Employers Consultative Association of Malawi (Ecam), a representative body of employers, has warned that firms will be forced to cut more jobs this year compared to last year.
Ecam said this is a consequence of the upsurge in Covid-19 cases that continues to negatively affect business operations coupled with the increase in minimum wage from K35 000 to K50 000 per months effective January 1 this year.
The warning by Ecama follows a survey the employers’ body conducted last year which showed that the job market was hit hard by the impact of the Covid-19, resulting in 273 712 people losing their jobs in the first half of 2020, with the tourism industry the hardest hit.
The survey estimated that by March this year, 680 496 jobs would be lost if the pandemic persists.
In an interview on Wednesday, Ecam executive director George Khaki said the raise in minimum wage by about 40 percent at a time employers are struggling due to the impact of Covid-19 could compel more employers to cut jobs while others may shift to automation to minimise production costs.
He said: “We earlier estimated that by March 2021, which was when we had estimated the Covid-19 pandemic would disappear, about 680 000 jobs would be lost, but we have seen
“However, the new wave of the virus is more contagious and is devastating the economy even more. Companies are operating below capacity. The minimum wage increase has, thus, put more pressure on employers.”
Khaki said some companies have already started cutting jobs as the higher minimum wage has induced more costs that employers have to incur. He could not indicate how many jobs have been cut so far.
on his part, Malawi Congress of Trade Unions general secretary Dennis Kalekeni admitted that the job losses are inevitable during the pandemic, adding that the situation calls for a development of a robust social protection scheme to cushion workers.
He said: “We long to have a robust system formulated to cushion job losses that may arise in view of situations like the current one.
“We have institutions such as hotels which are on the verge of collapse. Such schemes would, thus, come forward to assist such institutions.”
The Ministry of Economic Planning and Development and Public Sector Reforms was expected to roll out a K20.5 billion three-month urban social cash transfer programme beginning end January to March through which 185 247 households are expected to each receive K35 000 per month.
On the other hand, the Reserve Bank of Malawi (RBM) has throughout the year also strived to incentivise commercial banks by instituting measures to cushion them from collapsing, and also enabling them to offer a moratorium on interest payment to their customers.
Treasury spokesperson Williams Banda said stimulus packages have played a significant role in keeping economies and businesses afloat in times of pandemics and economic recessions