Minimum Wage Could Cost Jobs

Employers Consultative Association of Malawi (ECAM), a representative body of employers, has expressed fears of potential jobs losses due to the increase in minimum wage from K25 000 to K35 000 per month.

ECAM executive director George Khakhi said in an interview yesterday that with the 40 percent raise in minimum wage, employers that are struggling to pay salaries could retrench employees while others may shift to automation to minimize production costs, thereby impacting on jobs.

Khaki said more firms in the small and medium enterprises (SMEs) category could end up reverting to the informal sector, which could cost government tax revenue.

He said: “What we are seeing with this hike is that, already, we are suffering with pension arrears and having minimum wage increased could put more pressure on employers.

“So, the higher you raise the minimum wage, the more costs that employers will have to incur. We will be doing a study next year to establish the exact impact of this wage hike,” he said.

In his 2019/20 National Budget Statement a fortnight ago, Minister of Finance, Economic Planning and Development Joseph

Mwanamvekha said the adjustment in minimum wage will help protect lowlypaid workers and improve their welfare.

The minimum wage hike came three years after Treasury last increased the rate by 24 percent from K19 000 to K25 000 a month.

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