Malta was the only EU country to experience a contraction in wages during the second half of 2018, figures out today show.

Eurostat, the EU statistical agency, said the nominal hourly labour cost in the fourth quarter in Malta dropped by half a percentage point when compared to the same quarter a year earlier.

Malta was the only country to experience a reduction, which followed another contraction of 0.7% in the third quarter.

While the figures would represent good news for industry, making it more competitive internationally, they are bad news for workers because it means wages have decreased.

The decrease was driven by a drop in the hourly labour cost of the business economy – private enterprise. The non-business economy experienced an increase in the hourly cost of 0.6%.

Eurostat said that while hourly labour costs in industry increased by 1%, costs were lower for the construction and services sectors.

This means that wage costs in the construction and services sector decreased by 1.8% and 1.7%, respectively.

While Eurostat does not indicate what has caused this cut in costs, it is plausible to conclude that an influx of foreign workers in the construction and services sectors employed on a minimum wage or just above it, has contributed to depressing salaries.

EU28 and eurozone

Eurostat said hourly labour costs for the fourth quarter of 2018 in the euro area rose by 1.9% in industry, by 2.4% in construction, by 2.5% in services and by 2.4% in the non-business economy.

In the EU28, labour costs per hour grew by 2.4% in industry, by 2.8% in construction and in services, and by 3.0% in the non-business economy.

The highest annual increases in hourly labour costs for the whole economy were registered in Romania (+13.1%), Latvia (+11.8%), Portugal (+10.3%), and Lithuania (+10.2%), while the only decrease was recorded in Malta (-0.5%).