Malawi's informal economy keeps social security services out of reach
Like millions of people in Malawi, men working Blantyre's common food stalls are employed outside of the formal economy and often lack social security benefits such as pension plans. Photo by Travis Lupick.
By Travis Lupick
Two months ago, our neighbours here in Blantyre, Malawi, fired their night watchman. The man was in his late sixties and, we suspected, was going senile.
‘What will he do for money?’ I recall wondering. But the thought was soon forgotten.
Last week, however, the night guard’s fate returned to my conscience. Researching a story on social security in Malawi, I learned that in all likelihood, my neighbour’s former employee now lives in extreme poverty (defined by the World Bank as living on the equivalent of less than $1.50 U.S. a day).
Down a back road in Blantyre, a colleague and I found Enock Andaradi sifting through a pile of garbage, scavenging for anything that he could exchange for money or food.
“Life has been tough on me, especially lately because I am completely abandoned,” he told us.
Andaradi, 79, was also once a night guard. But he, too, was dismissed on account of his old age.
A few days later, Jonathan Mbenje told a similar story. Despite being 73-years-old, he was still working as a night guard, but expressed great anxiety for his future.
“For me to be working at this old age is not out of choice,” he said. “Being a guard, especially at this age, it is very dangerous.”
In Canada, these men could have paid into pension plans and now be living comfortably in retirement. But in Malawi and throughout much of Sub Saharan Africa —where, according to a comprehensive World Bank analysis, an average of 40 per cent of economic activity takes place outside the formal sector— such social services are largely out of reach.
In Malawi, there is legislation aimed at providing the basics of a welfare system.
The Employment Act, for example, includes provisions pertaining to a minimum wage, contract terminations, and severance pay. And there are sections in the act that state that employers must provide paid sick leave as well as full pay for women on maternity leave. In addition, the recently-amended Pension Bill sets the maximum retirement age at 70 and requires employers to pay 10 per cent of an employee’s wage into a pension fund.
However, according to a 2010 report by the International Labour Office in Geneva, 90 per cent of Malawians – more than 13 million people – work outside of the formal economy. And considering the extent to which significant segments of the population are fundamentally excluded from society due to poverty and inequality, the prestigious 2010 Ibrahim Index of African Governance gives Malawi a miserable score of two out of 10.
The Malawi government has attempted to extend social services to this large and vulnerable pool of labour.
Section 43 of the Employment Act refers to benefits for seasonal workers, and a 2010 amendment to the act reduced the qualifying period for long service benefits from 12 months to three. Furthermore, the 1996 Labour Relations Act provides for the formation of trade unions in the informal economy, and a group called the Malawi Union for the Informal Sector now exists.
Even still, an untold number of Malawians fall through these safety nets, which, as the situations of these night guards makes clear, remain porous.
A primary factor frustrating efforts to see casual labourers gain access to programs such as pensions is a lack of awareness.
Andaradi claimed that he has never heard of social services for the old and unemployed. “I do not know how the aged can be helped,” he lamented.
Another problem is the ineffectual state of Malawi law enforcement.
Mbenje is employed by a registered security company, and so upon leaving his job, he said he does expect to receive some form of monetary compensation to help ease him into retirement. But he complained that uneducated workers like him rarely get what they are owed.
“Most of the time, they give someone between K20,000 and K40,000 ($120-$240 U.S.),” Mbenje reported, noting that that would be a one-time payout, and not any sort of regular allowance.
“With that kind of money, you cannot survive; hence, I am still working at age 73.”
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