Employment in Malta is regulated mainly by the Employment and Industrial Relations Act, Chapter 452 of the Laws of Malta. Subsidiary Legislation has also been issued along the years which in turn provides for specific sectors and scenarios within the employment sphere. An employment relationship is then further regulated by an employment contract tailor-made to cater for the individual relationship between the parties.
An agreement was signed on the 28th of May 2017 between the Government, the opposition and the social partners to amend the National Minimum Wage National Standard Order.
The reason behind this agreement was twofold – to have focused measures to address poverty, and secondly to minimise the period during which workers remain on the minimum wage.
The agreement calls for:
- A mandatory increase of €3 per week to be affected upon the start of the second year of employment to the minimum wage earners who have completed their first year of employment. They shall also be entitled to another €3 per week in the third year;
- These increases are additional to the annual COLA increase which for 2017 is set at €1.75 for full timers and at €0.04 for part timers;
- The said increases will be backdated to the 1st of January 2017 for those who have completed their first year of employment ;
- Employees earning more than the basic minimum wage will also get proportional increases in the second and third year of employment so as to be on the same level as the new minimum wage.
Even though the ideal scenario would be that to have a considerable increase in the minimum wage, the latter would end up being counterproductive. A drastic increase would risk in bringing about redundancies or possibly even creating a new segment of unskilled people unemployable. Thus one should seek a balance without creating the said risk. Economist Gordon Cordina, the person who carried out the relevant studies ahead of this agreement claimed that the increase agreed upon was the furthest point the social partners could go without jeopardising the country’s competitiveness. He went on to say that the increase in the minimum wage does not really address the problem of poverty in its entirety and thus one needs to find other measures to target certain pockets.
Furthermore, the agreement makes reference to the establishment of a Low-Wage Commission that should be set up by 2020. This would consist of equal representatives of trade unions and employer organisations within the Malta Council of Economic and Social Development. The objective of the said Commission would be to give recommendations to the Government every four years on matters of economic and social relevance.