Employees of statutory corporations (SCs) or parastatals should forget about a pay hike in the 2016/17 financial year starting on July 1 as government has suspended their proposed increment averaged 20 percent until the country’s economic situation improves.
Through a letter reference number C1/01/08/02 dated June 14 2016 circulated to all board chairpersons and chief executives of parastatals, comptroller of Statutory Corporations Zangazanga Chikhosi advised the organisations to pend their proposed salary increment in the 2016/17 financial year.
In a telephone interview yesterday, Chikhosi confirmed writing the letter whose copy The Nation has seen.
He said: “The letter is coming from this office. We have sent the letters to the chief executives and chairpersons of the board.”
In the letter, government said after analysing the 2016/17 Performance Management Plans and Budget (PMPBs) for parastatal organisations it was noted that almost all SCs proposed salary adjustments averaging 20 percent.
Chikhosi said government understood the need to adequately remunerate staff, but the prevailing economic conditions were not right.
Reads the letter in part: “However, I wish to bring to your attention that the prevailing economic environment in the country may not accommodate the proposed adjustments.
“In view of this, government directs that all parastatal organisations should pend the proposed adjustments until the situation is reviewed and communication regarding the same is made.”
Ironically, in the same proposed 2016/17 National Budget, Ministry of Finance, Economic Planning and Development has proposed a 15 percent salary increment for low ranked civil servants, an offer Civil Servants Trade Union (CSTU) and Teachers Union of Malawi (TUM) expressed reservations with. They argued the 15 percent was not what they asked for from government.
In his budget statement tabled in Parliament on May 27, Minister of Finance, Economic Planning and Development Goodall Gondwe said K66 billion of the K1.13 trillion budget will come from non-tax revenue and the key non-tax revenue sources will be fuel levies, parastatal dividends and departmental receipts.
In the budget, government also announced a hire freeze except for 10 500 primary school teachers and 447 secondary school teachers who were not recruited in the current financial year ending on June 30.
The teachers’ recruitment will increase the wage bill from K198 billion to K224.4 billion.
Malawi is facing an economic slump which forced the International Monetary Fund (IMF) to revise downwards economic growth projections for the 2015/16 financial year from 6.1 percent to 3.1 percent owing to combined effects of drought and floods that reduced crop production by 30 percent. Malawi is an agro-based economy.
This year, dry spells, notably in many parts of the Southern and Central regions have also negatively affected crop output, putting 8.5 million of the 17.8 million population at risk of starvation. This has prompted some analysts, including Economics Association of Malawi, to query the optimism behind the belief that the 5.1 percent growth will be attainable given that same factors that hampered it last year prevail.