In an interesting turn of events, the Employers Consultative Association of Malawi (Ecam) has asked Finance Minister Simplex Chithyola Banda to consider increasing the minimum wage.
Traditionally, it is the workers who push for such demands, with employers negotiating for a lower percentage.
In its contribution to the 2025-26 national budget, Ecam says the economy has, over the past year, experienced persistently high inflation, which exceeded 30 percent.
By November 2024, this had decreased to 27 percent, with food inflation at 33.7 percent.
The employers’ body adds that the effect of this has been to significantly erode employees’ incomes, thus affecting their economic well-being and, by extension, economic development.
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“Ecam, however, is of a view that raising the minimum wage by at least 30 percent (slightly above inflation) subject to an agreement on the same in the Tripartite Labour Advisory Council…
“This will not only cushion the effects of inflation on disposable incomes but also increase aggregate demand for goods and services which has gone down.
“In the same vein, Ecam requests government to consider raising the tax-free band to K200,000 to enable workers to have more disposable income for their sustenance and that of their families,” the employers say.
Currently, the tax-free band on income tax stands at K150,000.
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In an interview, Ecam Executive Director George Khaki claimed that, as responsible employers, they also consider the welfare of workers.
“We are very aware of the fact that disposable incomes for workers have been negatively affected by inflation. A wage increase will ensure that their disposable incomes are maintained, thus ensuring productivity,” Khaki said.
Malawi Congress of Trade Unions (MCTU) Secretary General Madalitso Njolomole said that the workers’ body is in total agreement with the minimum wage hike proposal by Ecam, as well as the proposal to raise the tax-free threshold.
“Actually, we have a bilateral operating agreement with Ecam and this was discussed in one of our meetings. Therefore, MCTU is in agreement with Ecam’s proposal,” Njolomole said.
The employers’ body has also asked Chithyola Banda to operationalise the Workers’ Compensation Fund.
The Workers’ Compensation Fund is provided for in the Workers Compensation Act, which was promulgated in 2000. It is one of the few mandatory social safety nets provided for in the workplace.
According to Ecam, the government, in 2023, established a board for the fund but did not provide the necessary funding for the fund to become operational.
“Currently, compensation for work-related injuries is paid for by individual employers and not the fund, as envisaged in the Workers’ Compensation Act,” Ecam says.
The employers further state that the current arrangement has also created loopholes that some quarters are exploiting.
This, it says, has led to lawsuits against companies, to the extent that the industry is losing substantial amounts of money, thus hindering productivity improvement efforts and, in turn, the overall performance of the economy.
“To put this into context, The Malawi Occupational and Safety Profile 2020 indicates that there were a total of 2,417 injury cases reported in 2019. Only 656 cases out of these were settled and the compensation paid out was K848 million.
“This means that only about a quarter of injured employees were compensated, with approximately K1 billion left unpaid, leaving 75 percent of the injured workers without compensation.
“Potentially, the total compensation could have risen to over K4 billion, including litigation costs, because of delayed payments, which the industry can ill-afford,” Ecam says.
The employers have also urged Chithyola Banda to increase the budgetary allocation for the Ministry of Labour.
“In recent years, Ecam, as a social partner, has noted that the budget for the Ministry of Labour has been persistently and significantly reduced and the ministry is consistently underfunded.
“Malawi experiences many decent work deficits, which are reflected in various indicators, including the increase in labour litigation and work-related accidents,” Ecam says.
The Ministry of Finance is holding pre-budget consultations in preparation for the presentation of the financial blueprint in Parliament next month.
