Malawi economic experts say strikes can bring JB govt down

While President Mrs. Joyce Banda said the ongoing strikes will not increase workers’ perks, economic experts have warned that if an eminent solution is not found, the economy could be worse than during late Bingu wa Mutharika’s time.

Economics Association of Malawi (Ecama) president Edward Chilima and an economics professor at the University of Malawi’s Chancellor College, Ben Kaluwa have told Business Times  that the strikes are affecting production in many companies at the same time cutting supply of critical services to other business entities.

“Impact of the strikes is that it will be negative on the Gross National Product. We start to see service shortages or compromised services which in turn negatively affects our ability or quality of production.

Kalua: Need negociations

“With labour on strike, companies start to experience loss of sales, reduced profits and eventually reduced shareholder yields,” said Chilima.

He therefore observed that the worst case scenario would be for employers to retrench staff in order to meet the demand of workers.

“Pushing too hard will leave the employer with little choice but to retrench or close down. The question is which is the lesser evil?” asked the economist.

He added: “Given the large number of civil servants, any upward demand of salary increase stresses the government purse.

“Given the coffers, these demands maybe unattainable; this is the case because the austerity economics means tightening belts, constrained expenditure. So adjusting the wages to match the devaluation defeats the whole essence of devaluation. It is recipe for inflationary and unsustainable.”

Meanwhile, Chilima observed that the best way forward is for employers and employees to negotiate a way out in an amicable manner.

‘Devastating consequences’

On his part, Kaluwa observed that the strikes would have devastating consequences on the country’s economic growth.

He blamed the fiasco on the previous administration’s poor policies. However, he was quick to mention that the administration of Joyce Banda can simply pay the price if it fails to manage the crisis properly.

“The strikes are a result of the previous administration messing up policies,” said Kaluwa, adding, “It is incumbent upon the current government to be careful and manage the crisis properly otherwise it can pay the huge price from angry voters.”

Government meanwhile has remained steadily cautious but not moved with the wave of industry actions.

Labour Minister Eunice Makangala  told the paper the government is seeking to find a way out by meeting various stakeholders including the unions saying, “If the meetings do not take place as soon as possible then we are in deep trouble.”

‘Govt must step down’

And Consumer Association of Malawi (CAMA)  executive director John Kapito told The Nation that Banda’s administration has failed to defend Malawians from the economic and social challenges in the aftermath of the recent kwacha devaluation.

Kapito said the Banda government  did and continues not to understand the effects of devaluation on local masses, calling on the administration to step down.

“Everywhere in the world, government’s main responsibility is to [mitigate] the economic and social challenges that their people face and so far the current administration has failed to live up [to the mark] and be relied upon.”

Added Kapito: “They do not seem to be in charge of the current economic and social challenges facing Malawians. Time to blame the past is gone, now they are in charge and they need to take responsibility of any problem that Malawians are undergoing. If they can’t, then call for early elections so that we have a government that is ready to understand our pain.”

But presidential press secretary Steve Nhlane  said the call for the government to step down is also totally uncalled for.

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