Please use this identifier to cite or link to this item: https://www.um.edu.mt/library/oar/handle/123456789/83116
Title: Incomes policy and real wage changes in Malta
Authors: Caruana, Michael (1994)
Keywords: Wage-price policy -- Malta
Wages -- Malta
Income -- Malta
Issue Date: 1994
Citation: Caruana, M. (1994). Incomes policy and real wage changes in Malta (Bachelor's dissertation).
Abstract: A common feature of the Maltese economy in the last decade has been the experience of a moderate and sustained rate of increase in overall price and wage levels. This widespread and persistent phenomenon has been labelled in economic terms "wage inflation". To a certain extent wage inflation, and successive government attempts to deal with it, also dominated politics during the decade. In a broad sense, ever since the introduction of a national minimum wage in 1973, Malta has always had a sort of incomes policy. The most severe and controversial form has been the price-cum-wage freeze 1983-87. In 1990, the government and the representatives of trade unions and employers reached an agreement, binding for three years, on industrial relations and incomes policy. The scope of this study is to examine the impact of incomes policy in Malta since 1983 and the immediate effect on real wages. This dissertation is divided into four sections. Section 1 highlights the types and goals which characterise an incomes policy. Also the relation between the rise in money wages and the level of unemployment have been dealt with in a critical analysis of the theory of the "Phillips curve" presented in this section. This section examines whether unions are in a position to exert any influence on both money wages and real wages. Furthermore, this section deals with the revival of interest of another sort of incomes policy in the idea of "index-linking". It is generally agreed among economists that Indexation strikes a balance between the advantages of long term wage contracts and the interests of workers and firms in not having real wages get too far out of line. Hence, cost of living adjustment provisions link increases in money wages to increases in the price level. Section 2 surveys the existing econometric literature on the effects of incomes policy on the rate of wage changes and on prices. This review will be limited to empirical work. Section 3 provides a general view at the recent history of wages in Malta and an insight into the wa0e determining process in Malta since 1983. This also includes a two-equation model of wage and price inflation which is estimated using annual data for the period 1970-1992. The simulation which is presented also in this section analyses the immediate effect on real wages of a one unit change in the value of the exogenous variables specified in the price-wage model for the Maltese economy. Finally section 4 delves into the future prospects of incomes policy in Malta.
Description: B.A.(HONS)ECONOMICS
URI: https://www.um.edu.mt/library/oar/handle/123456789/83116
Appears in Collections:Dissertations - FacEma - 1959-2008
Dissertations - FacEMAEco - 1971-2010

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