Experts back minimum wage hike proposal

Economists and labour experts have backed a Centre for Social Concern (CfSC) proposal to increase the minimum wage from K50 000 to K100 000 to cushion low-income earners from rising cost of living.

Speaking in separate interviews yesterday, representatives of the Economics Association of Malawi (Ecama), Malawi Congress of Trade Unions (MCTU) and the Employers Consultative Association of Malawi (Ecam) cited the rise in inflation rate, which has pushed the cost of basic commodities up, as the justification.

Ecama executive director Frank Chikuta said even though the employers are also feeling the pinch, the upward adjustment of the minimum wage is long overdue considering that the purchasing power has been eroded by inflation which stands at 25 percent.

He said: “The impact will be there, but in nominal terms, the impact will be absorbed by the increase in revenue following the rise in the cost of their goods and services.

“It is in the interest of the employer, government and all stakeholders to make sure that the bare minimum is enough for their employees’ survival.”

However, Chikuta said other options need to be weighed in raising the minimum wage considering some businesses might suffer as consumers may not afford the products due to increase in prices.

On his part, MCTU president Charles Kumchenga said they expect employers to decide on how they intend to meet the needs of their employees.

“We are already discussing with relevant stakeholders and we are planning a Tripartite Labour Advisory Council Meeting where MCTU, government and Employers Consultative Association of Malawi are expected to reach a consensus,” he said.

But Ecam executive director George Khaki, while acknowledging the need to adjust the minimum wage, said such decisions are subject to negotiations.

He said: “An adjustment to the minimum wage requires a process of negotiation and discussion among all stakeholders involved. There is a need to consider the employer’s economic stand to avoid other negative outcomes.”

CfSC economic governance programme officer Bernard Mphepo said going by its  August Basic Needs Basket, Malawians are struggling to access basic food and non food items as prices keep soaring; hence, the need to revise the minimum wage.

“When the minimum wage was moved from K35 000 to K50 000, the cost of living was at K164 000 but in our August findings, a family of six now needs K307 000 a month. If you compare the cost of living then and now, you will see that the gap is so wide.” he said.

Ministry of Labour spokesperson Christina Mkutumula yesterday said the labour rights groups are entitled to voice out their views as part of their advocacy.

“You may wish to know that the setting of the minimum wage follows the procedure laid out in the law [the Employment Act]. The procedure involves, among others, consultations with the social partners, namely MCTU, representing workers and Ecam, representing employers,” she said.

However, labour expert Hamilton Deleza cautioned that while it is good to adjust upwards the minimum wage, it might not be the best for the economy as it may trigger soaring inflation.

He suggested an immediate change to the implementation of minimum wage so that it is pegged according to sector.

“There has to be another way round, for instance, a minimum wage for telecom industry, domestic workers, manufacturing industry, therefore, the implication on the economy can be absorbed through the approach, but if we say K100 000 for everyone, not all the sectors can manage that amount,” Deleza said.

A recent  data compiled by the Consumers Association of Malawi shows that prices of basic commodities like sugar, bread, cooking oil, flour and vegetables have risen by an average of K200 and K500 due to fuel scarcity.