Malta: Low inflation rate results in lowest ever increase in cost of living allowance

Low inflation has seen the weekly cost of living increase awarded to all employees in Malta dropping to its lowest ever level.

The increase, known as the cost of living adjustment (COLA), was just €0.58. This low level was due to a low inflation rate, largely caused by the reduction in electricity tariffs which came into effect in March 2014.

This cost of living adjustment is a legal mechanism that establishes the statutory wage increase linked to inflation.

Prime Minister Joseph Muscat said the government would not tamper with the mechanism. However, in the budget for 2015, a €35 bonus was given to those on low incomes and to full-time workers who will not benefit from tax reductions due to come into effect in January 2015. Part-time workers will receive this bonus pro-rata.

Malta’s Chamber of Commerce, Enterprise and Industry warned that this ‘top up’ of wages set a precedent that could bind future governments.

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