- 3 000 face lay-off this year
- 1 500 people sacked last year
The Ministry of Labour has disclosed that over 1 500 workers were laid off in the country between June 2015 and July 2016.
Deputy labour commissioner Wafwire Msukwa, told the Weekend Nation in an interview yesterday that most companies and organisations have resorted to laying off workers, citing the country’s unfavourable business environment and the effects of global economic crisis, among other triggers.
A source close to the establishment also confided to this paper the numbers have doubled this year.
“Between July last year to July this year the ministry has been overwhelmed with requests from institutions that wish to retrench staff and over 2 800 workers have been laid off within the period,” said the source.
Said Msukwa when this was put to him: “There is nothing the ministry can do to stop companies from laying off workers. We just give advice and that’s it. Mind you these companies want to survive and the only wise and practical business decision is to downsize.”
He said, for instance, most companies in the manufacturing sector are grappling with the high cost of importing raw materials and are unable to withstand the stiff competition on the local market, hence the retrenchments.
Msukwa said donor fatigue is also another challenge facing some of the non-governmental organisations (NGOs) that are reducing numbers of their workforce or are winding up, as they no longer receive enough financial support from their sponsors, as was the case some years ago.
The agricultural sector, which is the backbone of the country’s economy, has also not been spared from the cutbacks, as the country’s economy is not growing enough, he added.
Said Msukwa: “No sector appears to have been spared. The ministry is in the process of improving the law on retrenchment. It is being considered to make it a requirement for employers to consult their employees [first] before carrying out retrenchments.
“Retrenchment is first and foremost a business decision, and as such, the ministry focuses on providing advice aimed at helping an employer to comply with the law on the computation and payment of terminal benefits once reasons given for the retrenchment are satisfactory.”
Some economic experts have described the situation as a reflection of the poor performance of the economy, among other factors, and have since urged the authorities to put in place right policies and measures to reverse the growing trends.
Malawi Confederation of Chambers of Commerce and Industry (MCCCI) chief executive officer (CEO) Chancellor Kaferapanjira says the trends are a clear indication of policies which government thinks are good but are “dangerous and are damaging” the economy.
He faulted the ban the Ministry of Tourism Industry and Trade imposed on maize exports as well as the delay by the Ministry of Agriculture, Irrigation and Water Development to open Agricultural Development and Marketing Corporation (Admarc) depots for farmers to start selling their maize as unwise and having far-reaching consequences.
Said Kaferapanjira in a telephone interview yesterday: “As we have said before, we don’t want this country to suffer like in 2002, but a decision should have been made much earlier and as MCCCI, we have been advising government to give Admarc and National Food Reserve Agency (NFRA) money so that it buys enough maize to be stored somewhere and let the rest of the maize be exported.
“Exporting the maize would have affected prices, so maybe, the minimum price would have been the Admarc price and other people would have gotten better prices. Government has deliberately failed to bring in forex from outside the country which would have helped to prop up our economy.”
He said companies that focus on the domestic market are also closing because the market is shrinking, and this should be attributed to poor policies by government.
The MCCCI boss also blamed government for apparently sleeping on the job arguing that the executive hasn’t done much to rescue farmers after the Indian government closed its market for pigeon peas.
Following the closure of the Indian market, pigeon peas prices have plummeted from K350 per kilogramme (kg) to K50 per kg and Kafelapanjira has urged the responsible ministries to renegotiate the deal.
Kaferapanjira also described as worrisome failure to take appropriate action on issues that have an employment prospect for Malawians, arguing that government needs to protect its people from being exploited.
Said Kafelapanjira: “That’s why companies are closing down and this is very sad because we would want the people that we see on the streets, people who are qualified to get a job, get jobs, and if the few people who have jobs are also being shredded off, then we have a big problem.”
Commenting on the retrenchments, head of Economics Department at the Catholic University of Malawi Gilbert Kachamba said most companies are opting to lay off people to maximise profits especially in the wake of the poor performance of the economy.
He cited the recent trend of commercial banks going into mergers as a clear sign of wanting to survive the harsh economic times and creating job losses in the process.
But in an interview, Minister of Agriculture, Irrigation and Water Development, who is former minister of Trade and Industry Joseph Mwanamveka explained that he did not make a personal decision to ban maize exports, rather he was complying with the Control of Goods Act which states that maize is a strategic commodity.
Said Mwanamveka: “That decision was not made by Mwanamveka; it is something that has always been there and that is why people are not allowed to export maize without a license. Whether the decision to ban maize exports was right or wrong, then blame the person who made that decision when framing the act, but there was a reason for that.”
In 2016, Malawi imported goods worth $17l million (K123 billion) from India and exported goods worth $41 million (K30 billion), according to the International Trade Centre statistics.
The Industrial Relations Court (IRC) recorded 8 700 labour-related disputes between 2010-2015 in the four cities of Lilongwe, Blantyre, Zomba and Mzuzu.
According to the Malawi Labour Force Survey (Mlfs) conducted by the National Statistics Office (NSO), in 2013, the country’s formal unemployment rate stood at 21 percent.