Data published recently by the National Statistics Office shows that over the past year those having a part-time job over and above their full-time job increased by 9.4%. This means that 39,538 people work more than 40 hours per week and are more likely to have challenges to juggle between work, part-time duties, family and social life.

Though there might be various reasons for this increase, the sharp rise in the cost of living means that in the last 12 months households have faced pressures more than ever to make ends meet. The situation is negatively affecting the quality of life and is fast becoming a vicious circle. Unless you work 60 to 70 hours per week you could end up in the red.

UHM Voice of the Workers has been warning that the situation is of serious concern, and this sentiment is palpable at grassroots level during onsite visits and negotiations of new collective agreements. Though the situation mirrors what has been happening globally, there are signs that in Malta the cost of living has kept soaring whereas in Europe this upward trend is slowing down. This contrasting trend in inflation deserves attention to establish what is driving prices up, given that certain costs like freight and transport have gone down since the end of the pandemic. Why are such reductions not reaching consumers?

Unfortunately, the tools to combat inflation are rather limited. While raising interest rates will only make it more expensive to borrow money especially for those already on thin ice, increasing wages alone could lead to a vicious circle whereby this would trigger higher inflation.

On the other hand, reducing taxation could be a way of making work pay without increasing production costs.  One of the proposals UHM is putting forward is to start taxing overtime with the standard part-time rate of 10%. In this manner employees have the incentive of doing extra hours at their main place of work, without getting taxed in the higher tax bands, rather than seeking a part-time job elsewhere.

A key measure to boost spending power is to stop taxing the cost-of-living allowance. Preliminary calculations show that this year (2024 Budget) this will be hovering around €13 per week which equates to €676 per year. As things stand only those on very low income will receive this amount as the rest will have to pax on COLA meaning that it could go down to €507 for those with an average income taxed at 25%.

A further measure could be to exclude the amount being paid as social security contribution from the taxable income as this is tantamount to double taxation.

In total these measures could leave around €1,000 extra in the employees’ pockets, without increasing wages. Current circumstances dictate that this is the price to pay to fight inflation without increasing labour costs.