Tough economic climate could affect jobs—Ecam

Employers Consultative Association of Malawi (Ecam) has warned that some firms could be forced to cut their workforce as the current economic environment is affecting employers.

Ecam executive director George Khaki said in an interview on Tuesday that employers are struggling to balance between the “understandable pressure from workers to increase wages to enable them to survive” in the harsh economic environment and ensuring that companies remain afloat. 

He said: “The rising inflation has necessitated a rise in costs of production, which is increasing by the day, making goods and services we produce unaffordable to many Malawians.

“But on the other side of the coin, demand for goods and services is dwindling. This coupled with increased costs of production, we are selling less which is affecting profitability of our operations.” 

Khaki also decried the shortage of foreign exchange, saying this is affecting imports of raw materials and goods.

“The industry is unable to produce goods optimally and supply goods that are not produced in the country. Profitability and sustainability of our companies are also affected,” he said. 

Malawi Congress of Trade Union general secretary Madalitso Njolomole said it would not be surprising to see some changes in the world of work, calling on government to act quickly to protect the welfare of workers.

“We can all see that the economy is not performing well and this is beyond the control of employers.

“Our humble plea to government is to quickly work on modalities and put deliberate measures to put the economy back in shape, but also cushion workers from income and employment losses during these tough times,” he said.

Economics Association of Malawi executive director Frank Chikuta is also on record as having said that the economy is sailing through turbulent waters, adding that it is becoming tough for businesses to operate.

For instance, in June this year, Crown Fashions Limited, one of Malawi’s oldest garments manufacturing firms, temporarily shut down its operations,  with at least 520 direct and indirect employees of the company losing their jobs in the process.

Meanwhile, inflation has been on the rise for the past months largely due to increase in food and non-food items.

For instance, in a space of six months, the inflation rate has nearly doubled from 12.1 percent in January to 23.5 percent as of June, according to the National Statistical Office figures.

On the other hand, the kwacha, which is currently trading at K1 036 to a dollar was weakened by 25 percent against the dollar in May this year.