On 23 March, SPAWUM negotiations with Illovo Sugar (Malawi) Limited ended with an agreement for a 26 percent wage increase across the board.
According to SPAWUM, the agreement covers some 4,700 workers, about 2,500 of them in the Nchalo factory (in the south of the country, near the commercial capital of Blantyre), another 2,000 in Dwangwa (in the central region, next to Lake Malawi), and some 200 workers in the administration offices in Limbe. The company reports some 10,000 employees, including permanent and agricultural seasonal workers.
Other union demands, including housing allowance, leave grants, bicycle loans, and shift allowances will be dealt with in the so-called post-wage negotiations scheduled for the month of May.
A special matter under negotiation and discussed last January was an education allowance, which currently is given to employees in C3 category and higher – most of whom are in non-unionisable categories. In contrast, workers in categories from A1 to C2 (in the Paterson system) are offered “School Fee Loans,” which the union considers the workers cannot afford, given the general economic crisis in the country.
On 3 March, a Malawian newspaper reported a 15 percent hike in the domestic sugar price, with Illovo saying that price increases are “normally” implemented at the start of each harvesting season. However, the March increase followed a 12 percent hike in November 2012. The paper continued by saying that company revenues in 2012 increased by 71 percent… and profits by 143 percent.
Malawi hit a 35.1 percent inflation rate in January 2013 (up from 33.3 percent in Dec. 2012), as inflation exploded after a massive devaluation of the Malawi kwacha of almost 50 percent in May 2012. However, the devaluation also meant increased revenues for the company through sugar exports to Europe and to regional markets, like Zimbabwe; while the domestic market, which accounts for about 55 percent of the sugar output, maintains relatively profitable prices.
The two factories in Malawi, Dwangwa and Nchalo, contributed close to 43 percent of the operating profits in the Illovo Sugar Group in the six-month period ending in September 2012. This followed a contribution of 39.4% to the year ending in March 2012. These figures are astonishing when taking into account that the Malawian operations represented only 14 percent and 18.4 percent of the Group’s revenues in the same years. Illovo Sugar also controls operations in Zambia, Swaziland, Tanzania, Mozambique and South Africa, and is owned by Associated British Foods (ABF), which also owns British Sugar in the UK, AB Azucarera in Spain, in addition to sugar concerns in China.