‘Minimum wage needs urgent revision’

Issues of labour laws in Malawi have been at the fore in 2012, particularly after the devaluation of the kwacha in April. Most employees went on strike demanding pay hike, and somewhere along the line, there was a misunderstanding between employees and employers on the basic wage. Albert Sharra speaks to legal practitioner and labour law consultant Allan Hans Muhome to give an insight into the basic wage.

Q.As a labour law expert, what is your take on the current minimum wage for a general labour employee?

A:The current minimum wage of K317 per day was promulgated by the Minister of Labour on May 24 2012. This was after the devaluation of the kwacha by about 50 percent. However, one must note that the minimum wage had been at K178.25 before that. The increase, in any case, did not match the effects that the kwacha devaluation had on workers. Indeed, the inflation rate was much lower then and now we are talking of an inflation rate of above 30 percent. It is against this background that I strongly believe that the current minimum wage of K317 (which is less than a dollar) is far below the cost of living for the majority of the Malawi population. It needs urgent and realistic revision upwards.

A. A minimum wage is the lowest daily remuneration that employers may legally pay to workers. Equivalently, it is the lowest wage at which workers may sell their labour. Although minimum wage laws are in effect in many jurisdictions, differences of opinion exist about the benefits and drawbacks of a minimum wage.

Supporters of the minimum wage say it increases the standard of living of workers, reduces poverty and forces businesses to be more efficient. Opponents say if it is high enough to be effective, it increases unemployment, particularly among workers with very low productivity due to inexperience or handicap, thereby harming less skilled workers and possibly excluding some groups from the labour market; additionally it may be less effective and more damaging to businesses than other methods of reducing poverty

As in many other countries, minimum wage has played a crucial role in Malawi in determining salary and wages in workplaces. The minimum wage has been set for a number of reasons, but primarily to improve the living conditions of workers. The concept of minimum wage must, therefore, be seen as a social policy issue aimed at setting acceptable standards of pay as enshrined in the Malawi Constitution.

Under the Employment Act, the minister responsible for labour is given the discretion to fix the minimum wages of any group of wage earners in consultation with relevant workers’ and employers’ organisations. This is in partial fulfilment of the Constitutional right to fair remuneration and it becomes most relevant in situations where a group of unskilled workers are engaged in employment by an employer seeking cheap labour, for instance in tea and tobacco estates.

However, my own assessment is that the minimum wage has often been set at miserably low rates and so the nation fails to attend to the plight of vulnerable workers, especially those who are unskilled. The concept of minimum wage will thus remain unsatisfactory to employees unless government, worker’s and employer’s organisations put up a concerted fight for the right to fair remuneration for all workers.

Q. Some employees have complained of getting less than K8 000 as monthly salary. Why do you think this is happening?

A. It is a sad development that must be condemned in the strictest terms. Where the law has set a minimum wage, it is for all to comply. The courts have held that where an employer pays an employee wages which are below the prescribed minimum wage, the employer will be liable to make good the difference.

Further than that, contravention of minimum wages laws is a criminal offence punishable by a fine of K50 000 and imprisonment for 10 years. It is the duty of every citizen who is aware of such malpractices to bring them to the attention of law enforces, including the courts for appropriate remedies.

Q. Has government done enough in ensuring the welfare of employees, including a good minimum wage?

A. We know that government is doing everything possible to alleviate the suffering of workers. However, there is vast room for improvement. Apparently, government and the employer have an upper hand in the negotiation of minimum wages. The employee is left with not much choice but to accept proposals made by government and endorsed by the employer. In my opinion, organisations need to be more assertive about the employees’ right to fair remuneration, which is currently not the case.

That said, one must also appreciate that Malawi is a small economy. We need to produce more to export and we need foreign investment too. In setting the minimum wage, such issues do emerge. It is, for instance, not tenable to raise the wages to a point where the employer is having to retrench some workers due to rising human resource costs. Again, an investor is interested in investing in a country where labour costs are low in order to maximise profit.

In balancing these competing needs, there is need for compromise from government, the employer and the employee alike.

Q. If you are asked to advise all people responsible for the welfare of employees on earnings, what would be your message?

A. My advice is simple: Government must take a purposive approach in setting the minimum wage that lives up to the daily basic needs of our people. The employer must work out appropriate corporate strategies that assist in achieving profit without compromising the right of its workers to fair remuneration. And lastly, the employee must stand up and fight for his or her right to fair remuneration and not be allowed to be used as a mere tool for the capitalist.