How collective bargaining impacts individual workers

The Malawi tea industry’s first-ever collective bargaining agreement makes important strides towards living wage for workers

A living wage for tea workers is one of the core goals of the Malawi Tea 2020 programme. To move towards that goal, the programme has been prioritising an improved wage-setting process with greater worker representation – in other words, making sure workers’ voices are properly heard.

In 2016, the programme made an important step towards giving volume to these voices by signing the first-ever collective bargaining agreement (CBA) in the Malawian tea industry. This has enabled workers’ and employers’ organisations to engage in the meaningful process of collective bargaining. Stakeholders of the Malawi Tea 2020 programme recognised that a negotiated wage not only encourages workers’ voices to be heard, but also provides an opportunity for workers to be recognised as key stakeholders within the industry – where they deserve to be.

Forming the CBA

Historically, organising the workforce in Malawi has not been an easy task. Unions in Malawi were forbidden until 1994, meaning there was limited capacity for workers to form a united body through which they could engage with employers.

This has now improved, and organised workers are respected in the bargaining process. With the support of Oxfam, Rainforest Alliance and IDH, the Malawi Tea 2020 programme has been focusing on building the capacity of union representatives to engage effectively with employers. Key results have included the development, negotiation and signing of a recognition agreement between the Tea Association of Malawi (TAML) and the Plantation and Agriculture Workers Union (PAWU), as well as the aforementioned signing of the first-ever tea industry CBA in 2016.

The CBA continues to provide a platform for wages to be discussed and negotiated between employers and employees. According to the agreement, workers’ representatives can negotiate their wages through PAWU with their employers, who are represented by TAML. Since the CBA’s launch, the two parties have agreed to meet periodically, or at least every two years, to negotiate wage increments and any other issues affecting workers’ wellbeing.

Capacity building for meaningful collective bargaining

Before the CBA negotiations – the last of which took place in 2018 – PAWU and TAML representatives provided capacity-building sessions as part of Malawi Tea 2020. These sessions helped give both sides the negotiation skills required, and to make them aware of the negotiation process.

Going forward, PAWU and TAML representatives will continue to provide the capacity-building sessions, which are expected to help the CBA process continue beyond 2020. PAWU’s operation, organisation and recruitment processes have been continuously strengthened by Oxfam, which has worked intensively with the union over the entire duration of the programme. By organising leadership training, gender committees, study circles and more, PAWU has grown stronger and become an inclusive organisation at grassroots level.

The CBA process is a transparent process of wage increment.

Emmanuel Sandra

Tea Sorter

One issue PAWU must routinely deal with is making sure that it represents 15% of tea workers in Malawi; this percentage is required by law for the union to participate in the CBA negotiations. Prior to each negotiation, the union membership is verified by a team of stakeholders (TAML, IDH and Oxfam, together with PAWU) to ensure that the 15% is met. However, achieving this can be a complex task. As tea is a seasonal crop in Malawi, many workers are recruited for each new tea season, and the union must recruit workers every year to ensure that the 15% member threshold is being met. It has proven difficult to change the recruitment process over the course of the programme, and PAWU and Oxfam have worked on other methods of dealing with this issue, such as the use of a digital registration system.

Positive results from collective bargaining

The CBA has continued to deliver positive impact. The 2018 CBA resulted in an 11.29% wage increase for 2018–19, and a further 5% increase for 2019–20 for all members of the bargaining union. The 11.29% increase translated to USD 1.90 (MKW 1,380) from USD 1.71 (MKW 1,240) per day and the August 2019 5% increment brought the basic wage in the tea sector to USD 2.11 (MKW 1,586). Now, the basic wage for workers in the bargaining unit is USD 2.16 (MKW 1,618) per day. The CBA has led to a reduction in the living wage gap by slightly over 50%. The CBA has also resulted in TAML’s wage increment being greater than the inflation rate. For example, in 2018 when the wage increment was at 11.29%, the rural inflation rate was 7% while food inflation was at 9.5%, according to the Reserve Bank of Malawi. Lastly, the CBA resulted in a wage that is above minimum wage.

However, despite these positive impacts of the CBA, the wage increment has been challenged by the country’s tax system, whereby some increases have been swallowed up by tax. In Malawi, the tax-free threshold is now increased from MKW 45,000 to MKW 100,000 per month, while the average basic worker’s wage is MKW 42,046 per month. With this new increased tax-free bracket, for the worker whose pay is below the threshold, their take-home pay will be spared. A study carried out by Oxfam, TAML and IDH to assess the percentage by which the tax-free income threshold can be raised to keep tea workers’ wages in step with inflation and living wage adjustment, based on previous trends and government timelines for wage adjustments, has greatly influenced the new tax threshold.

Impact felt from the CBA

Although the Malawi Tea 2020 programme is still working towards achieving a living wage for tea workers, some workers in the bargaining union have reported positive impacts already. One worker – Matilda Kingsley from Naming’omba tea estate – revealed: “With the increase in my wages, I am able to buy enough farm inputs and enable my home to be food secure. I am also able to send my elderly parents MKW 10,000 a month.”

Patrick Alfred, another worker from the same estate, supported this claim: “Indeed, our homes have become food secure, and I am able to pay school fees for my sibling studying Electrical Restoration at a technical college.” However, Patrick added that the tax-free threshold continues to present a problem for workers: “The wages are not enough to meet all my needs. I would appreciate it if the government raised the tax-free threshold to at least MKW 55,000.”

One observation from the producers’/employers’ side is that the inception of the CBA has reduced the number of strikes among workers. This is largely because participating in the negotiations helped workers understand the other costs that employers have to meet to sustain the industry besides wages.

Negotiations for the last CBA have resulted in a 2% increase effective 1 October 2020. Both PAWU and TAML have successfully been building capacity as both parties are realising the benefits of the CBA. CBA negotiations will extend beyond 2020, continuing to bring important and sustained wage growth to tea workers as part of Malawi Tea 2020. During the last negotiations, the two parties have agreed to meet again in July 2021 for another negotiation depending on the prevailing economic situation.

It is without a doubt that we have experienced an improved bipartite relationship with PAWU through consensus building. All negotiations have taken place in good faith with conclusions that have resulted in productivity and sustainability of the industry. It is our sincere hope that this trend will continue even in difficult circumstances. 

TAML

Sorry

Your browser is too old to optimally experience this website. Upgrade your browser to improve your experience.