Titled the ‘Malta Economic Outlook,’ research by KPMG reveals that the average wage in 2023 was set at €1,530 monthly which translates to €18,359 per year.

This despite nominal wages climbing from an average of €18,967 in 2018 to €22,032 in 2023. Hence the resulting gap between the average real wage in 2023 and the average nominal wage during this same year, is more than €3,600, the report says.

In the aftermath of COVID-19, rising inflation has been a common theme across advanced economies, fueled by disrupted supply chains struggling to meet resurging demand.

However, recent data suggests a downward trend in inflation, projected to reach 2.7% in the Euro Area and 2.9% in 2024, as the ECB implements tighter monetary policies to counter escalating prices.

Despite these efforts, the increasing cost of living is expected to impact wages significantly unless nominal incomes see a corresponding boost.

The European Commission’s autumn forecast indicates a nominal wage growth of 1.5% in Malta during 2023, the lowest in the EU, while the HICP saw a notable jump of 5.7% during the same period, leading to a negative effect on purchasing power as price growth outpaces income growth.

This disparity is further highlighted by the EU Commission’s data, showing a decline of 1.4% in real compensation of employees per head in Malta during 2023, significantly lower than the Euro Area and EU averages.

Over time, the discrepancy between nominal and real wages has widened, particularly in the post-pandemic inflationary period, resulting in workers experiencing a decrease in purchasing power despite nominal wage increases.

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