Nampak Malawi, the country’s largest diversified packaging manufacturer, has retrenched more than half of its workforce, citing turbulent economic environment and shrinking market.
The move by the company could be a microcosm of a troubled economy characterised by high interest rates, diminishing purchasing power and the effects of prolonged power cuts.
An official from Nampak, who spoke on strict condition of anonymity because he does not speak for the company, yesterday confirmed that 56 out of its 106 workforce have been released, a decision arrived after a year of negotiations and notifying the Ministry of Labour, Youth, Sports and Manpower Development.
He said: “Operations are not what they were before, several issues are coming into play, but to a larger extent it is a shrinking market which does not require everybody else to be there because what the company is getting in is much less than what it is getting out. The company could not maintain the workforce of over a 100 while making losses.
“The company has been affected by so many elements making the business unsustainable. There is competition, electricity [cuts] and all those economic issues as well as several other people along the value chain. As a result, the company has scaled down production of all packaging materials. So, the downsizing is to try to keep business alive instead of shutting down completely.”
The official was downbeat on the company’s future prospects, saying it may take time before it returns to profitability.
The development is coming at a time 36 private firms have written Ministry of Labour on their intentions to lay off employees.
Over the years, the number of employees being laid-off has been increasing with 1 500 workers losing their jobs between June 2015 and 2016, while 3 000 faced lay-offs in 2016/17, according to the Ministry of Labour.
Companies that have already notified government include those in manufacturing, banking and finance, agriculture, energy and mining and import and export, according to the ministry.
In an interview yesterday, University of Malawi’s Chancellor College economics professor Ben Kaluwa said as a major supplier of packaging materials, the situation at Nampak indicates the slowing down of businesses in the country, a situation which points to a harsh operating environment.
“What we are seeing here is reduced demand for firms that get its supplies from Nampak which has also affected the company’s operations. It is a long value chain that has been affected, starting from individuals who have lost their jobs to companies that are faced with slowed businesses,” he said.
In an earlier interview, Ministry of Labour spokesperson Christina Mtukumula said the figure of companies applying to downsize could be more than the 36 as there are some companies that retrench employees without notifying the ministry.
Malawi Economic Justice Network (Mejn) executive director Dalitso Kubalasa is on record as having said the fact that more companies are downsizing shows the country is going through economic hardships.
But Finance, Economic Planning and Development Minister Goodall Gondwe earlier said government would apply measures to minimise lay-offs by private companies, but he did not elaborate. n