Minimum Wage

The issue of minimum wage has once again come up at the forefront of Maltese politics following the publication of Caritas’ study last week and its recommendation to increase the minimum wage to €180.  The reactions to such study were quite predictable.  On one side you had the trade unions and the Labour party that agreed with the suggestion of increasing the minimum wage in Malta.  On the other side you found the employers who blew off the idea by arguing that any increase would erode Malta’s competitiveness and risk creating inflation in Malta. (The PN politely said that it would be studying the issue at hand, although we all know that they do not agree with such a proposal and only said so because they don’t want to insult Mgr Victor Grech and lose any more potential votes).  However, what really riled me up were suggestions made in certain quarters that by increasing the minimum wage we would not be helping those people in need but on the contrary we would be creating a society of bums and lazy people that is content of maintaining its status quo in mediocrity. By increasing minimum wage, we would essentially be incentivising people not to improve themselves as they go along with their lives.

Allow me to say that this is total bollocks.  The concept of minimum wage is not about giving hand-outs to lazy people.  Minimum wage is in effect a positive reinforcement of work.  It conveys the message that it pays to work and that you will able to meet the basic demands of modern life through such work.  We are not talking here about living a life of luxury but rather at having access to bare necessities. The Caritas study suggests that an increase of the minimum wage is needed not to live a life of luxury but just to make ends meet and be able to afford the basket of essential needs consisting of food, clothing, health, personal goods, household maintenance, education, leisure, transport and housing.  By increasing minimum wage one would also in fact be incentivising people to work. The gap between minimum wage and welfare benefits must be bigger if we want to encourage more people to join the working force. This would have positive effects on the finances of the country as by working they would be contributing to the economic growth of our country and also reduce the economic burden of social benefits.

Another point that was brought forward is that people should work hard to improve themselves and their economic situation.  Although I do agree with this, one has to keep in mind that a lot goes into choosing a job apart from financial considerations.  If the only criterion for job and career selection was money then all of us right now would be trying to find work in the City.  People end up in low paying jobs for a variety of reasons and under a myriad of different circumstances and we must accept and respect that fact. Most of the people on minimum wage also end up working second or third jobs in order to make ends meet and so can find it quite difficult for them to obtain the necessary skills to improve.

We also speak of education as being one of the key elements to ensure a certain level of upward mobility.  By increasing our level of education, people will have a better chance of finding themselves a better paying job.  Although this shouldn’t be a political issue one must tackle the elephant in the room that despite having been for the last 25 years under a PN administration that has constantly patted itself on its back for its achievements in education, we are still the country with the highest rate of drop outs following compulsory schooling.  The PN’s educational policy in this regard has crashed and burned and the sooner we admit that, the easier it will be for us to move forward and look at how to close this gap.

The idea of a higher minimum wage is something which has to be looked at not only from a strictly economical perspective.  One must look at the social implications that are brought about by it.  A minimum wage which allows each and every one of us to live a decent life is a very important step towards creating a fairer society which is not dominated by the top 1%.  It is an important step to empower those people who are living in difficult conditions to be able to afford a decent living for themselves and their kids and be able to benefit from all the opportunities that they have to achieve their potential.