The hike on water and electricity bills has boomeranged on government, as it faces employers’ warnings not to increase the cost of living adjustment (COLA) in the next budget, or face the prospect of mass unemployment.
With inflation standing at 4.5% in May, over the EU 2% average, the projected cost of living increase for next year’s budget has pushed the adjustment to an all time record high of €7, which employers are insisting that they can never match, particularly in this time of crisis.
The COLA is a legally binding wage increase, which is based on the previous year’s rate of inflation.
The Malta Employers Association director Joe Farrugia warned that government’s intransigence in addressing the impact of the utility tariffs on inflation and the economy in general, has now led to a crisis.
“The levels of inflation reached during these months have been mainly characterised by the increased water and electricity tariffs and most of all government’s inability to control inflation,” Joe Farrugia said.
Farrugia said employers are not asking for a wage freeze, but a temporary suspension of COLA.
“If government will not see to this reality, this country will fall further into recession and hundreds of jobs will be on the line,” he said.
He added that Malta’s competitiveness will slump even more because Malta will be the only country to increase wages in Europe, adding more cost on its export price.
But General Workers Union secretary-general Tony Zarb also blamed government for the current level of inflation, and is now inviting employers to pressure government to assume its responsibility for the current state of the economy.
“Inflation is attributable to decisions taken by government, and by right, workers and pensioners are entitled to the increase reflecting the inflation – which amounts to €5 to €7 weekly,” he said.
“Employers are calling us to tell us that they cannot afford increasing their payroll by that much, but what we are saying is that if employers need to knock on anyone’s door, it is not ours but government’s,” Zarb said.
The GWU chief explained that as a trade union, “we are already being careful on the wage increases we push for in collective agreements, and COLA increases do not even make up for the year to come but for the year that passed, and we cannot possibly deny this to workers,” he warned.
“Government has increased stress on employers from all sides because of decisions it made regarding the utility tariffs, it is with government that this issue needs to be contested. I cannot accept what employers are saying at the moment. If we are threatening with job losses, look at what we’ve come to in this country,” Zarb said.
Similar comments were made by UHM Secretary General Gejtu Vella who also attributed the current high levels of inflation to government.
Vella warned, however, that one cannot assume a blanket policy and suspend COLA just because the employers are complaining about the situation.
He said the COLA should be rightly given to workers who are facing the brunt of inflation, and Unions will be ready to discuss with those companies who have collective agreements in place to find the right balance to compensate.
“There are companies that are doing well despite the crisis, and there are also companies that do not have collective agreements and those concern me most, because workers there do not enjoy any yearly increments,” he said.
Gejtu Vella warned that the situation should not be exploited by employers who find it “opportune” to benefit to the detriment of workers.
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