Govt tipped onsalary increments
Malawi Governmenr has been advised to restructure the public sector to create avenues for employers to raise salaries without triggering inflation and raising the cost of production for local businesses.
Economists and employers expressed the views inan interviews following a warning from Reserve Bank of Malawi (RBM) Governor Wilson Banda that raising salaries would trigger inflation and a subsequent decision by the Treasury Department in the Ministry of Finance and Economic Affairs to cap salaries for employees working for State-owned enterprises (SOEs) by 10 percent that employee rights groups say is “unacceptable”.
Economist researcher and consultant Exley Silumbu said the central bank proposed to limit the increments because it is trying to use monetary policy to control aggregate demand and maintain price stability.
He said in a telephone interview: “The central bank was expressing concern that wanton upward wage adjustments would lead to entrenched wage-price spiral or spark upward cost-push inflation which may undermine the effectiveness of monetary policy instruments to restrain aggregate demand and thereby frustrating the achievement of the primary objective of price stability.”
On what the recommended threshold for an adjustment would be, Employers Consultative Association of Malawi executive director George Khaki said employers can raise salaries without triggering a wage-price spiral as long as they keep the increments below the inflation rate.
He said: “The adjustments should not be above the inflation rate. The 10 percent and 15 percent adjustments [proposed by the government and some private sector] would be reasonable.
“But it is important to note that the salary increments have been cumulative. People should also consider that employers effected increments before at the beginning of this financial year.”
On his part, human rights and labour activist Robert Mkwezalamba said the government, through the Ministry of Finance, and Economic Affairs can trim the number of civil servants by cutting off unnecessary workers and using the saved wages to increase the salaries of the workers that remain.
Malawi Congress of Trade Unions is expected to meet representatives of the Government Negotiating Team to discuss revisions to the minimum wage bill and salary increments. The group, which represents more than 150 000 employees in Malawi, asked the government to raise the minimum wage and salaries by by 44 percent.
