Employers want government to cap COLA at €6 for next five years

Employers wants COLA to be capped at €6 for the next five years amid warnings that the projected increase next year of €10 will have a negative impact on companies.

Rising inflation since the start of the year is pointing a cost of living adjustment of around €10 per week next year.

Malta Employers Association director general Joseph Farrugia said employers want to have an agreement for a minimum and maximum COLA with all social partners to be in place by 2024. He also said COLA should be set at a minimum of €2.50.

55% of companies expecting negative impact

A survey carried out by MEA showed that 55% of companies said they are expecting a negative impact due to the projected COLA increase next year. 38% said the €10 COLA increase would pose a medium burden. The survey also found that 50% of businesses said they will partially pass the increased costs of operation to their customers, with 22% saying they will pass on the full increase to their clients.

88% of respondents said that the surge in inflation has affected costs of other components besides labour, such as raw materials and services.

The survey also showed that 45% of participants said they have increased their prices in to react to inflationary pressures, with 55% saying they have absorbed the cost increases and kept prices stable.

The majority (72%) also said their company may experience reduced profitability in the coming 12 months and 16% said they may face a loss-making situation. 12% expected their financial performance to remain relatively stable.

Farrugia said labour intensive companies are going to be the worst hit by the cost of living increase in wages. “We cannot assume that everyone is going to be impacted the same,” he said.