Findings of a new labour report show that Malawi’s economy is depending more on the informal sector, which employs over 90 percent of the working population, a situation analysts say is affecting revenue generation and derails development.
The Malawi Labour Force Survey 2024 produced by the National Statistical Office indicates that the country’s labour force is estimated at 5.3 million with 91.5 percent or 3.9 million employed in the informal sector while 364 017 or 8.5 percent are in the formal sector.
The data further shows that out of the said labour force employed population is 4.2 million, meaning that the economy is failing to create jobs to fill the existing gap in the labour force.
Reads part of the report: “The working-age population was defined as individuals aged 15 to 64 years and was estimated at 10.9 million.
“Within this demographic, the labour force was estimated at 5.3 million while the population outside the labour force was 5.6 million.”
The report further indicates that the employment-to-population ratio was 38.8 percent, with a higher ratio for males at 45.2 percent compared to 33.4 percent for females.
In contrast, the 2013 Malawi Labour Force Survey indicated that 88.7 percent of the country’s labour force was in the informal sector, showing that the situation continues to worsen 12 years down the line.
In an interview on Monday, associate professor of economics at the University of Malawi (Unima) Gowokani Chijere Chirwa, said this is a stark reminder that the economy is largely driven by the informal sector yet there is no effort to get taxation out of it.
He said: “This calls for the government to constitute studies on how we can make the best out of it because that is where money is.
“But experience from other countries is that it must be noted that tax administration in the informal sector is a challenge, but that doesn’t take away from trying.”
Gowokani Chirwa said the huge unemployed section is just making clear certain statements, that people are living on others’ pockets for survival.
In a separate interview, Unima economics lecturer Edward Leman said for a country with the potential to benefit from a demographic dividend, the high levels of unemployment and informality are a worrying signal.
He warned that if the trajectory is not reversed, the economic and social burden will only worsen in the coming years.
Said Leman: “The high unemployment rate raises concerns about low productivity and sluggish economic growth.
“Malawi has an abundant labour force which, if productively engaged and supported with adequate capital and skills, could drive the country towards middle-income status.”
On his part, Employers Consultative Association of Malawi executive director George Khaki acknowledged that the survey results are a sad reflection of the country’s economic performance.
“As a country, we are not creating more new jobs in the formal economy, leaving mostly the youth out of employment and without meaningful means to earn a living,” he said.
Khaki said the country need to urgently come up with measures that promote investments and promote the establishment and growth of micro, small and medium enterprises to move out of informality.
The last labour force survey was conducted in 2013..
