“Muscat allowed Gonzi to outsmart him.”
She was quite het up saying this during a lunch occasion hosted by a member of the diplomatic corps whose job is chiefly to keep count on Malta’s economic performance. He was fascinated by the extant controversy on the statutory minimum wage. For that specific do he chose his guests deliberately from outside partisan politics, but adequately knowledgeable on matters economic, social, and even political.
This week’s piece attempts to sum up the differing views expressed during that lunch which went on gone 4pm, viz:
1. The issue of the (in)adequacy of the current national minimum wage ( circa €160 per week ) had been resurfaced by CARITAS Malta earlier this year in a well-constructed, exhaustive and sobering report quantifying the bare minimum income required today for a decent living standard, but without frills or luxuries. For parents with 2 children Caritas’ worked out an annual minimum earning of €10,600. Compare this with below - €9000 a full-time employee earns as a minimum - and there are thousands of such workers, mostly abused either because they cannot do otherwise or because they happen to work in order to supplement their partner’s income. A clear case for revising it. Gonzi invited Caritas to a Cabinet meeting, promised to reflect, was in a position to act, but opted to do nothing in case he ruffled the feathers of some loyalist quarters. Contrariwise, Muscat kept mum for seven months, but lately stated unhesitatingly that he was against revising the minimum wage in the foreseeable future when he takes over the reins of government. Annoyed some of the PL’s faithful supporters. Accused by AD that he betrayed the working class. Reminded by many of his ‘living wage’ proposal. Outsmarted by Gonzi.
2. The very concept of a statutory minimum wage is basically social, but, as always with such issues, it has economic connotations. It is in its quantum that controversy is normally generated: most employers (especially those operating for the home market) regard it as an economic handicap/obstruction whatever its relativity with the average national wage, even if barely half as it currently is. People with a social conscience believe that it is today much too low to afford a decent living standard to an employee, unworthy of an economy boasted by Gonzi for its continuing improvement. They point out various instances of exploitation by greedy employers, particularly in a scenario of high unemployment. They regard as grossly exaggerated the fears of intensifying general unemployment expressed by some economists and practically all businessmen. Such fears are not borne out by history.
3. Nearly 40 years ago a Labour government for the first time legislated for a national minimum wage, despite strong criticism from the usual conservatives. For some years it was gradually enhanced in sync with economic progress - one several ways employed for a fairer redistribution of wealth accretions in favour of the working class. This process stopped when the P N assumed government in 1987. But union pressure managed at least to secure a guaranteed addition to compensate for the perennial increases in cost of living, thus maintaining the real purchasing power. No improvement in real terms has been afforded to the minimum wage for 25 years now, even though the country undoubtedly improved its overall living standard appreciably. Each year an upward adjustment was computed by means of an inflation formula agreed to by the three social partners in 1990 - C.O.L.A. as has been known all along and which lately the Chamber of Commerce has been lobbying Europe for its removal, leaving it to each employer to negotiate totally with the employee (or his union) on the basis of productivity achieved solely at plant level.
4. It was clearly dishonest for Gonzi to accuse Muscat of wanting even to discard COLA from an unchanged minimum wage. That would have been political suicide, especially inside PL.
5. Muscat should have listened more intensely to what Caritas Malta had to say about the matter.
Conclusion - There are cogent arguments on both sides, almost equal, for leaving the status quo and for uplifting the minimum wage (even if only by €10 a week immediately and the same next year). As a priority when in government, Muscat could have promised to set up an appropriate commission to study in depth and report within six months on the likely social and economic consequences of uplifting the national minimum wage.
Any outsmarting would then have been in the opposite direction.