Vassallo Group Chief People Officer (CPO) Lee Xuereb has emphasised the need for Government to provide support to Malta’s workforce through different means, not only with the Cost Of Living Adjustment (COLA).
He was asked to comment after the Malta Employers’ Association (MEA) released its pre-Budget document last week, in which it highlighted that the 2024 projected COLA increase to €13 is “unprecedented” and will undoubtedly place burdens on employers. A survey which was carried out by MEA in July 2023 found that 74 per cent of companies are concerned that wages are increasing disproportionately with productivity. A further 73 per cent reported that a COLA of €13 will prove to be “problematic”.
In a bid to alleviate the impacts that the COLA is expected to have, the MEA proposed changes to tax bands so that €3 of the weekly figure is compensated through tax deductions.
As a result, MaltaCEOs.mt reached out to Mr Xuereb, who leads Vassallo Group’s human resources (HR) function, to highlight the effect that a €13 COLA adjustment will have on the company, as well as if more needs to be done to aid businesses.
He remarked that even though the projected COLA figure is still speculation, any number in the region of last year’s €9.90 per week will have a “significant impact” on Vassallo Group’s services and outlay. Mr Xuereb pointed out that 2023’s COLA cost the company “in the region of €1 million”, and this happened within a “very short time span to plan for its consequences”.
“This year will only be different in that we are more aware of the consequences of such a large increase and will be able to plan for it,” he said.
While the current economic environment, characterised by rising costs, seems to explain some of the reasons behind such a COLA increase and the need to support workers, Mr Xuereb stressed that COLA should only serve as “one such tool in Government’s toolbox to provide real and concrete support” to the country’s workforce.
“Overall, I believe that our businesses need to become more efficient in conducting their operations to ensure that any funds which are being underutilised are put to better use, so that as much of the decrease from the bottom line is mitigated before even discussing the passing over of such costs to the end client, as this will only further stress the bringing in of business,” Mr Xuereb remarked.
Turning to whether the measure proposed by the MEA will be enough to mitigate COLA’s impact on employers, he emphasised that any form of help “would be welcomed”.
Should €3 of the €13 be catered for through tax deductions, COLA will still have a “significant impact” equivalent to that of last year, Mr Xuereb said, adding that this is “possibly more than some businesses can carry on their own”.
“Ultimately, I believe that getting employers to pay for the rising cost of living is not a healthy strategy for the country as this will only in turn contribute to further increased costs of goods and services across the board, thereby increasing inflation further,” he stated.
Mr Xuereb concluded by saying that he believes Government “can do more” by looking at more “diverse” ways of tackling inflation, which would lead to less pressure on companies and employers.
Vassallo Group Chief People Officer Lee Xuereb / Vassallo Group / Facebook
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