Ensuring a guaranteed basic income

The need for a decent basic income is an all-time issue among those who have a social conscience. However, it assumes more importance in times like these, when prices of essential goods are spiralling upwards, almost out of control.

The perennial question is whether the income received by each person through employment (or a pension) should be sufficient or else whether such income derived from employment or a pension should be supplemented through a social wage, when, on its own, it is insufficient for ensuring a decent living.

Various jurisdictions are experimenting with this idea through pilot projects. As a result, they are seeking to reinforce a social net, protecting the vulnerable through ensuring that each is guaranteed a basic income irrespective of his or her circumstances in life. Each person has the right to have the basic means to ensure a decent life.

The basic facts should, by now, be clear to all.

The three Caritas studies published to date have revealed a widening gap between the official minimum wage and three different categories of vulnerable households.

In the case of a household consisting of 2 adults and 2 children this gap is approximately 40 per cent, at 2020 prices. In fairness it has to be clarified that this gap does not include the receipt of social solidarity income, amongst which children allowances and the various forms of supplementary social income which may be applicable to specific circumstances. When this is taken into account, I believe that in most cases the gap is substantially reduced.

The current price rise of essential goods, average close to a 25 per cent rise in a number of cases, (although a number of items have had much steeper price increases) brings to the fore another worry. Cost of living adjustments to wages and pensions are effective at the beginning of the year, and reflect the cost of living of the previous twelve months.

The last statutory cost of living increase has been of €1.75 per week, less than the cost of a cappuccino. During the past years such increases have varied from a €5.82 per week increase in 2010 to a €0.58 per week increase in 2015.

At times this increase is deemed to be too low as was the 2015 COLA adjustment.

It is essential that the basket of goods and services utilised to measure the actual cost of living is updated on a regular basis in order to ensure that the results obtained are realistic and reflect actual needs.

Finance Minister Clyde Caruana has over the past weeks emphasised that he is considering proposals to introduce a new form of COLA for low-income people. So far, however, nothing has materialised. The Minister has hinted that he is discussing various proposals behind closed doors. Would it not be a much better idea if the discussion is externalised? Everyone of us is interested in the proposals being drafted and discussed.

One possibility which should be considered is not to keep accumulating the cost-of-living dues and carry out adjustments to the minimum wage (and pensions) on the following January. It should be possible to carry out cost of living adjustments to the minimum wage as well as to pensions twice a year, towards the end of June and towards the end of December.  In times of steep price increases, as the present, such an initiative could make a substantial difference to the vulnerable and those on low income.

Ensuring that each has a basic decent income is a basic requirement in the development of the welfare state.

published Malta Independent on Sunday : 30 January 2022

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