In response to yesterday’s Statistical Service report on December’s inflation, the Ministry of Finance has issued a circular revealing the adjusted rates for salaries and state pensions due to the cost-of-living allowance (CoLA) from January 1.
The set increase is pegged at 2.44%.
As outlined in the Ministry’s circular, the average Consumer Price Index for 2023, excluding the impact of increased consumption taxes, has surged to 111.38 units compared to the previous year’s 107.45 units (with the base year set at 2015), signifying a notable uptick of 3.66%.
The document elaborates on the agreement made last May, ensuring a 66.7% disbursement of the previous year’s index increase for calculating CoLA.
This assumes a positive growth rate in the second and third quarters of the reference year, resulting in a 2.44% increase in the cost-of-living allowance from January 1, 2024, over twelve months, raising it from 344.45% to 355.29% of basic wages.
This 2.44% increment will also extend to state pensions, mirroring the same rate for those in the private sector benefiting from CoLA.
According to figures released by the Ministry of Labour post last May’s transitional agreement, where CoLA yield increased to 66.7% of the Consumer Price Index, up from the previous 50%, a total of 180,000 workers are receiving the cost-of-living allowance, with 100,000 situated in the private sector.
The impact is particularly notable for employees under sectoral and operational contracts, including those in construction, the hotel industry, banking, and various other roles where wages are adjusted due to CoLA as a countermeasure to inflation.
Without a renewal of the transitional agreement reached after pre-election strikes, which elevated CoLA to 66.7% of the Consumer Price Index increase, the increase due to CoLA would have been limited to 1.83%.
It is noteworthy that immediately following yesterday’s Ministry of Finance circular, employers’ organisations KEVE and OEB have communicated the 2.44% increase in total/basic wages from January 1st to their members who grant CoLA.
Furthermore, the new transitional agreement for CoLA is effective until June 2025, indicating an ongoing dialogue between social partners for a resolution.
CoLA is an increase made to wages to counteract the effects of rising prices in the economy, caused by inflation.
CoLA typically equals the percentage increase in the Consumer Price Index for a specific period. The Consumer Price Index represents the average prices of a basket of goods and measures inflation.
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