Chamber warns minimum wage rise will have ‘harmful domino effect’

The President of the Chamber of Commerce has strongly opposed a potential increase in the minimum wage, warning that it would have a domino effect that would damage Malta’s competitiveness.

“If the government increases the minimum wage, then people currently earning just above the minimum wage will also start demanding higher salaries,” Anton Borg said on Reporter. “Even though the economy is doing well, Malta still faces strong competition from other European countries. The greatest cost expenditure faced by Maltese companies is wages, the second is electricity bills, and the third is way down the list of cost burdens.

“Increasing the minimum wage will simply increase the cost burden on Maltese industry, and could hence lead to a rise in unemployment.”

Host Saviour Balzan questioned whether a minimum wage rise will increase people’s purchasing power, which will in turn lead to increased consumption. However, Borg retorted that exports will take a severe knock.

Borg said that the greatest problem currently faced by Maltese business is the shortage of people in the labour pool.

“Many Maltese people refuse to work in certain jobs because they aren’t ready to work for such low wages, forcing businesses to resort to foreign employees,” the Chamber president admitted. “However, only a few people are on the minimum wage and Maltese people are only rejecting these jobs because they are managing to find better jobs elsewhere, which is how the free market should work.

“I see no problem with bringing in foreign workers to fill up certain jobs, as it will boost the economy.”

Borg said that academia courses should be more properly designed to address certain skills gap in the workforce, such as the shortage of local accountants that has led to several audit firms hiring Filipinos.

When questioned by Balzan on the Labour government’s self-proclaimed pro-business stance, Borg had words of consolation for the previous Nationalist administration.

“Just because the current government is pro-business, it doesn't mean that the previous one wasn't,” he said. “The current government is passing through a period of economic growth, whereas the previous one had passed through economic instability. Tough economic times force governments to introduce certain measures that make them look less pro-business.”