Malawi offers lowest paid civil servants 61% pay hike: Union accepts, end strike

Malawi’s Civil Service Trade Union (CSTU) and government of President Joyce Banda on Thursday night agreed a 61-percent pay hike for the lowest paid public-sector employees and a five-percent rise for high earners effective January 1 2013.

CSTU president Elia Kamphinda Banda, reading a communiqué during a joint news conference with the Government Negotiating Team (GNT) in the capital, Lilongwe, said government has offered to review civil servants’ salary structure.

“We have agreed with government on a 61 percent increment for the lowest paid civil servant and five percent for the highest to be paid in arrears from January 2013 effective from next month,” Kamphinda Banda told reporters after signing a Memorandum of Understanding.

Kamphinda Banda was accompanied by Teachers Union of Malawi (TUM) general secretary Dennis Kalekeni whereas the GNT comprised Ben Botolo, who was introduced as its chairperson, and Principal Secretary for the Department of Human Resource Management, Sam Madula.

Botolo: There will be cuts in some areas to finance the wage bill
Botolo: There will be cuts in some areas to finance the wage bill

The Union leader said the increments have been spread across the grades and the percentage increases vary from one grade to another.

For the lowest paid civil servants, the 61 percent increment means that their basic salaries have gone up from K18 000 (about $50) to about K29 000 (about $80).

Botolo said the state could meet the agreed increments with cuts in other areas.

Some ministries and government departments will suffer massive cuts in budgetary allocations to facilitate the massive increments. The State House is one of them, according to President Banda, who told journalists on departure for Equatorial Guinea on Thursday, that she instructed her government officials to consider the state-workers demands.

“Of course a few services are going to suffer with this increment because we have had to cut off some money in some other sectors,” Botolo said

Economic commentator Henry Kachaje commented after the pay hike announcement: “Government has to raise money to foot the bill: It may raise taxes to businesses, who also raise prices of food and other essentials including transport costs; this leads to a further depreciation of the Kwacha, then the landlords raise house rentals, at the end of the spiral…. the real buying power value gained from the salary hike may be some 10% – 20%! Such is life… life goes on.”

Botolo explained that government came up with the K5.7 billion through cuts in some of the votes within the 2012/13 budget.

Kamphinda Banda said the new salaries will be implemented in March whereas arrears for January and February will be paid in July 2013. However, he said, negotiations for another salary review effective July 2013 are scheduled to start from March 19 2013.

Meanwhile, CSTU has called off its nationwide strike that paralysed public service delivery.

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