This is because of the risk that businesses could well compensate for the money lost through a higher COLA by increasing the costs of their own products and services further, negating the effects of the COLA increase.

The Chamber has therefore proposed limiting this year’s COLA to workers who didn’t get us a raise this year, but this proposal has been opposed by the General Workers’ Union.

Caruana Cilia agreed with the Chamber’s argument but not with its solution, arguing that the answer lies with public funds.

“Currently we are facing record inflation figures. In July, we reached a whopping 6.8% annual inflation rate with the highest increases being registered for food and other basic every-day essentials,” he said.

“An increasing and extremely high cost of living impacts everyone, yet clearly, the most affected are those at the lower end of the income scale. Under the current exceptional circumstances, I believe that everyone should be given, as a minimum, the full COLA irrespective of any salary increases already received.”

“I am fully appreciative of the concerns raised by the Chamber, particularly as businesses are only just re-emerging from two difficult years related to the pandemic. In this context, Government has to cushion the financial impact on local business by helping out the private sector so as to ascertain that they remain competitive and therefore operative.”

“A major impact is that any business, if not assisted by government, will probably in turn place the extra cost of the full COLA as yet another expense on goods,” he said.

“This will in turn contribute to further inflation and higher prices and pressure on consumers. Those worse affected will be pensioners, low-income earners and the financially vulnerable in our society.”

“That is exactly why government must use public funds in a strategic, coordinated and controlled manner, for the common good and not let our public finances be frittered away by the friends of friends close to the centre of power.”

“The solution is not asking workers to carry the burden. The irresponsible high levels of uncontrolled expenditure such as the Malta Films Awards and other examples, which Government continues to refuse to disclose – have bloated our deficit and debt, to levels we have never seen before and therefore constraining the ability of Government to intervene and cushion the impact as would be expected in such a situation.”

He called for further discussions on the future of COLA, noting that Finance Minister Clyde Caruana had last year pledged to set up a new mechanism, over and above the COLA one, to provide additional assistance to vulnerable people.

“Unfortunately, recently, the Anti-Poverty Forum, which comprises of 16 local organisations, remarked that 10 months after this promise was made in Parliament, government still has not held any discussions let alone published any details of this new independent mechanism,” he said. 

“The Nationalist Party has been stating over and over again, that government needs to commence serious discussions and negotiations to introduce a minimum living income mechanism so as to ensure a decent standard of living and a better quality of life.”

Do you think public funds should be allocated to businesses to help them deal with the record-high COLA?