Employers Association concerned about growing wage disparity but warns against ‘meddling’ on low income

The Malta Employers Association has called on the government not to raise minimum wage, in its proposals for Budget 2017.

The MEA said the minimum wage should only be adjusted through the cost of living adjustment (COLA) mechanism and that instead, efforts should be made to minimise the number of employees actually living off the minimum wage.

“The minimum wage in Malta is certainly not the lowest in Europe and the percentage of employees earning the minimum wage is very low. The operation of the labour market mechanism, combined with a relatively high incidence of unionised employees in Malta provides more opportunity for employees to improve their conditions of employment, particularly during times of low unemployment,” the MEA said.

“Some countries in the EU have higher wages than Malta, but they also have higher unemployment, meaning that a larger section of the working population is deprived of these higher wages, thus making them more emarginated and unable to access the labour market.

“In principle, the MEA has advocated policies that minimise the number of persons on low wages rather than raising wages artificially. Vulnerable groups, such as pensioners and single parent families should be assisted through focused social interventions. Home ownership and long-term savings should be encouraged and incentivised.”

The MEA said it was not advocating a freeze in wages and salaries, but any increases should reflect corresponding changes in productivity and competitiveness of our industries.

“It will be a mistake on the government’s part to meddle with the operation of the labour market and collective bargaining process. There is no question that wage inflation is currently a reality, even in low skilled jobs. This is a result of labour shortages in various sectors of the economy, as well as the creation of more high value added jobs by the private sector.”

The MEA said that Malta was passing through a boom period and the major challenges being faced are to keep the economy from over-heating and to manage sustained growth.

“The main question is: We are skating smoothly on the ice, but how thick is the ice we are skating on? Is this an economy on steroids, or is this level of growth sustainable in the medium to long-term?” the MEA asked, referring to the sale of Maltese citizenship as a “gold rush”.

The MEA said the disparity in gross value added between different sectors was leading to widening wage differentials between sectors, especially pensioners and single parent families.

“Rental costs are increasing due to higher demand by foreign workers and residents and are thus eroding the disposable income of persons and families who do not own their own homes… Displays of ostentatious consumption by wealthy foreigners (and some local ones) increases the feeling of relative poverty, especially within the low income segment.”

Other proposals

The employers association also said that no collective agreements should be forged during the six months in the run-up to an election.

The MEA said that pegging wages of private-sector workers to those in the public sector had been a mistake, referring to private companies who provide services to the public sector, where employees doing similar jobs are being paid different rates. “This has created a dangerous precedent. If public sector wages are going to be applied to the private sector, then the private sector should be involved in the negotiations of the public sector collective agreement.”

The MEA also said that all consultants engaged with public entities and who have not been employed through a recruitment process should be subject to a periodic audit by an independent board to justify their position. “As with any private sector company, they will report on time spent, activities and results achieved,” the MEA said, referring to handpicked consultants employed by ministerial direction.

The association also said that in spite of improvements in educational investment, the rate of early school-leavers was leaving much to be desired. “Government should investigate to determine whether increased expenditure leads to better results, or whether there could be a more streamlined educational system which is more efficient and yields better outcomes. The reasons for low achievement might not lie within the educational system itself, but may be attributed to exogenous factors.”