Job cuts loom over minimum wage

 Chris Banda from Chilobwe Township, Blantyre, could be forced to lay-off workers at his welding workshop if government raises the minimum wage from K50 000 to K90 000 per month.

He said in an interview on Friday that he cannot pay his workers more than half of what he earns in a month.

Banda has six permanent employees, but also recruits part-time workers on a needs basis.

He said: “It would mean reducing my workers if I am to pay them the prescribed minimum wage. Otherwise, it will be a tall order for me.”

Banda pays his workers K40 000 per month and they are okay with the arrangement.

He said his business has been struggling for the past year, resulting in his monthly sales dwindling to about K500 000 from an average of K900 000.

Now with six permanent workers each getting K40 000, it means he spends K240 000 monthly to pay them.

If he adjusts their wages, for example, to K90 000 or close to it, he would spend roughly K360 000 and remain with K140 000.

“From the balance, I have electricity bills for the  workers to budget for. This is excluding my own bills back home,” he said.

The proposed general minimum wage has gone up from K1 923.08 per day or K50 000 monthly to K3 461.54 per day or K90 000 per month.

However, for domestic workers, the minimum wage is now pegged at K2 000 per day or K52 000 per month from K1 461.54 per day or K38 000 per month, an increase of 38 percent.

Other employers have expressed their discontent with the proposed minimum wage, which is yet to be published in the Malawi Government Gazette.

 Their argue that their incomes have shrunk due to an unfavourable economic landscape which do not correspond to the high cost of living and high inflation, currently at 34.5 percent.

As such, the majority of employers, including small and medium enterprises (SMEs), told Nation on Sunday in random interviews they would rather have fewer workers if they are to abide by the new minimum wage.

The Employment Act states that the minimum wage is the level at which minimum salaries or wages

 should be paid.

Section 55 (2) of the Act states that an employer who pays an employee a minimum wage contrary to the set minimum wage shall be liable for an offence and a fine of K50 000 and 10 years imprisonment.

Zomba-based nursery school teacher Maryam M’bwana said it would be hard for her to adjust her maid’s salary to align with the new approved minimum wage.

Earning K167 345 per month, the single mother to a three-year-old girl said she can only manage the K30 000 she pays the maid.

She said it would be prudent to have her daughter taken care of by a family friend instead.

While noting that the minimum wage adjustment Elizabeth Mzima from Chibavi, Mzuzu said only high-earning employers would manage.would benefit low-paid workers,

But Siphat Wabu from Area 25 in Lilongwe said employers and their workers should come to an understanding in regards to paying decent wages from the proposed minimum wage.

The Chamber of Small and Medium Businesses Association executive secretary James Chiutsi said in an interview on Friday that the increase in minimum wage would hurt small-scale businesses.

He said this is a result of a non-favourable business environment.

Chiutsi said: “We are actually reviewing how we can reduce labour and other costs by laying off some permanent workers and hiring piece workers when and as required.

“The increase will be ideal for bigger corporate players, not SMEs, main employers in Malawi. We are not sure how the law can segregate this.”

Consumer rights activist John Kapito said there is a need as a country to agree and pay people, especially those at the bottom, a wage that would make them live a decent life.

“There is a need for institutions, including the government, to do serious reforms by realigning its salary structures which favour top officials who earn obscene salaries with exorbitant benefits that can be paid to those at the lower ranks,” he said.

Enforcement of the minimum wage has been a challenge with workers still earning below the minimum wage.

The current K50 000 minimum wage came into effect on January 1 2021.