Worrying wage drop means we must look beyond GDP

Official statistics show that Malta was the only EU country to experience a contraction in wages during 2018. Indeed, Malta’s decrease was of -0.5 per cent, when the annual growth rate at an EU level was almost 3 per cent. Romania, Latvia, Portugal and Lithuania recorded double digit hourly labour cost growth rates.

Malta’s hourly labour cost drop featured in the private sector, in construction and services respectively. Ans while the public sector and industry experienced small increases, Malta’s inflation rate is overshadowing this. Indeed official figures for February 2019 show the highest increases since January 2017. Inflation during February read 1.92 per cent, putting greater hardships on families, workers, pensioners and youth on basic expenditure on items such as food, medicinal products, health services, transport, home maintenance and rent.

A few months ago, President Marie-Louise Coleiro highlighted the plight of such people when she referred to a study by the National Observatory for Living With Dignity and the National Centre for Family Research, both of which are research entities within her Foundation for the Well-being of Society.

The study shows that four-person families in Malta have to spend more than €500 a month for healthy food. This is too high for many families, especially when one considers other expenditure such as that referred to above in comparison to Malta’s wages. The math is clear.

Malta is now witnessing social challenges that had been a thing of the past: For example persons in the 25-35 age bracket who keep living with their parents not out of choice but because the cost of housing is simply too high. The importation of workers for cheap labour is also resulting in a race to the bottom between workers at the expense of their quality of life.

It is becoming clearer that Malta’s fast economic growth is coming at the expense of social justice and the environment. True, there are winners in this model, but it is also true that many are losing out: The working poor and the downwardly mobile who are playing by the rules but losing the game.

It is about time that the government gives serious consideration to the proposals by trade unions, economists and sociologists for a realistic and sustainable revision of Malta’s Cost of Living Allowance (COLA). Its current measurement seems out of synch with the realities faced by workers and pensioners, resulting in negligible compensation for higher prices of goods and services. Government should also seriously look into the creation of refunds or discounts for elderly persons and low income earners for basic goods and services such as utility bills.

As a candidate for the European Parliament I am also proposing that the EU budget should be more flexible for the needs of small islands, which, for example, are more susceptible to the inflationary pressure due to high import content.

Economic reforms pushed by the European Commission should be monitored at member state level, where civil society should play an active role for sustainable and socially just reforms.

Malta requires an economic vision that does not simply look at GDP growth rates but that also factors in people’s quality of life. The social and the environmental should not be sacrificed for the benefit of an unequal and unsustainable economic vision.