14 - 20 March 2001

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Cost of living adjustments divide unions, employers

By Miriam Dunn

The organisations representing employers and workers are divided over the best way forward to calculate the next adjustments to be made in line with increases to the cost of living.

The General Workers' Union has asked for the changes, known as COLA, to be worked out on household income rather than the basic wage; a proposal that concerns the bodies representing employers who believe such a move would be highly inflationary.

A sub committee has now been set up at the Malta Council for Economic Development, where representatives of the social partners will discuss the issue.

Although all the bodies agree that the criteria for calculating the COLA need an overhaul, especially since the old system has been in place for over 10 years, the issue may well prove to be a difficult one to reach consensus on and talks, which got underway last week, are likely to get heated.

The GWU is asking that rather than the former adjustment, which was calculated on the basic wage by the now defunct income's policy, a new system should be established that would work on general income, according to the household budgetary survey.

GWU secretary general, Tony Zarb, confirmed that the union had proposed a revision in the way that the COLA is calculated, but stressed that discussions have only just begun at sub committee level of the MCED.

"What we are asking is that the calculation should be made on a basic wage as per the Retail Price Index," he said. "Obviously there is some way to go in the talks, which have only just begun, but I am positive that the discussions will be fruitful, since all the social partners agree there is a need for an overhaul in the way these calculations are made."
But the bodies representing employers are already voicing a concern that such an adjustment will be highly inflationary and unsustainable, at a time when competitiveness has become so important.

"There is a concern that the household budget takes into account other forms of income, not just the main wage," sources said. "Some employers feel that it should therefore not form the basis on which the percentage increase should be calculated."
Sources also said that the private sector in general is against moves to grant statutory cost of living adjustments, believing, rather, that they should be left to collective bargaining.

"The government's involvement should be the setting of a minimum wage and end there," they said.

The Business Times, Network House, Vjal ir-Rihan San Gwann SGN 07
Tel: (356) 382741-3, 382745-6 | Fax: (356) 385075 | e-mail: editorial@networkpublications.com.mt