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27 November 2010
The living wage – some reflections

There has been a substantial reaction from all social partners on the Labour leader’s recent proposal for a Living Wage to be implemented in Malta. This concept differs substantially from the minimum wage although both cases (a rise in the minimum wage and the Living wage) have met with resistance from employers and employer organizations.

The Living wage is a term used to describe the minimum hourly wage necessary for an individual to meet basic needs, including shelter (housing) and other incidentals such as clothing and nutrition, for an extended period of time or a lifetime. In developed countries such as the United Kingdom  or Switzerland, this standard generally means that a person working forty hours a week, with no additional income, should be able to afford a specified quality or quantity of housing, food, utilities, transport, health care, and recreation.

This concept differs from the minimum wage in that the latter is set by law and may fail to meet the requirements of a living wage. It differs somewhat from basic needs in that the basic needs model usually measures a minimum level of consumption, without regard for the source of the income. A related concept is that of a family wage – one sufficient to not only live on oneself, but also to raise a family, though these notions may be conflated.

The living wage is calculated on the necessities of the employee to enjoy a basic standard of living. A study by Caritas earlier this year found that a weekly wage considered sufficient for a basic standard of living for a family of four was €314. In contrast, the minimum wage is €152.

However with the spiralling cost of living, it has become clear that the minimum wage at its present level is far removed from what is really required to maintain a decent standard of living. Dr Joseph Muscat’s suggestion is timely as it creates a debate where the real difficulties of the Maltese family are put into stark contrast with those who are resisting this call for change. After all a few cents or at the most of a couple of Euros per hour would not make much difference to huge companies but it will mean that those on the lower rungs of society will be able to enjoy a decent life.

The living wage concept is actually already functioning in London, introduced by former socialist mayor Ken Livingstone. His successor, the Conservative maverick Boris Johnson has not only endorsed this policy – he actually raised the capital’s living wage by 15p to £7.60 per hour, applying it to all staff of the Greater London Authority and “all new contracts for staff working on our sites, such as caterers, security guards and cleaners where allowed”. While the London council has no way of imposing the living wage except for offering its own employees, living wage employers in the British capital include HSBC Bank, PricewaterhouseCoopers, London’s underground subway system, four East London Health Trusts, and the London School of Economics.

So far trade unions, even those not traditionally associated with the Labour Party, have warmed to Muscat’s concept. The Forum of Maltese Trade Unions, chaired by John Bencini, augured that the living wage is discussed in Parliament, as well as among the social partners.

To conclude, a balance must be found in protecting those companies who cannot afford to pay higher wages than the minimum wage and the basic standard of income required by a person. It is a matter of debate whether it will be government or private institutions who will have to fork out the difference.


Dr Etienne Grech is a family doctor and a labour party candidate

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