Centre for Social Concern (CFSC) has said low income earners in the country are facing huge challenges to earn a decent living despite government efforts to narrow cost of living and earning gap by the revising the minimum wage and tax-free band.
Minister of Finance, Economic Planning and Development Joseph Mwanamvekha announced in Parliament last month a revision of minimum wage from K25 000 to K35 000 and free tax band from K35 000 to K45 000 in this financial year.
But in a statement issued this week, CfSC economic governance programme officer Bernard Mphepo said the new minimum wage and the tax free band is still low, highlighting that monthly Basic Needs Basket (BNB) research findings reveal that the level of income for many Malawians fall below half of their requirements.
“This reality is not necessarily due to performance of our economy, but total negligence of the reality on ground. The question to all Malawians is what can be done to change the situation?
“The monthly Urban Basic Needs Basket [UBNB] carried out by the CfSC in the month of September reveals that the cost of living is over K200 000. The food poverty line was above K120 000 which represents 60 percent of the total cost,” he said.
According to Mphepo the rising cost of food items such as maize and vegetables are contributing to increased cost of living.
“Food is basic need that one cannot do without. The fact that the cost of living is significantly influenced by the cost of food shows how agro based policies should be taken seriously in implementation of the budget to protect the welfare of Malawians,” he said.
He said lack of adequate income leads to poor nutrition status; hence, the denial of a good psychological environment at home to support family needs highlighting that adequate nutrition is essential for one’s physical and intellectual development and work productivity and is, therefore, an integral element for socioeconomic development.
In an interview tax expert Misheck Msiska, who is partner at audit and tax advisory firm EY, explained that government could do more to balance the gap between cost of living and earnings.
“The revision in tax free band and minimum wage is a good step but not enough to reflect on the economic realities facing the lowly paid employee. At least K100 000 would have been a better threshold for the tax free band,” he said.
Malawi’s headline inflation has in recent three months been on the rise, until last month when it slowed to 9.2 percent, as price for maize, Malawi’s staple food has been escalating in the past months.