Rising cost of living  impacts workers’ pay

 Rising cost of living continues to erode consumers’ purchasing power, leaving many struggling to afford basic necessities, employers and consumers have said.

A Business News analysis based on Centre for Social Concern (CfSC) data shows that the cost of living in Malawi has jumped by about 36 percent within a year, beating the country’s inflation rate at 32.7 percent.

Consequently, the monthly living expenses for a typical Malawian household of six people has surged from K386 000 to K522 000.  Notable price increases have been observed in essential commodities such as maize, relish, charcoal, soap and transport costs, particuarly minibus fares.

However, although government increased the general minimum wage by 80 percent from K1 923.08 per day or K50 000 per month to K3 461.54 per day or K90 000 per month, the new wage still falls short of the amount of money needed to afford a basic life for an average family of six.

For those in employment, the year has been mixed, with random interviews showing that most are failing to make ends meet.

However, on average, salary increments for most sampled employees have averaged 15 percent during the review period.

For Teleza John, her employer only offered her a 10 percent salary raise during the year.

She said this has had “no meaningful impact” on her daily life as prices of goods have continued to escalate.

Things have only worsened for Sara Tembo (not real name), who despite the cost of living crisis, has had no salary increment.

In an interview yesterday, Employers’ Consultative Association of Malawi executive director George Khaki said while employers understand that the rising cost of living is eroding the purchasing power of workers, they have to take into account the welfare of workers, general economic conditions, productivity growth and affordability.

“Our recommendation is that employers and workers should engage in meaningful social dialogue and collective bargaining to ensure a balanced and sustainable outcome to wage increases,” he said.

On her part, CfSC economic governance programme officer Agnes Nyirongo observed that the disparity between the increase in living expenses and salary increments means that many households are struggling to afford basic necessities.

She said: “Families are finding it increasingly difficult to cover essential costs, leading to increased financial stress and potential long-term economic hardship.

“It is crucial for the government to take more aggressive and effective actions to tame the rising cost of living and provide relief to the affected populations.”

Speaking separately, Consumers Association of Malawi excutive director John Kapito said consumers cannot survive with the continued rising cost of living.

Meanwhile, Reserve Bank of Malawi (RBM) has said given the current economic environment, it will stick to a tight monetary policy that will translate into high policy rate and subsequent increased cost of borrowing.

In the face of high money supply growth, underperformance of the export sector and higher global oil prices, RBM had projected inflation rate to average 30 percent in 2024