COLA: More than just the rate of Inflation – Videoblog 33


Finance Minister Prof. Edward Scicluna discusses the principles behind the Cost of Living Adjustment (COLA) mechanism, which is a wage increase given to all income earners equally across the board.

He explains that this mechanism began in 1991, and before this mechanism came about, the increase was given by the Government, but the amount of these increases was decided arbitrarily.




Prof. Scicluna notes that the COLA mechanism not only takes into account inflation and cost of living, but also factors such as the standard of living, and the country’s economic and labour productivity.

The Finance Minister notes that the COLA adjustment is most necessary to safeguard the interests of those individuals who are on minimum wage, and who most likely are not in a position where a union can represent their interests and negotiate wages and salaries on their behalf.

Prof. Scicluna notes that the increase in cost of living by itself is not sufficient to ensure that wages remain current, and points out that the COLA formula is fashioned in a manner whereby minimum wage earners benefit not only from the inflation increase, but also an additional increase.

Thanks to this, Prof. Scicluna explains that the minimum wage today is more than €1,000 higher than it would be than if the COLA mechanism did not take into account this additional increase.



– Sunday, 16th February 2014

Leave a Reply

Your email address will not be published. Required fields are marked *