Govt wage bill up 53%

Malawi’s public sector wage bill has gone up by a whopping 53 percent in the new financial year despite government effecting a 12 percent salary increase which trade unions have protested.

In the 2021/22 financial year that ended on March 31, the wage bill stood at K436.3 billion, but jumped to K670.28 billion in the current financial year which began on April 1 2022, representing a 53 percent increase.

Public workers in the country are expressing displeasure with the 12 percent average salary increment that the government yesterday offered them.

In the current K2.84 trillion National Budget, Minister of Finance Sosten Gwengwe, without mentioning the actual percentage or figure, hinted that there will be an increase in salaries for civil servants once discussions with Civil Servants Trade Union (CSTU) are completed.

Reacting to the 12 percent average increment, CSTU vice-secretary general Mabvuto Kawonga said their displeasure stemmed from the fact that initially they proposed to government a 30 percent salary increment.

He said: “We are not happy as you know the cost of living has gone up. We really had tough negotiations. We had 30 percent as our percentage while the government had six percent. We tussled until we stopped at 15 percent from our side, but the government did not buy it and stopped at 12 percent average salary increment.”

Kawonga said while they accept the 12 percent, they agreed with the Government’s Negotiating Team for further engagements to ensure that they meet half way or more.

On where they expected government to raise the 30 percent salary increment at a time when revenue collection is low, he said they expected their employer to widen the tax base and remunerate workers in line with the rising cost of living.

Teachers Union of Malawi president Willy Malimba shared Kawonga’s concerns that they expected 30 percent salary increment because teachers are struggling to survive amidst the biting economy.

But economist Milward Tobias has described the huge jump in the wage bill, which is the highest allocation in the budget, as a puzzle on the basis that it does not translate to productivity, especially considering that the civil service still has a higher vacancy rate.

In a telephone interview last evening, the economist, who runs the Centre for Research and Consultancy, faulted Minister of Finance and Economic Affairs Sosten Gwengwe for the manner he framed the budget statement. He said there was need to have the negotiations with workers union concluded before presenting the proposed budget.

Tobias said: “It may be a minor issue, but it must not be encouraged. The government should have concluded the negotiations and present to Parliament what it felt would be the increase in salaries. This could have helped Parliament to scrutinise the budget with sufficient information.”

He also said it was interesting that the wage bill has increased significantly when salaries for civil servants remain low and the vacancy rate is high.

Tobias said: “I have looked at the new salaries, they are on the lower side yet the wage bill is huge and the question is: Why is the increase only 12 percent when the increase in the bill is 53 percent?”

In the budget statement, Gwengwe said the increase was meant to accommodate recruitment of new staff and that there were funds reserved for salary increments depending on the outcome of negotiations with workers unions.

Economics Association of Malawi executive director Frank Chikuta yesterday said the 12 percent average salary increment may be reasonable because largely the cost of living is determined by the average inflation rate of the previous financial year which the government uses to determine average salary increment.

He said what is usually in the wage bill is relevant to existing workers’ wages and salaries, including catering for new people to be recruited in the financial year as alluded to in the budget statement.

Budget and Finance Committee of Parliament chairperson Gladys Ganda said in a written response the salary increment was factored in the budget.

She said: “Going forward, we need to watch the wage bill because if not being careful, one day, government will be broke which will make procurement of other basic needs impossible.

“I believe the Ministry of Finance will not overlook the fact of protecting other votes. I am saying this because in some cases, government has diverted funds meant for activity X to a different activity.”

However, Ganda said the increase in salaries is commendable,  considering the rise in the cost of living.

Malawi has a long-term arrangement with the International Monetary Fund on macroeconomic policies which includes wage bill policing that enforces recruitment freeze.

In the 2022/23 budget, overall fiscal balance is estimated at a deficit of K884 billion, which is 7.7 percent of GDP to be financed through foreign borrowing amounting to K230.07 billion and domestic borrowing amounting to K653.98 billion.

Currently, Ministry of Health has a vacancy rate of 52 percent, education at 43 percent and agriculture at 34 percent.

Ministry of Finance spokesperson Taurai Banda asked for more time before responding to our questionnaire while Gwengwe, currently in the United States of America, did not respond to our questionnaire sent through WhatsApp.