United States Department of State

An estimated 89 percent of Malawi’s total labor force of approximately 6.6 million work in the informal sector, largely outside any regime of labor law and policies. The formal employment sector operates under a host of labor rules and regulations. Due to capital requirements, all foreign investors are categorized in the formal sector. Malawi is a signatory to the International Labor Organization (ILO) Convention protecting worker rights and has ratified all the ILO Fundamental Conventions and the Forced Labor Protocol, but enforcement is generally weak.

Employment and immigration laws and regulations require any local or foreign investor to prioritize hiring of Malawian nationals except in cases where the needed skills are not available locally. There are no provisions for labor laws to be waived to attract or retain investment in Malawi nor are there additional or different labor law provisions in Export Processing and Special Economic Zones for purpose of promoting exports.

In the formal sector, the current official minimum wage is approximately USD 53 per month.

There are no restrictions on employers adjusting employment to respond to fluctuating market conditions so long as such adjustments comply with employment laws and regulations. The Employment Act requires employers to provide severance pay when there is redundancy or retrenchment or unfair dismissal, but this is not applicable in cases of long service or when an employee is fired due to breach of the contract. Currently, there are also no government-provided social safety net programs for workers laid off due to economic reasons nor are employers required to have unemployment insurance for their employees. Employers are encouraged to make provisions that cushion retrenched employees.

By the Pension Act of 2011, all employers in Malawi are mandated to place employees on a contributory a pension plan, where the employee contributes a minimum of 5 percent and the employer a minimum of 10 percent. A gratuity (usually in the form of a 13th month salary) is paid to certain types of employees that are exempted by the Act, including domestic workers, members of parliament, expatriates in possession of Temporary Employment Permits, seasonal employees, and tenant farmers.

Aside from military or police personnel, all workers are legally permitted to form and join trade unions without previous authorization or excessive requirements. Unions must register with the Registrar of Trade Unions and Employers’ Organizations in the Ministry of Labor. There are approximately 46 trade unions, mostly affiliated with the umbrella Malawi Congress of Trade Unions (MCTU), covering approximately 300,000 workers, representing approximately 41 percent of the formal employment sector. The informal sector is represented by the Malawi Union of Informal Sector (MUFIS) formed to organize, protect, and negotiate on issues related to rights of informal workers. Despite the membership size as a portion of the formal employment sector, the MCTU’s power is limited. Based on Trade Union registration data, of the 72 registered Unions, 67 have registered collective bargaining agreements (CBAs) representing a 94 percent coverage, broken down by sector as follows: academic (6); agriculture (6); building and construction (2); chemical and energy (3); civil service (5); civil society (1); commercial (7); education (8); electronics and media (2); energy (2); entertainment (1); federation of trade unions (3); health (4); hotel and catering (1); housing (1); judiciary (2); media (2); health (1); security (1); statutory and parastatal (2); textile and garment manufacturing (1); and transport (6).

The Industrial Relations Court (IRC) has jurisdiction over labor disputes and other issues relating to employment. An aggrieved party may appeal the decision of the IRC to the High Court of Malawi but only on matters of law or jurisdiction. IRC decisions are final and binding on all other matters. The Labor Relations Act (LRA) governs labor-relations management in Malawi’s formal sector. Employers, labor unions, and the government lack sophistication regarding labor relations/disputes. The government enacted the Workers Compensation Act in 2000 but the workers compensation fund was only operationalized in 2022. In October 2021, the government amended the LRA to allow an employer to deduct wages from an employee who strikes for more than three days per year and authorizes the Minister of Labor to designate categories of workers as essential, thereby prohibiting them from striking or lockdowns. The LRA amendments also removed the requirement of employer and employee panelists in the IRC, thereby loosening bottlenecks. 2021 amendments to the Employment Act prohibit forced and tenancy labor, provide special working conditions for pregnant and breastfeeding female employees, provide for paternity leave, and make provisions for deduction of wages for the period an employee is absent from work due to participation in a strike. In 2023, there were no major strikes that posed serious investment risk. However, a truck drivers’ strike for salary increases led to delayed fuel deliveries, causing fuel supply shortages that caused an investment risk for some businesses. The following are pending draft bills and policies in the labor sector: Labor Export Regulations, Labor Migration Policy, the Health and Welfare Act, Occupational Safety, Health, and Welfare Policy.

The Government of Malawi does not fully meet the minimum standards for the elimination of trafficking but is making significant efforts to do so.  Nevertheless, capacity limitations and credible reports of official complicity continued to impede the government’s efforts to carry out anti-trafficking law enforcement efforts and proactively identify and care for trafficking victims.
For additional details see the 2023 TIP Report on Malawi.

The overall labor force is characterized by very limited levels of skills and education. Most working-age individuals in Malawi live in rural areas and are involved in subsistence agriculture or informal employment — primarily minimally capitalized micro or small enterprises reliant on household members for labor. Child labor is common. Unemployment is 20.4 percent overall and 27.5 percent among younger workers. 51 percent of the population is below the age of 18, a demographic bulge that will need an increasing number of jobs. Skilled and semi-skilled labor is scarce and skilled employment opportunities are extremely limited. Skill mismatches are particularly common in construction, manufacturing, mining, transport, and tourism. Despite the Gender Equality Act of 2013, discrimination against women is pervasive, and women still have lower literacy and education levels and less access to employment opportunities.

A small minority of Malawians are college educated. Malawi has six public universities that provide bachelor’s and master’s degrees in several fields, including accountancy, law, economics, engineering, medicine, ICT, education, agriculture, and administration. The University of Malawi and the privately owned Catholic University are accredited to offer law degrees. PhD programs in economics, health, agriculture, and education usually enroll a few candidates each year. The government is also expanding its network of vocational schools and initiated a process of aligning vocational training curricula to industry needs for demand-driven skills development.  The Ministry of Labor has developed a Labor Market Information System (LMIS) to bridge the information gap between employers and job seekers that will help curb skills gaps in the labor market.