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The National Minimum Wage National Standard Order (Subsidiary Legislation 452.71) is the official legislation for regulating the national minimum wage. Besides the statutory minimum wage, there are 32 wage regulation orders that specify the minimum remuneration and other conditions of specific occupations within particular sectors. The statutory national minimum wage and the sectoral minimum wages generally increase annually and are announced in the Government Budget Speech each year, which then comes into effect on 1 January of the following year through Legal Notice (the most recent, setting rates from 1 January 2024, are currently Legal Notice 286 of 2023 for the sectoral Wages Council Wage Regulation Orders, and Legal Notice 287 of 2023 for the National Minimum Wage National Standard Order).
Both types of Legal Notices are complemented by a Wage Increase National Standard Order (Subsidiary Legislation 452.65), in which the increase – known as Cost-of-Living Adjustment (COLA) is expressed in absolute terms. The most recent COLA was provided by Legal Notice 288 of 2023), with effect from 1 January 2024 and applicable to both to the minimum provided by the National Standard Order and to the minima provided by the sectoral Wage Regulation Orders.
No major changes were enacted in the minimum wage regulation in the past 10 years, apart from the very recent institution of the Low Wage Commission in 2023, that – despite not changing the basic mechanisms of minimum wage setting – have added another relevant actor, as will be explained in more details in the following sections.
The main source providing guidelines for the process of setting minimum wages in Malta is the Employment and Industrial Relations Act, first enacted in 2002 and consistently amended.
The increases in the statutory national and sectoral minimum wage are based on the Cost-of-Living Adjustment (COLA), which was agreed upon in December 1990 between trade unions, employers’ organisations, and government. An independent tripartite committee (set up to ensure the equitable working of the statistic) directs the calculation of the Retail Price Index. Subsequently, a government statistician calculates the cost-of-living increases which are added to the minimum wage.
It is noteworthy that the highest level of tripartite discussion among the social partners in Malta takes place at the Malta Council for Economic and Social Development (MCESD). However, minimum wages are mainly discussed within the tripartite Employment Relations Board (ERB), established by art. 3 of the Employment and Industrial Relations Act and composed by an independent chairperson, the Director responsible for Employment and Industrial Relations who shall act as Deputy Chairperson, four representative of employees belonging to representative trade unions, four representatives of employers belonging to representative employers’ organisations, and three other members appointed by the Minister. is appointed by the Minister, as has several functions including, in the process of setting the statutory minima, making recommendations to the Minister to any standard or sectoral conditions of employment and to advise the Minister on the matter.
To have a complete overview of the actors involved, it should also be mentioned that Legal Notice 66 of 2023 established the Low Wage Commission, an expert committee composed of 15 members, comprising the Chairperson, four members nominated by workers’ organizations sitting on the MCESD, four members nominated by national employers’ organizations sitting on the MCESD, and six members representing the Government of Malta. The Low Wage Commission establishment was originally called for by tripartite Agreement of 28 April 2017 (‘National Agreement on the Minimum Wage’). Among the functions of the Low Wage Commission, Legal Notice 66/2023 mentions (art. 4): determining whether the minimum wage shall need reviewing, ensuring that minimum wages are set at adequate level, defining of the national criteria constituents of the minimum wage, taking into consideration trends in the price level and increases in a number of selected collective agreements for employees on low level grades, specifically ascertain that any change in the minimum wage is affordable in terms of sectoral vulnerabilities, competitiveness and productivity gains, and sure minimum wage adequacy and the timely and effective involvement of the social partners in the process of review and evaluation of the adequacy of the minimum wage. Furthermore, active engagement in research work for the fulfilment of the functions for which the Commission was set up for is also required (Art. 8).
Social partners are therefore, together with the government (and the Minister responsible for employment and industrial relations specifically) the main actors involved in minimum wage setting due to their involvement in the MCESD, in the ERB and in the Low Wage Commission.
The statutory national minimum wage and the wages specified in the wage regulation orders are updated on an annual basis. In fact, the Minister for Finance and Employment announces such revisions in the budget speech. Such updates are over and above the increases stipulated by collective agreements. The COLA increase takes effect every 1 January of the following year.
As regards the process of setting the statutory minima, the Employment and Industrial Relations Act (art. 4) provides the following basic norms:
With the establishment, in 2023, of the The Low Wage Commission (LWC), it is further provided (art. 8 (3) of Legal Notice 66 of 2023) that the LWC, shall submit its recommendations to the Prime Minister and the Minister responsible for for social dialogue every four years, the first of which shall be due in 2023.
In October 2023, an agreement was reached between employers, trade unions, and government representatives on the increases in Malta’s minimum wage over the next four years. This consensus, facilitated by the work of the newly established Commission, is considered historic, with social partners aiming for a balance between increased productivity, fair pay for workers, and transparent minimum wage increases until 2027. This means that over these four years, the minimum wage would have been increased by more than the statutory COLA (Cost of Living Adjustment) provided during the same timeframe. The Low Wage Commission plans to continue its work, with another minimum wage revision besides the COLA adjustment scheduled for 2027, if needed.
There are no specific criteria explicitly provided by law, binding the Employment Relations Board or the Government when making recommendation on amendment of the statutory standard or sectoral wages (the first) of when enacting legal orders modifying them (the second).
However, a system connecting the annual increase of statutory national Standard Wage and sectoral wages is in force. It is known as Cost-of-Living Adjustment (COLA, already mentioned in previous chapters) and strictly connected to the Retail Price Index (RPI), which is therefore the main criterion for statutory minimum wage setting in both national standard wage setting and sectoral statutory wage setting.
Therefore, the COLA represents the minimum adjustment of the minimum wage. The COLA is calculated on the basis of a twelve-month moving average inflation rate as of September multiplied by the ‘base wage’, where the official index of inflation is the Retail Price Index (RPI). The ‘base wage’ represents a wage level agreed upon in 1990 and which has since then been augmented annually by the COLA. One characteristic of the COLA is that, unlike other forms of wage indexation observed in European countries, compensation is granted by a flat amount, independent of the wage level, rather than a percentage indexation. Hence, the percentage increase of wage is smaller at higher wage levels relative to the base wage.
The statutory minimum wage in Malta covers all Maltese workers. However, there are 32 wage regulation orders that specify the minimum remuneration and other conditions of specific occupations within particular sectors. The 32 occupational and sectoral minima cannot be lower than the National Minimum Wage (as provided by art. 3, Subsidiary Legislation 452.71 and art. 5, L.N. 287/2023).
There are no explicit exceptions to the applicability of statutory minima (either standard or sectoral).
The National Minimum Wage National Standard Order (Subsidiary Legislation 452.71), which regulates the national minimum wage, also specifies two sub-minimum wages according to age groups: one for workers who are 17 years old, and another one for workers who are younger than 17 years.
Besides the statutory minimum wage, there are 32 wage regulation orders that specify the minimum remuneration and other conditions of specific occupations within particular sectors, that – as mentioned in the previous section – cannot be lower than the National Minimum Wage (as provided by art. 3, Subsidiary Legislation 452.71 and art. 5, L.N. 287/2023).
The Employment Relations Act does not bind the Board or Government to provide for hourly, weekly or monthly rates, but the Standard Order and the vast majority of sectoral Orders express the amount of the minimum in weekly rates, with very few exceptions – Wage Regulation Orders in which wages are expressed in yearly, monthly or daily rates.
Pursuant to Article 2 of the National Minimum Wage National Standard Order (Subsidiary Legislation 452.71), The national minimum wage of part-time employees shall be calculated pro rata at the same hourly rate of a comparable whole-time employee as applicable in accordance with the minimum wage of the relevant Wage Regulation Order, or in cases where a Wage Regulation Order is not applicable, at an hourly rate not below the National Standard Minimum Wage applicable, as determined in accordance with the Schedule and divided by forty.
The 40-hour working week is stipulated in L.N. 247 of 2003 (Organisation of Working Time Regulations). In addition, the Department of Industrial and Employment Relations (DIER) publishes a resource pack for practitioners in the field of labour law, which includes the official hourly rate (equated to the weekly rate divided by 40 hours).
Wages should be paid at regular intervals not exceeding four weeks in arrears. However, different periods of pay can be agreed in a collective agreement.
The ‘basic’ national minimum wage rate is exclusive of statutory bonuses, overtime allowance and holiday allowances. The full statutory bonus payable every six months is €135.10, whereas the full statutory weekly allowance payable every six months is €121.16. Furthermore, a contract of employment may, apart from specifying the basic wage rate, also contain a clause for an allowance to be paid in respect of a number of hours worked in excess of the normal working week.
No regular reports published on minimum wage setting in Malta has been identified.