2023/24 Budget under threat

 With the wage bill growing at an average of 50 percent yearly, prospects of salary adjustment, promotions and recruitments in the civil service threaten implementation of the 2023/24 National Budget.

At a national budget consultation meeting in Blantyre, Finance Minister Sosten Gwengwe said 97 percent of the budget goes to wages, pensions and public debt while three percent goes to agriculture and health sectors.

Economic commentators have since warned that if the public sector wage bill is left uncontrolled, government will be forced to borrow more thus negatively impacting on the next financial blueprint and the economy.

Malawi’s public sector wage bill is at K670.8 billion, representing 23.52 percent of the revised K2.85 trillion National Budget and 5.9 percent of the gross domestic product.

The current wage bill represents a 53 percent increase from the 2020/21 financial year when it stood at K436 billion.

In the 2019/20 financial year the public sector wage bill was K525.3 billion, an upward adjustment from K443.4billion in the 2018/19 financial year.

Currently, civil servants are pushing for a 35 percent salary increment and review of their benefits and conditions of service amid a rising cost of living.

Nurses, on the other hand, are also pushing for recruitment of over 3 000 health care workers amid the cholera outbreak while a 51 percent vacancy rate in the health sector needs attention.

But economic commentators in separate interviews last week warned that if left uncontrolled the wage bill would hit close to K1 trillion; hence, asked the Treasury to strike a balance between meeting civil servants demands amid the tough economic environment.

Malawi Institute of Journalism economics lecturer Murry Siyasiya said the salary adjustment demands and recruitments in the public sector are valid.

He said salary increments are needed to keep up with inflationary pressures while an additional workforce is necessary to meet the demand for essential services.

However, Siyasiya said it is important to recognise that implementing these changes would place a burden on taxpayers, many of whom are already struggling with high levels of inflation.

He said: “Public sector employees should consider the impact on taxpayers who ultimately bear the financial burden of these changes when determining the justification for proposed adjustments.

“Additionally, it is important to acknowledge inefficiencies in service delivery within the public sector and the need for improvements in this regard.”

In December 2022 government said it would rationalise the public sector wage bill through a hiring freeze except for frontline service delivery staff in health and education.

This was communicated in a memorandum of economic and fiscal policies between the Malawi Government and the International Monetary Fund (IMF).

Economist Milward Tobias said in a separate interview that while the civil servants are justified in their demands, on the part of government, he stressed it is not a matter of having a balance on the wage bill.

He said: “The whole essence of government is to serve people and there is no debate about this. The question we should respond to is what needs to be done to sustain the wage bill.

“To sustain the wage bill there is a need to address wastage. An audit that took place some time back revealed that 30 percent of the money in the national budget is lost through corruption. So, let’s deal with this wastage first if we are to sustain the wage bill.”

Tobias was referring to a 2012 report by the Malawi Economic Justice Network that said 30 percent of the resource envelope is lost to corruption which has been retrogressive towards the country’s financial blueprints.

The economist, who runs the Centre for Research and Consultancy, said the system, therefore, needs thorough cleaning by reviewing the

 remuneration of senior officers who get hefty amounts in various benefits that apparently balloons the wage bill unnecessarily.

He said through such a clean-up, government will be able to meet the demands of civil servants who receive less while maintaining the public sector wage bill.

Tobias further said it is sad that there is a huge salary gap in the civil service which needs to be addressed to ensure that in the long-term, all public officers get good pay as the wage bill is maintained.

When asked on how government will balance the civil servants’ demands and maintain a probable spilling wage bill, Minister of Finance Sosten Gwengwe said they will give negotiation a chance.

The minister declined to comment further on the matter.

During the 2023/24 Pre-Budget Consultation Meeting in Blantyre on Monday, Gwengwe is on record as having said government borrowed over K800 billion as there was no money to fund some sectors.

Malawi has a long-term arrangement with the International Monetary Fund on macroeconomic policies which includes wage bill policing that enforces recruitment freeze.

CSTU general secretary Madalitso Njolomole last week justified their demands, saying the current economic turmoil has affected the civil servants many of whom get less pay.

A joint IMF and World Bank analysis on debt sustainability cautioned government on the wage bill increase and recommended that Malawi Government freeze recruitment and promotions in the public sector