Employers’ organisations call for caution over raising the minimum wage

November 2, 2016

20151230-MinWageLetsTalkThe  Malta Employers’ Association, the Malta Chamber of Commerce and and General Retailers and Traders Union jointly expressed their concern with regard to discussions on poverty and the minimum wage.  The employer bodies believe that the country’s efforts should be targeted specifically at eradicating poverty while safeguarding competitiveness and long-term economic growth.  In the current economic scenario, the employer bodies believe that it is unacceptable to find certain cohorts of the population that are still beset by poverty and deprivation. They believe that it is the joint responsibly of government, politicians, social partners, employers, employees and civil society to ensure dignity for the entire population.

A report commissioned by the MCESD was recently presented to social partners. This report sheds doubt as to whether raising the minimum wage is the ideal measure to address poverty. The report, in fact, suggests that it would be more meaningful to use more direct and targeted action.

Malta has a positive track record of wage-bargaining at enterprise level. Through this system, wages are determined fairly on the basis of social considerations but also on the basis of productive and competitive constraints. This established and recognized structure explains why only a small percentage of the workforce in Malta earns a minimum wage.

The issue of employers is not in fact with raising the minimum wage, but rather on the spiral effect this will trigger on wages across the board and because of this, raising the minimum wage has serious consequences on national competitiveness.  It is the duty of all social partners to act responsibly on this matter.  All stakeholders must understand that these consequences are well understood by all.  Private business is the motor of our economy and it is the private sector which finances the country’s social security system.  Endangering the private’s sector’s competitiveness and the Malta’s export potential may indeed harm the very basis of our economy and with it the potential to sustain the country’s safety net.