Increasing minimum wage ‘generally benefits the economy’

Campaign for a Decent Minimum Wage has highlighted comments by economist Lino Briguglio, who referred to studies which showed that a modest increase in minimum wage has a “generally beneficial effect” on the economy.

During a meeting of the Malta Committee for Economic and Social Development (MCESD), Briguglio said that studies have shown an increase in the minimum wage can have both positive and negative effects on an economy, adding that when the increase is modest, there is generally a beneficial effect. Among the benefits, he mentioned an increase in the productivity of workers, as well as an increase in their purchasing power, resulting in more spending.

Briguglio was joined by fellow economist Gordon Cordina who recommended that any increase in minimum wage should be motivated and quantified using objective economic measurements, further guided by a dialogue with civil society and other social partners, and “future proofed” so that they allow changes.

Campaign for a Decent Minimum Wage has supported the arguments divulged in the process of yesterday’s meeting, saying that they uphold its stand.

“We feel that, in substantial terms, the arguments made by foremost economists Gordon Cordina and Lino Briguglio, and by others, do not contradict our arguments and conclusion, but rather reinforce them,” the campaign said.

At the launch of Campaign for a Decent Minimum Wage, the numerous organisations it comprises vouched that the minimum wage should increase by 3.5% for three consecutive years – to between €11,000 and €12,000 annually – in addition to the cost of living adjustment.

The organisations participating in the campaign are Aditus Foundation, Alleanza Kontra l-Faqar, Caritas, Forum Bormliż, Integra Foundation, Koperattiva Kummerċ Ġust, Malta Humanist Association, Malta Microfinance, Mid-Dlam għad-Dawl, Millennium Chapel, Moviment Graffitti, Paulo Freire Institute, Peace Lab, The Critical Institute, Third World Group and Żminijietna - Voice of the Left.

The campaign noted the warning that raising the minimum wage will not attend to the causes of extreme poverty.

Cordina had argued that the number of households earning less than the minimum essential budget, as determined in the Caritas report, was about 1.5%.

“Half of these households not earning an income from employment, while the other half are making less than the minimum wage. This means that they are not in full-time employment all year round,” Cordina had said, adding that in these cases, it would be more pertinent to discuss other methods of direct intervention.

Campaign for a Decent Minimum Wage said that the issue of an increase in the minimum wage was primarily an issue of social justice “rather than the panacea for all social ills, including poverty.”

It supported the affirmation made by civil liberties minister Helena Dalli, that government should embark on a programme “to support the most vulnerable and the minimum wage increase [is just] one such measure”.

Campaign for a Decent Minimum Wage also welcomed Briguglio’s suggestion for a re-estimate of the base wage, which would bring it in line with basic expenditure needs.

Furthermore, Campaign for a Decent Minimum Wage said that it has already advised that with regard to safeguarding those businesses that might suffer from the proposed suggested increase, measures should be enacted by government to safeguard competitiveness and address possible ill-effects.

It has also welcomed the suggestion to establish a low wage advisory committee under the MCESD to oversee issues relating to low wages.