Finance Minister Tonio Fenech yesterday shot down the Malta Employers Association (MEA) proposal to partly shoulder the Cost of Living Adjustment (COLA) as no money is available to fund such a proposal.
“I don’t have €12 million available, and if I had, I would use it to retain jobs by directly focusing on companies which require help,” Tonio Fenech said while addressing a business breakfast organized by di-ve.com.
Employers had invited government to partly cover the cost of paying an estimated €5 to €6 per week to employees in compensation for the record inflation rate incurred by the economy this year.
A recent survey among MEA’s members has revealed that 74 per cent of businesses are not in a position to absorb next year’s COLA increase.
20 per cent of respondents said their company would manage a COLA increase by reducing the labour force and cutting overtime, while another 25 per cent said they would increase their prices to customers. One-third of those surveyed said they would improve efficiency as a result of a COLA increase.
MEA’s director general Joe Farrugia insists that the association’s proposal is in the best national interest, and given the current circumstances, “it will work in the interest of all social partners.”
According to Joe Farrugia, the implications of imposing the high COLA compensation is evident from the findings of the survey.
“There are many employers who have been postponing redundancies, and unless a corrective measure is taken to minimize the harmful impact of the COLA mechanism on the level of employment, we risk having a surge in unemployment in the coming months,” he said.
Joe Farrugia stressed that “a rise in unemployment will possibly drag the recession in Malta until 2011,which is when many major economies will be expected to be on the path to recovery. It would be tragic if Malta lags behind the global recovery because of its inaction.”
