Subdued economy affecting job creation—Ecam

Employers Consultative Association of Malawi (Ecam) says the current economic environment threatens employers’ capacity to create more jobs and ensure that they remain in business.

Ecam’s assertions come on the back of continued rising in inflation rate currently at 28.6 percent, a volatile exchange rate, rising interest rates and forex shortage.

In an interview on Tuesday, Ecam executive director George Khaki said current structural challenges Malawi is facing have depressed aggregate demand, thereby affecting job creation efforts.

He said: “The rising inflation, shortage of forex, fuel challenges, high interest rates are all impinging on industry productivity.

“Overall, this is leading to lower revenues and companies failing to meet operational costs, including wages and statutory payments.”

Meanwhile, inflation rate has been rising over the past 12 months and is currently at 28.6 percent as of August while the kwacha has been depreciating since the start of foreign exchange auctions in January this year and is officially trading at K1 126.

Malawi Congress of Trade Unions president Charles Kumchenga said in an interview on Tuesday that the depressed economic environment compels companies to cut jobs.

“Instead of employing people, maybe let us look at how to empower people to venture into businesses to create employment,” he said.

In its June 2023 Financial Stability Report, the Reserve Bank of Malawi admitted that the depressed macroeconomic environment has weakened the economy.

Malawi’s unemployment levels have been deteriorating, rising from 4.9 percent in 2019 to 5.7 percent in 2021, according to International Labour Organisation data.

The Ministry of Labour has projected a slow growth of about 0.6 percent in the creation of new jobs between this year and 2024.