Salary Benchmarking in Malawi

With significant increases in inflation and price-rises linked to the devaluation of the kwacha, the cost of living in Malawi has increased sharply.

Malawi’s friends in Scotland are looking at how, where and if they can support.

SMP members whose organisations include Malawi-based colleagues are keen to benefit from the experience of others who have undertaken salary-benchmarking in Malawi recently.

As ever, we want to be Malawi-led and member-led.

Whether you had insights to offer others or were looking for input, thank you for joining us for an informal conversation, co-hosted by our sister organisation, the Malawi Scotland Partnership (MaSP).

With the aim of encouraging open, free-flowing contributions, the meeting was held under Chatham House Rules and not recorded on video. Government of Malawi Ministry of Labour representatives & an HR specialist joined SMP/MaSP Members and Guest Participants. The SMP noted that we are not financial advisors and are not making any recommendations regards salaries, but remain keen to be Malawi-led and to provide a platform to listen to Malawi and for members to share information and experience.

The Summary of points raised:

• Malawi’s minimum wage was previously changed with a review in 2021 and new minimum wage came into effect (by coincidence) on the day this meeting was held 1st February 2024. A chart, courtesy of Change Consult Group, showing the figures is available here

• It was emphasised that the figures given in the chart are minimum wages as a benchmark. NGOs could look at paying a percentage above.
• NGOs in Scotland absolutely want to pay a fair rate to team members in projects in Malawi.
• It was noted that as salaries are increased, there is danger that there is less budget for operational costs and programmes may be affected.

Q. If a new NGO were to come into Malawi and needed to set salary scales and they want to benchmark with other NGOs, how do they do that?

A. NGO’s should consult with Malawi’s NGO Board, CONGOMA who may be a source of further guidance for NGOs on appropriate salary scales within that sector

• For personnel previously based in Malawi but now in Scotland running an NGO - they find it was easier to set salaries and other costs when in Malawi as comparisons and price checks could be undertaken in situ to make sure salary matched any inflation. From Scotland that exercise is more difficult, but they are trying to benchmark against Malawi salaries and keep them proportionate
• Malawi trading news publishes salaries when they change
• One org mentions that they do not get involved in MW staffing decisions, operating together with a separate Malawi entity. They:
  • Budget 6 – 12 months in advance
  • Benchmark roles in different sectors
  • Make sure employees fully understand their role and package and the organisation makes them feel valued and nurtured by organisation through training & development
  • Conduct on an annual basis performance reviews/cost of living review
  • Find that contracts are really important with role descriptions (full-time employees all have competitive salary, pension, medical insurance, airtime and internet access) Not in favour of overtime but TOIL instead.
  • Development capital expenditure budgets separate from salaries.
  • Have forex accounts set up in Malawi (not to get hit by fluctuation and to manage costs in Malawi)
  • Malawi based directors draw upon forex accounts when needed
    
    
• Another org with 10 employees is:
  
  • Trying to cover cost of living increases (especially if inflation doesn’t reflect true cost of living)
    
  • Suggests that it would be extremely helpful if SMP and MaSP could be involved in larger scale benchmarking exercise
    
• Trading economics as a guide for annual increases
  • Difficulty in how to compare jobs (as added benefits in some jobs such as inclusion of medical insurance)
  • If SMP and MaSP could collate information on what the government does, what members do, that would be useful
  • Minimum wage goes up but Kwacha value is going down
  • Various organisations are doing it differently

Q Is it normal practice for salaries to increase due to length of service?

A. Yes. The longer you stay with the employer an increase in pay is expected


Q. What guide is there for payment of overnight travel allowance/being away from home allowance

A. (Another member suggests) ...this best be agreed before travel


Q. What is the tax base?

A. Most workers earning the minimum wage do not pay tax. A link was shared to Malawi Revenue Association (MRA): https://www.mra.mw/individuals/what-is-pay-as-you-earn-paye

• One attendee stated that most people in Malawi get very low wages, i.e. driver in Zambia getting paid more than MW. Also added that standard for NGO’s should be used which ideally wouldn’t be just the minimum salary
• Labour offices do vet employment agreements (contracts) for companies to ensure they do not breach the Labour Act (examples were if you got fed on job you were paid less – unbeknown to you)
  • Government sets minimum salaries but doesn’t set limit up the way
  • Important nobody is paid below minimum rate
  • International companies setting up need to go to nearest labour office for advice
• There is scope for benchmarking support from The Council For Non Governmental Organisations In Malawi – CONGOMA
• The SMP noted that it would be happy to review what useful involvement it might have in signposting to benchmarking information and sharing members’ experiences and to connect with MaSP the org in Kenya who commented in Chat at the close of the meeting that they had been struggling to register as an entity in Malawi.
• Appreciation was expressed to speakers and participants and info on forthcoming SMP events was shared