Government Announces Rise in Malta’s Minimum Wage

The recent announcement by the Maltese government concerning the rise in the minimum wage has sparked significant interest. Starting January 2024, the wage will increase from €192.73 to €213.54 weekly, marking a substantial shift in the nation’s economic policy. This article delves into the details of this change, its projected impact on the workforce, and the wider economic implications.

 

 

Four-Year Growth Plan

For the next four years, the 40-hour workweek wage will see gradual increases. Next year’s hike will include an €8 raise and the €12.81 COLA (Cost of Living Adjustment) added yearly.

Yearly Minimum Wage Projections:

• 2024: €200.73 + COLA
• 2025: €203.73 + COLA
• 2026: €206.73 + COLA
• 2027: €210.73 + COLA

Additionally, the hourly wage will jump from €4.82 to €5.34 next year.

Rationale Behind the Wage Rise

After discussing with social partners, the government decided to raise the minimum wage. However, the Malta Chamber expressed doubts. They stated that merely increasing the minimum wage and COLA doesn’t fully address poverty.

Earlier this year, officials formed the Low Wage Commission. Their main goal was to recommend ways to boost the minimum wage.

Effect on the Workforce

In 2017, the government started raising the minimum wage in stages. For instance, workers with the same employer for a year got a €3 raise. This continued in 2018, with a €3 raise for those employed for two years.

With the new changes, this €6 increase will be removed. Workers will get the new rate of €200.73. The 2022 Labour Force survey states that about 6,000 full-time workers will see changes in their wages. About 2,000 of them currently earn the base minimum wage. The other 4,000 receive benefits for staying with their employer. The hourly rate change will also affect many part-time workers.

Setting up the Commission: A Delayed Action

Parliamentary Secretary Andy Ellul noted the late start of the Low Wage Commission. The initial goal was a 2020 beginning. But the COVID-19 pandemic shifted these plans. Yet, Ellul was happy with the Commission’s fast decision-making.

Malta Chamber’s Viewpoint

In a chat with Times of Malta, Ruben Cuschieri, a member of the Malta Chamber, discussed inflation concerns.

He said that wage increases without productivity growth might hurt Malta’s global standing. Such a situation, he mentioned, could negatively affect the people these policies should help.

“The Malta Chamber believes that just raising the minimum wage or COLA isn’t enough to fight poverty,” he said.

“It’s essential for the government to control inflation and boost productivity. It’s vital, especially in the public sector,” he added.

 

 

 

Future Suggestions

Cuschieri also advised adjusting tax bands. This change would help workers benefitting from wage rises to avoid extra tax cuts.

Minimum Wage FAQs

1. What is the new minimum wage in Malta for 2024?
   The minimum wage in 2024 will be €200.73 plus the annual COLA.
2. How does the Malta Chamber view the wage increase?
   The Malta Chamber expresses concerns about inflation and advocates for broader economic strategies.
3. What impact will the wage increase have on the workforce?
   It aims to improve living standards for low-income workers but has broader economic implications.
4. Why was the Low Wage Commission formed?
   To recommend strategies for a sustainable increase in the minimum wage.
5. What are future economic strategies suggested?
   Adjusting tax bands and focusing on sustainable economic growth are key suggestions.

Bonus

If you think Malta’s new minimum salary isn’t sufficient, check these salary negotiation tips.