Wages stagnate | The Times Group

Post was last updated: December 28, 2016

The gap between the cost of living and what people get at the end of the month is widening, not only in Malawi, but globally following findings by the International Labour Organisation (ILO) showing wage growth around the world has decelerated since 2012, falling from 2.5 percent to 1.7 percent in 2015, its lowest level in four years.

In its Global Wage Report 2016/2017, the ILO estimates that excluding China, where wage growth was faster than elsewhere, growth in global wages dropped from 1.6 percent to 0.9 percent.

The report shows that while in much of the period following the 2008/09 financial crisis, wage growth was propelled by relatively strong wage growth in developing countries and regions, more recently, however, this trend has slowed or reversed.

The report also notes vast wage inequalities becoming even steeper for women.

In Africa, the report estimates that wages declined to 2.0 percent in 2015.

But an expert says while the situation is manageable at international level, Malawi’s case is out of control.

Secretary General of the Communication Workers Union, Hamilton Deleza, said for the past four years, real wages in Malawi have continued to decline despite the nominal wage going up.

He said this has been the case because the face value of the kwacha has continued to decline such that any increase in has not been able to absorb the effects of the kwacha devaluation.

“Despite workers receiving wage increments over the period, the real value of their wages has spectacularly gone down in comperative terms,” he said.

A survey conducted by the Centre for Social Concern (CfSC) in 2014 found that an average worker receives K44,000 per month and CfSC says the figure has not significantly changed despite salary increments which have been effected since then.

CfSC reported a rise in national cost of living of 0.26 between the months of June and July. As it stands, a family of six living in Malawi’s major cities require about K166, 086 to meet basic needs in a month.

T he cost of living is likely to go further up with new changes to the Value Added Tax Act which has seen government extending taxes to basic commodities such as water, bread, soap and laundry soap.

Malawi is leading other 25 countries in the Common Market for Easter n and Southern Africa (Comesa) with the highest inflation reported at 22.8 percent as of October 2016.

Consumer rights activist, John Kapito, earlier said such reports are an indication that the Malawi economy is struggling and that the cost of living in Malawi is higher as compared to other Comesa member states.

Kapito worried that such figures paint a gloomy picture for the consumer as high inflation means disposable incomes are also being eroded.

“Under such circumstances, people will buy less and as a result industries will also shut down as they cannot produce at a profit,” he said.

Labour unions have been calling for a revision of the statutory minimum wage to assist workers, especially low income earners, finance basic needs as they are still bearing the brunt of the harsh economic environment.

Government, through the Ministry of Labour and Manpower Development, last approved a revision of the minimum wage in October 2015 and the rate is now at K687.70 per day from K551.

In an earlier interview, Deleza said as much as the process of reviewing the minimum wage involves various stakeholders, government needs to formulate a policy to ensure that Malawi’s minimum wage should be raised to a level that matches the cost of living in the country.

But employers speaking earlier through their umbrella body, Employers Consultative Association of Malawi (Ecam) said even though the minimum wage may be considered low by international standards, it is still realistic in the current economic environment.

Ecam Executive Director, Beyani Munthali, said the cost of doing business in Malawi remains high. He, however, said the Association encourages its members to go beyond the stipulated minimum wage to support government efforts of creating a decent work environment for all.

“We are committed to always find a balance between remaining sustainable in the long term while at the same time contributing to decent job creation,” he said.

Munthali said industry will continue to engage government to ensure that the minimum wage is enforced and that all employers comply with the standard.

‘We will continue to lobby government to ensure that there are enough resources to carry out inspections and we will ask government to alert us if any of our members is found to be in breach,” he said.

Experts have argued that Malawi’s low minimum wage and weak enforcements mechanism gives permission to employers to exploit employees with some even paying below the government minimum wage standard.

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