Minimum wage earners in Luxembourg earn €2,202 a month which is almost three times as much as their Maltese counterparts who earn €785. Though Malta still ranks in the top half of those EU member states having a statutory minimum wage system, it risks sliding further down the packing order as in recent years Easter European countries have close the gap considerably.

This data emerged from the 2021 minimum wage annual review published by Eurofound. According to this report in all but 4 member states there was an increase between January 1, 2020 and January 1, 2021. It transpires that the highest increase was registered in five central and eastern countries – Latvia, Slovenia, Slovakia, Bulgaria and Lithuania – where the minimum wage rose by more than 5%.

Malta where the increase was a modest 1% is in the second cluster of countries which had an increase between 0.5% and 5%. In Belgium, Spain, Greece and Estonia minimum wages remained frozen.

As things stand Malta ranks in 10th place in the list ahead of Portugal, with Luxembourg firmly in the lead and Bulgaria at the foot of the table with €332 per week. However, it is of concern that in Malta the minimum wage is rising at a much lower rate than in most EU countries. According to Eurofound Malta stands out as being one of the six countries where the rise in the last decade has been below the EU average. However in the case of the other five countries within this cluster – Belgium, France, Germany, Ireland and Luxembourg – this modest increase could be justified as their minimum wage has already reached a much higher level than Malta. In fact in these five countries minimum wage earners are paid more than double.

Though in 2017 an agreement had been signed among the social partners in Malta with the objective to increase the minimum wage, the employee will only benefit from the increase after the first year. Hence, the only upward revision in the minimum wage is through the cost-of-living allowance mechanism. Devised around 30 years ago this mechanism is based on a complex formula which calculates the increase on the strength of inflation recorded in the previous year. Though there is consensus that this has been a successful way of handling wage increases, criticism is mounting that the mechanism is outdated and needs to be revised to reflect the modern day needs. Moreover, there have also been calls to have a different mechanism for pensioners whose spending is primarily on food and medicines.   

In its 2021 Budget proposals UHM Voice of the Workers called for the implementation of the second part of the 2017 agreement which provided for the setting up a Low Wage Commission.

This commission has the remit to establish a mechanism to determine whether the minimum wage would need reviewing. Without excluding any other mechanism that may be proposed, this mechanism may take into consideration trends in the price level and increases in selected collective agreements for employees on low level grades. The Low Wage Commission reports directly to the Prime Minister and comprises representatives from trade unions, employers and government.

The Commission must ascertain that any change in the minimum wage is affordable in terms of sector vulnerabilities and productivity gains. It must also factor any economic and/or legislative measures taken in the interim that might have an impact on labour costs. Its recommendations must be submitted to the Government every four years with the first one due in 2023.