[WATCH] Increasing minimum wage will not solve poverty problem, Scicluna warns

Social partners call for scientific studies on the impact of a potential increase in the minimum wage 

Finance minister Edward Scicluna
Finance minister Edward Scicluna
Finance minister, social partners dicsuss potential minimum wage increase. Video: Chris Mangion

Finance minister Edward Scicluna said that increasing the minimum wage will not necessarily solve the problem of poverty, arguing that many people who fall beneath the poverty line are in fact unemployed or pensioners.

“The minimum wage in Malta increases automatically and it has been working this way since 2000,” he said. “For there to be a change in the this system there need be markers indicating that it needs to change, for example an indication that this system has kept the minimum wage down when compared to other countries, or a rise in inflation.”

Scicluna was speaking to MaltaToday after a meeting of the Malta Council for Economic and Social Development (MCESD) to discuss proposals for the upcoming budget.

General Workers Union (GWU) secretary general Josef Bugeja said that the union had presented a proposal for an increase in the minimum wage. Moreover, he said that people on minimum wage should have an additional top-up from the government.

“We need to know what effect the introduction of a living wage will have on the country’s productivity, pensioners as well as other aspects of the economy, however our aim is to have a living wage so that everyone has a decent quality of life.”

This was echoed by Martin Balzan of the Confederation of Malta Trade Unions who said that “the economy is growing and so is wealth, however this needs to be divided across the population in a more just way.”

When asked whether he believes the wealth gap in Malta is growing, Balzan said that there are currently no scientific studies available for an opinion to be based on.

“However, it seem that the gap between those making good money and people at the bottom is growing,” he said. “In fact the study carried out by Caritas has indicated that there are a number of people that are barely managing to make ends meet.”

One of the main points of agreement between the representatives MaltaToday spoke with was the need for more data to inform policy decisions.

When asked about the suggested increase in minimum wage, John Bencini, Chairman of the MCESD, said that “in order for us to decide on a way forward, we need to have statistics in hand.”

He added that the Household budgetary survey was carried out three years ago and the results have not yet been published.

“At this point, not only should the results be published but we almost need a new survey in order to give us an accurate picture of where we stand now,” he said.

Malta Employer’s Association director Joseph Farrugia said that before discussing an increase in the minimum wage “we must first determine what our objective is and who we want to reach.”

“We need to know how many people are on minimum wage, how long they have been on it and whether they have other income. In this way can we know how big the problem is and we can work on a more targeted approach that does not affect the operation of the entire market,” he said.

Farrugia also stressed the importance of having updated figures for household expenditure explaining how updated figures are necessary to calculate the retail price index so as to have “a picture of the present and not one from 8 years ago.”

Earlier this year, Caritas released results from a study about poverty in Malta where they suggested that an increase in minimum wage is necessary. Over the past week this suggestion has also been put forward by the Civil Society Network who have called on the government to increase the minimum wage in the upcoming budget.

More in Budget 2017