Malawi grappling with rising unemployment:Economic slump sees massive lay-offs in companies

The current economic slump in Malawi has led to massive lay-off of workers in most companies and organizations a situation that is being feared that might lead to uncontrollable high unemployment in the country.

Lay-off  increases in Malawi due to unfavarouble business climate

Although, recently the Malawi government has been touting itself of an improved economic climate, the situation is not all that rosy on the ground with the Ministry of Labour disclosing that of late there has been massive lay-off of workers as most companies and organisation try to survive harsh economic conditions.

Malawi which relies on donor support to manage its economy with its developing partners contributing almost 40% of its GDP, has for the past three years since 2014 not seeing much of donor aid trickling into the economy mostly due to the massive loot of public resources in most government institutions.

The Ministry of Labour has disclosed that over 2,800 workers were laid off in the country between June 2015 and July 2016 and sources within the ministry have indicated that many more, in excess of 3,000 workers, are likely to face retrenchment in the coming year.

Deputy labour commissioner Wafwire Msukwa disclosed that most companies and organisations have resorted to laying off workers, citing the country’s unfavourable economic environment and the effects of global economic crisis, among the major triggers.

“Between July last year to July this year the ministry has been overwhelmed with requests from institutions that wish to retrench staff and over 2 800 workers have been laid off within the period,” said a source from within the ministry.

Msukwa confirmed that there has been massive laying-off of staff recently but could not give the exact the figures.

“There is nothing the ministry can do to stop companies from laying off workers. We just give advice and that’s it. Mind you these companies want to survive and the only wise and practical business decision is to downsize.

Retrenchment is first and foremost a business decision, and as such, the ministry focuses on providing advice aimed at helping an employer to comply with the law on the computation and payment of terminal benefits once reasons given for the retrenchment are satisfactory,”said Msukwa.

He said, for instance, most companies in the manufacturing sector are grappling with the high cost of importing raw materials and are unable to withstand the stiff competition on the local market, hence the retrenchments.

Msukwa said donor fatigue is also another challenge facing some of the non-governmental organisations (NGOs) that are reducing numbers of their workforce or are winding up, as they no longer receive enough financial support from their sponsors, as was the case some years ago.

He also said even the agricultural sector, which is the backbone of the country’s economy, has also not been spared from the cutbacks, as the country’s economy is not growing enough.

“No sector appears to have been spared. The ministry is in the process of improving the law on retrenchment. It is being considered to make it a requirement for employers to consult their employees first before carrying out retrenchments,” said Msukwa.

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