Malawi’s private sector has been riddled with massive job cuts that have seen about 1 000 people losing jobs in a space of 12 months largely due to a tough economic environment, Nation Online has established.
The 1 000 have lost jobs in various companies across the economic sector, but only 35 companies have reported to government about the laying off of about 450 employees.
The 450 exclude 250 fired following the merger of Malawi Saving Bank (MSB) previously wholly State-owned and FDH Bank owned by FDH Financial Holdings Limited, 114 that lost their jobs at the now defunct Indebank which has been integrated into National Bank of Malawi (NBM), 198 fired at Malawi Mangoes in Salima, 44 that are challenging their dismissal at Opportunity Bank of Malawi (OBM) and over 100 that lost jobs in other sectors, including the media. Further job loss uncertainty lingers at the country’s sole power provider Electricity Supply Corporation of Malawi (Escom) as the company is going through the unbundling process that would split it into two entities.
Malawi Posts Corporation (MPC) is also soliciting for funding to effect redundancies and retrenchments.
Ministry of Labour, Youth and Manpower Development said last week some of the major reasons companies cited when effecting redundancies and retrenchments include unmanageable wage bill due to declining profits, adverse economic environment, frequent power interruptions which render staff idle in certain operations, thereby raising the cost of production, reorganisation of operations/repositioning in order to remain competitive and adoption of more advanced technologies which require fewer workers.
The ministry’s spokesperson Simon Mbvundula said in an interview government records for the past 12 months show that only 35 companies notified the Ministry of Labour, Youth and Manpower Development about redundancies affecting about 450 employees.
He said with the reasons for effecting redundancies, it would be unreasonable for government to require prior approval of redundancies as that would make doing business very expensive; hence, put even more employees at risk of losing jobs.
Said Mbundula: “The ministry does not have powers under the law to stop a company from laying off employees. We are in the process of reviewing the Employment Act, including the section on redundancies.”
He said since there has never been a proposal to empower the Ministry of Labour, Youth and Manpower Development under the law to stop companies from effecting redundancies, neither is there compelling economic reasons for government to take that route.
He said it should be understood at the outset that the Employment Act does not elaborate much on the issue of redundancies.
He said in 2009 the Ministry of Labour, Youth and Manpower Development issued a policy statement to guide orderly and fair implementation of redundancies by employers.
Mbvundula said companies are firing people mostly on financial-related challenges that compel companies to lay off some employees.
Reacting to the developments, Malawi Congress of Trade Unions (MCTU) secretary general Elija Kalichero said in an interview it was disappointing that what is happening in the country was not in line with the Decent Work Country Agenda that the country developed.
He said under the Decent Work Country Agenda, the country agreed to follow four pillars that included job creation, workers rights, social security and social dialogue.
He said it was a pity that there was no deliberate policy from government to protect people losing employment by creating enabling environment for the growth of the Small and Medium Enterprises (SMEs).
Employers Consultative Association of Malawi (Ecam) executive director Beyani Munthali said in an interview on Friday there were two major reasons leading to job losses in the country and his organisation intends to engage government with some proposals that would help to retain employment.
He said mergers and acquisitions and economic environment are the main factors leading to job losses in Malawi.
The Ecam boss added that in the past four to five years the country’s economic environment has not been conducive for the companies to grow and retain employment.
He said: “In the current economic environment, one has to make the unfortunate decision. Most of these companies would have shut down in 2011. The interest rates are high, there are no incentives for employers to generate business. Everything in Malawi is punitive.”
Government is the biggest employer in the country with about 120 000 civil servants and the private sector shares about 300 000 employees with sugar and tea combined employing close to 100 000 and the remaining 200 000 being shared among numerous companies in the country with the big ones employing an average 450 people.