MCCCI backs alleged ‘western style’ bonuses
Malawi Confederation of Chambers of Commerce and Industry (MCCCI) has defended salaries and bonuses paid in the private sector, saying they are in line with the Companies Act and business practices in Malawi.
While government argues that paying of salaries in the private sector equal to those received by executives in developed countries equivalent to $20 000 (about K14 million) a month should be roundly questioned, MCCCI says the perks are determined by recruitment and retention policies of the companies as well as competition.
Speaking when presenting the 2016/17 National Budget in Lilongwe on Friday, Minister of Finance, Economic Planning and Development Goodall Gondwe said payment of “western-style bonuses” to top executives in the private sector is a major concern for government, because it entails a waste of resources that could have been re-invested productively.
He said the practice helps to fuel income inequalities and creates disincentives in other equally important sectors of the economy.
He said: “The practice in some companies to pay salaries equal to those received by executives in developed countries and grants them huge perks should be roundly questioned, just as it was questioned in those countries in the wake of the 2008 economic meltdown.”
In reaction, MCCCI president Karl Chokotho said on Tuesday although it is difficult to know who the minister was referring to as he did not share data on the same, it is important to know that the private sector is guided by the Companies Act and business practice in Malawi.
“Salaries are also determined by recruitment and retention policies of companies. We complain of brain drain in Malawi, but part of the reason is low salaries when our people are demanded elsewhere at higher salaries.
“Further, salaries are also structured against competition. Increased investment in Malawi, and also competition, would change salary and general company structures in Malawi. If competition is rife and the cake is smaller, companies begin to review its structures,” he said.
Chokotho said in sole proprietorships, the owner of the businesses will determine the salaries, whereas in partnerships, the partners will normally agree on the salaries and benefits while in companies, the board of directors’ fees and allowances are determined by shareholders at a annual general meeting.
In turn, the board will guide and approve salaries and bonuses of the top executives. n
