Status of Wages, Labour Laws and Collective Bargaining Agreements and the Impact on Workers in Malawi by Semu N. Chikondi

1.0 INTRODUCTION

One critical challenge that continues to confront Malawi is the prevalence of poor living conditions for the masses in both rural and urban areas. In spite of the various shifts in development strategies for Malawi from the Structural Adjustment Programmes (SAPs) in the early 1980s to the Malawi Growth Development Strategy MDGS, the Economic recovery plan and the current reform, the improvement of the living conditions for the masses remains a farfetched dream.

Paying a living wage would allow families with children to escape poverty and severe financial stress, ensure healthy childhood development, and permit families to participate in the social, civic, and cultural lives of the communities; contribute to the reduction of crimes; contribute to high productivity at the work place; evenly and fairly share the tax burden and raise government revenue.

The living standard of workers has been a challenge for a long time because of lack of platform for employers and employees to discuss the issues affecting the workplace. Due to lack of such a platform, Collective Bargaining Agreements are not easily reached.

It is in this context that the paper will examine the status that Malawian workers are living in, in terms of wages and collective bargaining agreement. It will further enlighten some areas that Trade Unions need to improve to uplift the living standards of workers. The data used in this paper is mainly coming from secondary sources and partly primary sources due to time limit hence three general secretaries were sampled. 

2.0 THE SHIFT FROM MINIMUM WAGE TO LIVING WAGE

For a long time, Trade Unions in Malawi have strived to shift from minimum wage to living wage. Realizing that the most abundant resource possessed by the low-income households in Malawi is labor, policy steps that attempt to fully employ human resource and raise the returns to labor can become key tools for raising household incomes and reducing poverty in Malawi.

Malawi is among the countries in SADC region that pays the lowest wages. This has been a typical feature since the colonial period, when wages on the tea and tobacco estates and plantations, as well as wages in the urban areas of Blantyre were the lowest in this part of Africa (Dzimbiri, 2008).

The Government of Malawi raised the minimum wage from K551.00 to K678.76 per day. Currently the dollar is being exchanged at K770.00 which means workers are living below the poverty line. Hence the adoption of a living wage as a matter of policy is a solution in this regard. Below are reasons why trade unions propose a living wage over minimum wage;

  • Malawi Kwacha devaluation of 59% triggered the high rocketing of commodities such as food stuffs, water, rent, electricity and transport to and from work places.  Floatation of the Kwacha continues to push upwards the costs of essential commodities in shops and at commodity markets.
  • Currently, the inflation rate is 22.8%.  Wages of unskilled laborers in private sector with average family of 4 people cannot meet reasonable needs day in and day out since then.
  • Private sector is an engine room for economic development in Malawi and in any other country. Therefore in order to enhance increased productivity, there is need to consider fixing a wage sufficient to cover worker’s normal material, moral and cultural needs to enable him or her to carry out duties as head of family.
  • High living expenses and low nominal wages and declining real wages means that hundred thousands of the working families are living in poverty. This is substantially supported by the 2010 UNDP report which states that 80 percent of the people who are employed in Malawi live below the poverty line.
  • Low wages makes the entire nation pay through poor healthy educational failure, high tax burden, weak local economy, inequality and high crime rate.

Parents in low wage jobs are trying to raise children with one hand tied behind their backs. These families face impossible choices i.e. buy food, take good care of the children, or pay rent. The result has been spiraling debts, constant anxiety, stress related illnesses, and long term health problems. Ultimately, this negatively affects productivity at the work place, and puts a huge burden on the government in terms of expenditure on health at the expense of other social services such as education. Low minimum wages also has a negative bearing on the general welfare of consumers. The workers in retail shops are illegitimately inflating prices in order to make ends meet given the low wages.  They tend to overcharge to benefit from the difference; hence we can conclude that low wages are contributing to increase in corruption and crime. Living wages are good for business. Better pay translates directly into a healthier local economy. Low income households spend almost all their money close to home.

HISTORICAL BACKGROUND OF LABOR LAWS IN MALAWI

The earliest labor policy was formulated in 1936 whose aim was to identify causes of labor migration, its effects on the workers and how to control it. This was very common in the tea industry. Poor conditions and low wages were identified as being the major contributing factors towards labor migration. Such pathetic conditions compelled the workers to come together and form a united front to confront their masters. Then the first trade union was formed.

Examples of some of the legislations that were formulated to regulate the labour market are;

  • The Workman’s Compensation Ordinance,1944
  • The regulation of Minimum Wages and Conditions of Employment Ordinance,1949
  • Trade Disputes ( Arbitration and Settlement) Act ,1952 and
  • The Trade Union Act, 1958—this was believed to have been passed to enhance State powers to control trade unions which by then had increased from one to four. 

In summary it is the mandate of the employees’ organizations (trade unions) and employer’s organizations (ECAM) and the Ministry of Labour to work together as partners in the development of labour in Malawi. It’s only through this that the Decent Work, which integrates labour into key priorities within  Government development agenda through the Malawi Growth Strategy and Development (MDGS), will be achieved.

3.0 COLLECTIVE BARGAINING AGREEMENTS

The ILO Right to Organize and Collective Bargaining Convention (No. 98), 1949 describes collective bargaining as: "Voluntary negotiation between employers or employers' organizations and workers' organizations, with a view to the regulation of terms and conditions of employment by collective agreements."

Collective bargaining could also be defined as negotiations relating to terms of employment and conditions of work between an employer, a group of employers or an employers' organization on the one hand, and representative workers' organizations on the other, with a view to reaching agreement.

It has not been an easy task in Malawi to have a CBA in place. It is the desire of all employees to have a CBA as the weapon to protect them from any exploitation at work. There has been high resistance from employers to have a CBA in workplace and this has affected quality of the contents in the CBA. According to the respondents, the CBAs are supposed to cover issues around condition of service i.e. wages, working hours, job security, HIV and AIDS, Gender and women. Below is a table that shows the extent on how these are covered;

Condition of service

CBA

Wages

CBA’s state that periodic negotiations are to be conducted. Unions normally initiate dialogue with set of demands

Working hours

This is followed in line with the Employment Act but if there is need for any exception then the CBA stipulates how excess hours will be compensated

Job Security

It is mostly based on the Employment Act; however some CBA’s cover their own procedure to follow. Nonetheless, separate documents on displinary dismissals and appeals are written in separate documents.

HIV and AIDS

Few CBA’s capture on how those infected or affected should be treated. However some companies have HIV and AIDs policy.

Gender and Women

It is still a big challenge and most CBA’s are not clear on this but guidelines are available for gender policy in unions.

It must be noted that the conditions of service are clearly stated in separate documents, however the trade unions try as much as possible to incorporate them into CBA’s. According to one of the respondents, they do not put all the information in CBA’s to avoid making it a very big document. 

18 out of 22 trade unions have at least registered a Collective Bargaining Agreement (CBA) in Malawi.  Overall the unions have registered 86 Agreements (CBAs).  Toping on Collective bargaining agreements is Hotel, Food Processing and Catering Workers Union and Textile, Leather Garment and Security Services Workers Union.

Trade Unions focus so much on wage negotiation at the expense of other conditions of service hence working hours, job security, skills development and other services are hindered.  

In collective bargaining certain essential conditions need to be satisfied, such as the existence of the freedom of association and a labor law system. For unions that operate within the framework of collective bargaining agreement, it is a trend that when negotiations with their respective employers reach a stalemate, a union may declare a dispute by providing the employer with a written notice. Thereafter, at least two meetings between the employer and union would be arranged, failure of which both the employer and union may agree to seek the intervention of a mediator. In few instances, upon the failure of the mediator to resolve the dispute, a union may resort to industrial action. Alternatively, the dispute may be referred to the industrial court for hearing and judgment.

According to Chinguo (2012), members in unions that have signed CBAs did not know the content thereof. This is due to lack of transparency among the leadership and the union members. Hence members of trade unions have expressed dissatisfaction towards effectiveness of CBAs due to high expectations towards their general welfare at the workplace.

In order to have effective CBAs in workplaces, it is important that unions should also consider capacity building on issues surrounding CBA. Members should understand that collective bargaining is not once off but rather a continuous process which will help the unions to gain their bargaining power. Given the current scenario within the collective bargaining context, unions should have up to date information of their sector so as to have an edge over the employers.

Collective bargaining agreement cannot address all workplace issues that might arise in the future, however the agreement covers issues surrounding wages and other benefits. Therefore, for better living standards of workers to improve there is need for better labour policies, which will help to influence employers to accept CBAs in workplaces and bargaining for good wages will become easy.  A lot of policies have been in draft form e.g. Employment and labour policy, child labour policy, and HIV/AIDS Workplace policy among others which creates unfriendly environment for workers.

4.0 Conclusion and Recommendations

It is important for Trade Unions to conduct capacity building on Collective Bargaining Agreements just to ensure that the document which are created addresses workers problems. Given the current scenario within the collective bargaining context, unions should have up to date information of their sector so as to have an edge over the employers.

Unions should also resist the interference by government officials in the collective bargaining arena. It is high time the unions stood up for their rights and ensure that their gains are not eroded by government officials as they try to gain support from business. Additionally, Trade unions should continue to put much effort in pushing for collective bargaining agreements because employers do not want to be bounded hence they will hardly sign the agreements willingly. It is for this reason that the Trade Unions should ensure the collective bargaining agreements stipulates clearly on the conditions of service for their own benefits.

Recommendation

  • Negotiators should undergo to special training.
  • There is need for research in respective unions before coming up with a CBA
  • Trade Unions should also negotiate other benefits other than wages e.g. study leave, social protection e.t.c.
  • Trade Unions should bargain for a living wage
  • Networking amongst unions for CB to be effective and this includes sharing information.
  • Trade Unions should make use of the Collective Bargaining Manual which is already available.
  • Employers need to understand the importance of CBA to formalize all issues on a workplace. 

References

Chinguwo,  P. (2012). Trade Union Services and Benefits.

Dzimbiri, L. (2008). Industrial Relations in a Developing Society: The case of colonial, independent one party and multiparty Malawi. (Gottengen: Cuvillier Verlag)

ILO (2007). ILO’s Eight Core Conventions on Fundamental Human Rights

Labour  Relations Act (1996). Zomba: Malawi Government

www.tradingeconomics.com/malawi/inflation-cpi  

United Nations Development Programme. (2010). Human Development Report. New York: UNDP