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8 May 2017

Malta: Minimum wage system changed

During a meeting of the Malta Council for Economic and Social Development, on Friday 28 April 2017, an agreement was concluded on improving the statutory minimum wage. The agreement was signed by the government, the leader of the opposition and the social partners.

The agreement does not provide for an increase of the current statutory minimum wage at the start of an employment relation. The statutory minimum wage for persons 18 and over as set by the governmental Department for Industrial and Employment Relations remains €169.76 per week.

The changes, starting from 1 January 2017, affect workers in their second and third year of employment, who will at the end of each year get a weekly increase of 3 euro. Its implementation will reduce the number of persons on the current minimum wage and minimise the period in employment that a person remains on the start level. Therefore, the mandatory weekly 3 euro increase upon completion of the first year of employment with the same employer and an additional weekly 3 euro upon completion of the second year will become mandatory. Workers that are transferred to another company within the same group will remain eligible for the increase. If workers on a temporary contract, within six months of expiry of that contract, is offered another definite-term contract, the two periods shall be considered one continuous period, both in terms of law and for the purpose of the minimum wage agreement. The agreement also includes a one-time 1 euro supplement in 2018 and 2019 over and above the existing cost of living adjustment mechanism that will be given across the board to all workers.

The signatories have created a long-term mechanism for the revision of theminimum wage. It involves the setting up of a Low-Wage Commission, with an equal representation of trade union and employer organisations represented on the MCESD, and government representatives, with the task to formulate recommendations to the government, every four years, based on scientific research and official data. Relevant data in this respect are the parameters of the collective agreements. The recommendations have to take into account the impact on competitiveness and the risk of redundancies. The commission will have to be set up by 2020 and give its first proposals in 2023.

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