Cabinet gets 80% subsistence hike

Malawi Government has increased by 80 percent Cabinet ministers’ subsistence allowances from K25 000 to K45 000 effective August 6 2012.

While the Office of the President and Cabinet (OPC) has defended the increase, civil servants are outraged and have since demanded a similar hike to their allowances.

A leading public finance commentator, Dalitso Kubalasa of the Malawi Economic Justice Network (Mejn), has described the move as “unfortunate”.

In an interview on Friday, Clerk to Cabinet Clement Chinthu Phiri said the hike is responding to recent increases in hotel rates.

Said ChinthuPhiri: “The K25 000 [about $100] was set in 2008 when hotel rates were between K18 000 [about $72] and K20 000 [about $80]. Now, [per night], hotels are [charging] between K38 000 [about $152] and K49 000 [about $196].”

The rise comes at a time the Joyce Banda administration is implementing austerity measures to, among others, control public expenditure, a necessary evil to stabilise an economy hurt by rising inflation, a weakening local currency, foreign currency shortages and stunted domestic and foreign (donor aid) revenue.

“Yes, this may be seen as contradictory, but look, ministers are people and they also deserve decent accommodation,” said ChinthuPhiri.

The K45 000 [about $180] is all-inclusive—bed and breakfast, meals and incidentals, according to OPC, which said the rise was already planned for.

“It was already factored into the budget because we knew we were going to change,” said Chinthu Phiri.

He said ministers were risking their lives driving at night to return to Lilongwe from assignments because they could not afford hotel accommodation with their previous allowances.

“It is not a daily expenditure. In fact, their travel has been limited to not more than eight nights in a month,” said Chinthu Phiri.

He said OPC has a monitoring system which will ensure there is no abuse.

If ministers travel for a function to districts surrounding Lilongwe, notably Kasungu, Mchinji, Salima, Dowa, Dedza and Ntcheu, they are expected to return to capital city the same day, he said.

But president of the Civil Service Trade Union (CSTU) Eliah Kamphinda Banda said: “It is a very sad development, especially knowing that civil servants have not been considered in the increase.”

The most junior civil servant currently gets about K4 000 whereas principal secretaries—who require similar accommodation with ministers—are stuck at the non-accommodated per diem of K25 000 per night.

“I ask government to review subsistence allowances for all civil servants by the same margin [80 percent],” said Kamphinda Banda.

Government announced an average of 21 percent salary increase for civil servants in June, just after the Reserve Bank of Malawi devalued the local currency by 49 percent and floated it, which saw the unit falling further.

This led to sharp rises in prices of consumer goods and services on the market.

Professor of economics at the University of Malawi’s Chancellor College in Zomba, Ben Kaluwa, told The Nation on Saturday that “all these things [higher perks] are coming in the wake of the devaluation.”

He warned that raising perks, while necessary to a certain extent, should be done cautiously to avoid destabilising the economy.

Kubalasa also said he was stunned by the development.

“That, if true, might easily be misinterpreted as an unfortunate contradiction in the light of the real pressing need long overdue to find redress for well-deserving, hard working civil servants such as nurses, teachers, etc., whose monthly salaries are actually a third of such an adjustment!” said Kubalasa.