Fabian Demicoli

Agreement on minimum wage – A Historical Milestone

minimum wage agreementGRTU was one of the social partners who have signed the agreement on the revisions related to low income earners. The negotiations were very delicate and to-gether with the other employers’ representatives, GRTU made sure that any increases would not negatively af-fect the competitiveness of businesses.

The agreement signed amongst social partners ad-dresses the concerns presented to us by government and to which social partners took the brave decision to shoulder responsibility. The measures agreed upon in this agreement are purposely designed to preserve wage relativities and industrial relations, while address-ing social inequalities.

 

Malta has a national minimum wage, this minimum wage is legal and is there for a reason, there is nothing unlawful in workers entering employment on minimum wage. Social partners however agreed that minimum wage earners should not remain stuck on the minimum wage and therefore these employees will have their pay increased by Eur 6 per week over a period of two year following their first year of employment, starting January 2017. This will lead to a drastic decrease in workers being paid on the minimum wage.

Apart for this, the agreement also caters for another increase as a onetime increase in the COLA supplement amounting to Eur1 per week during 2018 and another Eur1 per week in 2019. This affectively means that minimum wage earners will have their pay increased by Eur 8/week in 2018 and another Eur 8/week in 2019.

As part of this agreement, social partners also under-line that a change in the minimum wage alone will not realistically resolve the poverty risk of many families, including pensioners and the labour market mechanism on its own cannot be expected to address poverty mat-ters. At enterprise level, wage levels are determined on the basis of productivity and competitiveness.

The social partners also suggested that specific measures targeting poverty are more effective in addressing the prob-lem without destabilising the labour market.

All Social Partners within the MCESD are aware that poverty is a social issue and conduct their functions – within MCESD and without – with a keen social conscience. These meas-ures underscore the importance of designing and imple-menting specific and targeted measures to address pockets of poverty, as against adopting wide ranging actions which risk destabilising the labour market, which can be wasteful since they may well end up channelling resources to indi-viduals/ segments which are not really at risk of poverty (e.g. raising incomes to relatively higher income earners to restore relativities). Such resources will be more efficiently used if they are directed in a focused manner to recipients who are the most afflicted by poverty and social problems.

 

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