Economic Environment threatens firms, jobs

 The rising cost of doing business worsened by the scarcity of forex and fuels, rising inflation, scarcity of fuel and inadequate power supply is psoign a threat to jobs, Employers Consultative Association of Malawi (Ecam) has said.

The employer’s umbrella body, an umbrella body for employers, has indicated that companies are continuously reducing their workforce as the current economic environment is affecting employers in many ways.

In an interview yesterday, Ecam executive director George Khaki said people are losing jobs as employers are struggling to balance between the rising cost of production and their workforce.

He said: “We have not done any quantitative analysis on the exact number of job losses, but thus far several companies big and small have reached out to us indicating they are retrenching staff in view of the current environment.

“This is mainly on account of the absence of electricity and fuel which have greatly affected productivity. Over and above, the rising inflation has necessitated a rise in costs of production and affected people’s buying in the end companies are not performing to their capacity.”

Khaki also bemoaned the shortage of foreign exchange in the country saying this is affecting imports of raw materials and goods.

“The industry is unable to produce goods optimally nor is it able to supply goods that are not produced in the country. Profitability and sustainability of our companies are also affected,” he said.

Khaki has since advised government to consider reducing expenditure and borrowing saying these are some contributing factors to the tough economic environment.

Meanwhile, Malawi Congress of Trade Union (MCTU) general secretary Madalitso Njolomole said it would not be surprising to see some changes in the world of work, calling on government to act quickly to protect the welfare of Malawians.

“We can all see that the economy is not performing well and this is beyond the control of employers.

“Our humble plea to government is to quickly work on modalities and put deliberate measures to put the economy back in shape as well as cushion workers from income and employment losses during these tough times,” he said.

Economics Association of Malawi (Ecama) executive director Frank Chikuta is also on record as having said that the economy is sailing through turbulent waters, highlighting that it is becoming tough for businesses to operate.

Presently, inflation, the rate of increase in prices over a given period of time, has been on the rise largely due to increase in food and non-food items.

For instance, it has soared to 25.9 percent as of September, according to the National Statistical Office figures.

On the other hand, the kwacha, which is currently trading at K1 036 to a dollar and was weakened by 25 percent against the dollar in May this year, has been swimming in troubled waters.

Foreign exchange have on the other hand continued to remain a challenge with gross official forex reserves under the direct control of the Reserve Bank of Malawi declining by 8.71 percent to $326.06million which is an equivalent of 1.30 months of import cover as at October from of $357.18 million which is an equivalent of 1.43 months of import cover in September.

Minister of Information and Digitisation Gospel Kazako is, however, on record as having said government has a plan to resolve the challenges and that it was unfortunate that some people do not seem to understand the gravity of the issues facing the country.

In June this year, Crown Fashions Limited, one of Malawi’s oldest garments manufacturing firms, temporarily shut down its operations affecting directly and indirectly at least 520 employees of the company losing their jobs in the process.

The company’s group chief executive officer Vijay Kumar linked the development to the current economic environment but hoped to reopen the company when the economy starts to perform well