During the May 20 2014 Tripartite Elections, political parties tried to win civil servants’ votes by promising to raise their salaries almost astronomically once they were elected. The realities of economics were hardly given a thought.
Now civil servants have turned up and reminded the Democratic Progressive Party (DPP) government of its promises. Whether the civil servants votes were decisive in getting President Peter Mutharika and his party into office is not something that has been analysed. Let us not forget that at the time the DPP was making pledges to urban dwellers such as civil servants it was also making promises to rural dwellers such as smallholder farmers about input subsidies.
What should be the basis for fixing and then increasing employees pay? The report of the Delegation of Economic Depression, League of Nations titled ‘Economic Stability in the Post War World’ admonished trade union leaders that they should adopt a national wage policy under which demands for wage increases would be directly related to increase in productivity.
The British White Paper on employment policy stated that increases in the general level of wage rates must be related to increased efficiency and effort.
Most people acquainted with elementary economics would regard the above statements as self-evident. They say in other words, you must deserve extra pay by working extra hard and producing more of the goods and services that we can sell. The average worker on the other hand, at least in the past, would prefer the communist slogan ‘Pay everyone according to his needs, not according to his ability’.
Guided by this slogan, most workers in communist countries became indolent. Regardless of how they worked, they paid just as much as the one who was foolish enough to over exert himself or herself. As time went on, the ability by communist countries to feed everyone was lost. Their economies became poorer; communism was abandoned in most countries. Even in countries like China and Cuba, communism has given way to mixed economies with a good dose of capitalism.
Under what circumstances can the economy keep on paying workers higher and higher rates when this can be done if the economy grows through discovery of new natural resources such as minerals, oil or the introduction of new crops to supplement or replace those which have reached the saturation point in the markets?
Living standards improve under two conditions; first when prices of the commodities people usually buy, including the rents they pay, are constant while wages increase. Second or alternatively, if prices of the goods are constantly falling while wages are constantly rising. These conditions do not come about by accident. They are a result of increased productivity or efficiency.
The role of scientists and entrepreneurs is crucial. Scientists must invent new products or find new uses for existing products. Entrepreneurs should organise business units to exploit or utilise these inventions.
A very challenging job for the Malawi economy is how we shall survive as a nation when the anti-smoking lobby closes markets for our tobacco. If we think this possibility is remote, we are being myopic. We need a George Washington Carver to discover or find new uses for our tobacco industry.
It has been said that when you say this is everybody’s responsibility you later discover that you were understood to mean nobody need bother. Therefore, we must be so organised that if someone asks which government department is responsible for the diversification of the economy we can point a finger at it. If someone goes to that department, he or she can meet the officer who is concerned directly with diversification projects.
When workers demand extra pay, they usually refer to the rising cost of living. What can be done to keep prices steady or else decline? Of course recently, government announced reduction of prices of petrol. When those who use petrol as a major input raise prices of their products, should government not talk to them?
The Malawi economy experienced dynamism when the sugar industry was introduced during the year of self-government more than 50 years ago thanks to Dr. Hastings Banda’s rapprochement with the legendary business tycoon Tiny Rowland of the Lonrho conglomerate. This industry was followed with the launching of the new capital city, railway expansion and improvement of motorways. These boosted the economy, employment and level of wages.