctant to give in to demands of a capping of COLA, because it would mean that they would be accepting a lower adjustment to what their members (and all the workers) would deserve.
The arguments in favour or against a revised COLA system should be made now, not in summer or, worse, closer to the presentation of the budget for 2024.
We know that some constituted bodies have presented their proposals on how the COLA system needs to be revised. Some of them have been made public before the budget for 2023 was presented.
It is high time that these proposals, and their counter-arguments, are made at the MCESD so as to establish the way forward.