Malawi’s economy on the brink
Although the Judiciary strike involved only a segment of the civil service, but it was painful. So what will become of our economy when the whole civil service is brought to a standstill?
Strikers of gold inflate the economy, strikes of labour deflate it.
In industrialised countries, economists and statisticians carefully monitor a strike and produce reports, explaining what the strike means financially and even in terms of opportunity costs.
Here we talk only in vague terms and we can, therefore, not tell what the stoppage of labour meant o the economy.
When workers down their tools, production ceases and wealth is no longer being generated. The stoppage gives competitors an opportunity to monopolise the market.
The history of industrial revolutions shows that governments and employers had clear policies on handling labour issues.
In Britain, for example, the birth of industrial revolution from about 1750 to 1830 forced the government to outlaw trade unions under the Combination Act.
Those who took part in strikes were being deported to British colonies such as North America and Australia.
When the Combination Acts were repealed, trade unions were very adversarial. Employers and employees viewed each other as antagonists.
Employers saw trade unions as inimical to the expansion of businesses while employees saw their employers as exploiters who only treated them as factors of production not as human beings.
In Germany, industrialisation started in the 18th Century when Otto von Bismarck was the chancellor [prime minister].
Bismarck told workers not to go on strike. But when the economy began to grow fast, he introduced a social welfare system which became the prototype for the rest of Europe.
Lee Kuan Yew of Singapore tells us in his autobiography that as soon as the country got independence, he discussed with trade unions and convinced them that adversarial trade unionism was not appropriate to the young country.
Singapore developed first before employers and employees started sharing the wealth. He also persuaded them to accept compulsory savings. The rest is history.
It is axiomatic that it is only in a growing economy that it is possible to raise workers’ wages. In a stagnant economy, the extra money you give out only results in inflation.
This forces workers to demand more money to match the general rise in prices.
Getting workers and employers to accept the view that the economy should grow first before we live affluently is difficult. Statesmanship is required here. Ours is a trying moment. If out of panic government acts wrongly, the country will be on the road Greece took some years ago.
When we read of countries that found themselves in hyperinflation and appalling deficits, we notice that they had weak governments, whence they had to make all manners of concessions to rent-seekers [That is to a group of people who want to earn more while providing no extra services].
Our culture has its seamy side. Pressure groups, whether spiritual or temporal, urge the government to do this without taking the trouble to find out why the government is not doing it. Inability and unwillingness are different things.
The government itself should take stakeholders into confidence by acquainting them with financial realities. Too many people think the government is delaying to give them what they demand because it is parsimonious.
The Malawi economy is in danger. A slight push in the wrong direction will send it to a heavy fall. In its negotiation with the workers, donors and the private sector, the government should not shy away from consultants with a deep grounding and experience in the economics of deficits and development.
Modernisation should be the ideal conduct for us all. Borrow moderately to avoid taking the country into insolvency and award increments in the civil service that are in step with growth rates of the GDP. Otherwise, we shall one day wake up only to find that the kwacha has become useless.
May I appeal to civil servants not to carry out their threats of a countrywide strike. Malawi is the only country we can call home and are free to work. Outside Malawi we only encounter hostility.
