Stakeholders in the labour market have proposed the development of a comprehensive minimum wage structure that resonates with the sectoral and economic environment of employers.
The proposal comes two weeks after Minister of Labour Peter Dimba increased the minimum wage by 40 percent with the general minimum wage increasing from K90 000 to K126 000 per month while the rate for domestic workers has gone up from K52 000 to K72 800 per month and that of the micro-enterprises has increased from K75 000 to K105 000 per month.
Writing on his Facebook page, Grant Thornton Malawi chief executive officer Hastings Bofomo Nyirenda said a fair minimum wage structure should consider sectoral economic variations as well as the location, especially for domestic workers.
He said: “Minimum wage should be by sectors of the economy. Certain sectors are more profitable than others.
“Those segments that are more profitable should have higher minimum wages in line with their profitability. For example, oil and gas, financial services, agriculture, manufacturing and mining, among others, should have different levels of minimum wage.”
In addition, Nyirenda, whose firm provides audit, tax and advisory services, said the segmented sectors should also take into account the size of the entity in categories such as large companies, individuals or small and medium enterprises.
He said: “A domestic worker in Namiwawa [residential area in Blantyre] cannot have the same minimum wage as the domestic worker in Ndirande Township.
“A wholesale one-size-fits-all on the minimum wages has the implications of increasing unemployment. Certain areas may not afford these minimum wages because the employers are probably also on minimum wage.”
Commenting on Nyirenda’s proposal, Employers Consultative Association of Malawi executive director George Khaki described the plan as progressive, saying previously, the employers suggested the idea to have a comprehensive minimum wage structure.
“The Ministry of Labour has started doing something. We have seen, for example, the introduction of minimum wage for shop workers, but we think a comprehensive approach is needed to provide a clear framework,” he said.
Centre for Social Concern (CfSC) economic governance officer Agnes Nyirongo said if policymakers fail to act decisively, the nation risks great inequality, labour unrest, failing productivity and a deepening cycle of poverty even among formally employed citizens.
She said: “The wage policy in Malawi has too often been dictated by government budget constraints rather than by the live experiences of workers.
“A new approach that brings together government, employers, trade unions and civil society, is urgently needed to ensure the decisions are fair, transparent and grounded in economic realities.”
Nyirongo further said true economic justice will only come when wages reflect the real cost of living.
Ministry of Labour Principal Secretary Chikondano Musa said in an interview on Sunday that they are gradually implementing the minimum wage structure while cautiously consolidating all stakeholder feedback and commissioning further studies.
She said following a resolution of the Tripartite Labour Advisory Council, the Ministry of Labour is gradually adopting a sectoral minimum wage system.
“There is a general minimum wage, minimum wage for domestic workers, minimum wage for truck drivers and minimum wage for shop attendants. The sectors were agreed upon by the social partners, having recognised that it was appropriate to designate minimum wages for these sectors,” said Mussa.
A recent survey by CfSC showed that pressure on the cost of living has eased, increasing by 2.6 percent to K503 876 for a family of six in March due to maize price drop.
