Malawi state workers end strike after pay hike deal
LILONGWE Feb 21 (Reuters) - A two-week state workers strike in Malawi has ended after union leaders and authorities agreed on a 61 percent pay hike for the lowest paid public-sector employees and a 5 percent rise for high earners, union officials said on Thursday.
More than 100,000 public sector workers went on strike last week demanding a 65 percent wage increase - almost double the inflation rate - to counter a devaluation of the kwacha currency and rises in the cost of living.
"We have agreed with government on a 61 percent increment for the lowest paid civil servant and 5 percent for the highest to be paid in arrears from January 2013 effective from next month," civil servants trade union president Kamphinda Banda told reporters.
During the strike, schools and the international airport were closed, forcing Kenya Airways and Ethiopian Airlines to cancel flights to Lilongwe. Major hospitals, already short of health workers and medicine, were paralysed.
Finance Minister Ken Lipenga said on Tuesday that the government could not afford to increase wages and was negotiating with the striking workers.
But the head of the government negotiating team, Ben Botolo, said the state could meet the agreed increments with cuts in other areas.
"Of course a few services are going to suffer with this increment because we have had to cut off some money in some other sectors," Botolo said.
President Joyce Banda has instituted painful economic reforms backed by the International Monetary Fund and foreign donors since winning office last year. Aid traditionally accounts for about 40 percent of the budget.
The IMF's mission chief to Malawi, Tsidi Tsikata, said on Tuesday there were "encouraging signs" that the country's economy is on the mend, with foreign exchange more available and good rains set to increase farm output.
The IMF also recommended cutting or postponing non-essential spending. (Reporting by Mabvuto Banda; Editing by Tosin Sulaiman and Roger Atwood)