Maltese pensioners’ income improved by 22% when one also considers the rise in prices during the decade from 2012 to 2022. This was the fourth highest increase observed across the Euro area. While workers and businesses benefit directly from economic growth, typically pensioners are left behind as their benefits are not usually linked to current salaries. Moreover, when inflation hits an economy, their purchasing power is the first to suffer as their...

Statistics show that, during the last decade, the rich got richer but so did everyone else and, in relative terms, even more than the rich did. One of the most repeated phrases is that the rich are getting richer, and the poor are getting poorer. Rising income and wealth inequality is a theme that has garnered a lot of attention over the years. The Organisation for Economic Cooperation and Development (OECD)...

Whether high inflation has become embedded in economies remains a moot point. While inflation has started falling, it’s going to be tough to bring it back to pre-Covid levels. High inflation has plagued many developed economies since mid-2021.  The European Central Bank (ECB) has taken forceful action in response to the unprecedented surge inflation in the Euro area, raising its key interest rate from -0.5% to 3.5%.  Policy...

It is important that firms realise that, after having been shielded from the huge shocks faced by their counterparts abroad, they must exercise caution not to reduce Malta’s competitiveness at this crucial juncture. Higher profits should be the result of higher efficiency or the introduction of new technologies rather than an increase in mark-ups. The ongoing discussion on the factors driving inflation has intensified in recent months. In the beginning, when inflation had spiked, there was broad agreement that this was due to supply considerations, as Covid-19 had disrupted the operations of firms across the...

International studies confirm that the latest policy expounded by the PN, that the electricity sector should be liberalised fully and that Government should not seek to extend the derogations from EU rules that our country presently benefits from, would lead to high prices and negative impacts on workers. The Labour Party has, in recent years, clearly affirmed its pro-market policies. Yet, it never abandoned its social commitment to ensure that all families, but particularly those in the most vulnerable groups, do not have to carry unnecessary burdens. In contrast, the...

Understanding the additional mechanism against inflation: While the standard COLA is an addition to wages and social benefits, the additional COLA is a benefit in its own right. Its calculation, although somewhat inspired by the one underpinning the standard COLA, differs in important respects. It’s always a good idea to double-check one’s facts before publishing anything. In its editorial, The Malta Independent on Sunday implied that the fact that the number of beneficiaries of the additional cost-of-living adjustment (COLA) mechanism introduced in...

Our value systems and social relations acutely undervalue care work and discredit its importance to our lives. Care workers are overwhelmingly women. This necessitates a look at not only how we undervalue care itself, but also who care workers are and the discrimination they face. “Wages should be based on a worker’s contribution to wider society, rather than their ability to generate profit.”  This is the proposal made by Olivier De Schutter, the UN special rapporteur on extreme poverty and human rights, in a recent report.  It...

Structural reforms are often the Achilles’ heel in Malta. Yet, the Government should spare no effort to move faster on key reforms. This is because structural reforms are the policy levers aimed at boosting the supply side of the economy and ameliorating the framework in which businesses and people operate. Global debt has risen significantly over the last two decades.  The possible adverse consequences of excessive debt levels on the global economy, as well as the macroeconomic, financial, and fiscal stability of countries, should not be underestimated. The risks...

When prices rise as suddenly and radically as they did last year, workers are in a particularly bad spot: consumers have no choice but to pay the prices asked for food and other essential products, while trade unions cannot just renegotiate the price of labour from one day to the next. Over the last decade, Malta has seen a significant distributional conflict between labour and capital, similar to that in the European Union and the USA.  The soaring inflation of late 2022 and early 2023 has made the situation worse.  As a result, workers...

Although the rise in inflation over the last few years may suggest caution in raising the minimum wage, we do have the necessary margin to go beyond the current level and protect, at least partially, the living standard of poor workers and their families. “Naïve” and “suicidal”.  That is how the Malta Chamber of Commerce described the potential rise in the national minimum wage being proposed by the Government and endorsed by the majority of the other social partners in the Low Wage Commission, set up a year ago...

The new model allows researchers and policymakers to track the economic effects of an underlying shock to changes in the circular flow of income among the different agents in the economy. The recent development of a Static Computable General Equilibrium model for Malta, jointly between the Central Bank of Malta, the University of Malta, and the University of Macerata, has added a useful tool to the armoury of models employed by the Ministry of Finance...