The Centre for Social Concern (CfSC) says government has lost an opportunity to narrow the gap between the rich and the poor by maintaining the minimum wage at K50 000 per month in the 2021/22 National Budget.
CfSC economic governance programme officer Bernard Mphepo said an increase in minimum wage would have supported the majority of Malawian by improving their welfare.
He said: “The low minimum wage is not necessarily due to performance of our economy, but total negligence and maintenance of exploitative policies.
“An increase in minimum wage would have supported the majority of Malawians to move out of poverty line as they are greatly affected by Covid-19 and the negative effects of the post-election demonstrations.”
The centre argued that Treasury’s move to increase the minimum wage from K35 000 to K50 000 in the 2020/21 financial year, which was effected in January 2021, did not help to improve the standard of living of low-paid Malawians.
Studies conducted by CfSC, through its monthly basic needs basket reports between 2020 and 2021 revealed that the cost of living is increasing due to Covid-19 pandemic and the weakening of the kwacha.
The studies found that the average cost of living is K209 000 for a family of at six people while food poverty line is over K118 000.
But, in an interview on Wednesday, Employers Consultative Association of Malawi (Ecam) executive director George Khaki called for sobriety when looking at demands for the need to increase the minimum wage.
He explained that Covid-19 has drastically reduced production and productivity in companies.
“Raising the minimum wage further would trigger massive retrenchment because employers are already struggling to maintain current wage bills,” said Khaki.
He said already, some employers are retrenching low-income earners because they are failing to pay the K50 000 minimum wage and that, in some instances, permanent workers have been reduced to casual labourers who are paid based on the number of days worked in a month.
Speaking when he presented the country’s financial plan for the year, Minister of Finance Felix Mlusu said there are more competing needs in the budget, but the resource envelope remains thin to meet people’s demands, calling for patience as the country is treading through turbulent economic times.
Studies conducted by Ecam show that since the pandemic struck early 2020, over 680 000 employees have lost their jobs and companies are continually scaling down operations.
Financially struggling AHL Group Limited, formerly Auction Holdings Limited, has just announced that it will lay off 500 employees in the next two months.