The calculation of a national living wage as a decent wage floor : thoughts and alternative policies applied to the Maltese scenario

Abstract

The exchange of wages for work is at the crux of the study of labour economics. Many protagonists on local and international levels have proclaimed the need for a fair pay for a decent living, which initiated the lobbying for the concept of a living wage. Currently, within the local context, one still finds a situation of in-work poverty and exploitation. It was only in 2017, that the statutory minimum wage was increased after being stagnant for too long, currently standing at around €761.97/month (Eurofound Industrial Relations Minimum wages in 2019: Annual review). With this being said some workers still strive to sustain their families. This research thus is aimed to shed light on the concepts and differing perceptions revolving around the idea of a living wage. The study provides a true calculation of a suitable living wage for Malta, utilising actual weighted expenditures, reflecting local consumption trends, along with feedback on the subject from the local labour market stakeholders, directly involved in this measure’s implementation. A set of alternatives and methods for financing the living wage will also be discussed. However, everyone’s commitment is essential to reach a balance between the potential fiscal, economic and psychological benefits and additional labour costs of implementing such a measure. Based on the author’s calculations, a living wage rate of €7 per hour is essential to lead an adequate lifestyle and combat local poverty in relative terms. This wage floor rate reflects the standard of living Maltese people lead.