Malawi Govt, MCTU fight over minimum wages

While the elephants try to outwit one another in this power play over raising the minimum wage, the proverbial grass in the shape of John Mwenye continues to wait and suffer.

Government, the Malawi Congress of Trade Unions (MCTU) and Employers Consultative Association of Malawi (Ecam) have for months failed to agree on how much the minimum wage should rise from the current K317 (about $0.79) per day.

The devil is in the detail, but at the core of the negotiations is the delicate balance between the need for pay progression against the employers’ ability to absorb the higher minimum wage and its attendant costs such as reciprocal jumps in payroll taxes, workers’ compensations as well as employer pension contributions.

While MCTU is pegging the minimum wage at K551—which represents a 74 percent rise—government is entrenched in its position that the figure should rest at K441 (about $1.10), representing a 39 percent adjustment.

Based on MCTU’s proposal, the lowest earning workers would take home is K16 530 (about $41) a month, a jump from the current K9 510.

On the other hand, government’s proposal would take the figure to K13 230 (about $33).

Poor take home pay

It is a fight Mwenye is watching with both apprehension and hope. Doom awaits him if the stalled negotiations between the three players do not bring him and many others in his situation good tidings.

A guard working in Blantyre, Mwenye earns about K10 000 (about $25) a month, which translates to K333 (about $0.83) per day.

He and his family of six live a day at a time.

“I walk every day from Mbayani to Blantyre city centre where I work. I usually do not take breakfast because I have to report at work as early as six o’clock every morning.

“We are surviving on katapila [usury],” he said.

Figures on survival in Malawi make for grim reading. The latest Centre for Social Concern (CfSC) Basic Needs Basket for a family of six in Blantyre stands at K108 000 (about $270) a month, while in Lilongwe it is K112 728 (about $281).

For Zomba, a family of six needs K96 903 (about $242) to live a basic life while for Mzuzu K97 837 (about $244) would do.

What this means is that even after the elephants stop fighting and settle for K551 per day, Mwenye will still be well below the income that would earn him dignified basic living.

MCTU president Chaukuka Muwake blamed government for the delays in resolving the issue.

“The Minister [of Labour] has all the powers to make a determination. Discussions have stalled. There will be a general council meeting on October 2 2013 and whatever we agree at the meeting, that is what we will take to government,” he said.

Industrial action

Muwake said industrial action is one option on the table should government continue to drag its feet on the issue.

Muwake said MCTU believes that a family of five would need a minimum of K60 000 (about $150) a month to live a basic life.

He said the proposal was based on the needs of the lowest earners such as workers in tea plantations and tobacco farms.

But Minister of Labour Eunice Makangala is hopeful that government would soon announce new minimum wages that would put a smile on the face of workers.

However, Makangala refused to reveal the figure, saying doing so would be unethical.

“We have a figure in mind that will make everybody happy.

“We do not want to be in a situation where we increase the minimum wage and companies cannot afford to pay the workers. Our wage benchmark is based on what small companies can afford to avoid retrenchments,” she said.

Chancellor College economist Ben Kalua warned government yesterday against overzealous increases in minimum wage at the moment, saying it could hurt the local labour market.

“A fairly good wage is good for the employer and an incentive to the employee. It should not be overzealously too high and employees must be fairly satisfied at work place,” he said.

Minimum wage

Ecam executive director Beyani Munthali called for caution in determining the minimum wage to avoid hurting companies.

“If their [government and MCTU] proposals are not in line with what employers can afford, then as social partners, we will not do justice to the government’s efforts of creating jobs and allowing the private sector to be the engine of such job growth or if their proposals are business environment-friendly then more Malawians benefit from a decent minimum wage and the economy benefits as more people are employed, a move that can stimulate this economy,” said Munthali.

The minimum wage is always a delicate balance given that if the rate is set too high, it could affect the employment prospects of both existing and potential workers, especially in a country such as Malawi where the business environment has been harsh in recent years.

For example, at the moment, businesses are still adjusting to the multiple shocks that the Joyce Banda administration injected aimed at realigning the economy through austerity budgets, devaluation and floatation of the kwacha, re-introduction of the automatic pricing mechanism on fuel, higher interest rates as well as deregulation of water and electricity tariffs that have pushed utility costs higher—all of which have raised the cost of doing business in the country.

Over the past 16 months, a number of companies have sharply down-sized, leading to retrenchments because low business volumes could not sustain current workforce.

On the other hand, high cost of living resulting from the same reforms their employers are reeling from have also made workers’ lives unbearable, necessitating minimum wage jump demands that also tend to force companies to increase salaries of those earning above the minimum wage as well to balance pay scales.