PRESIDENT Mnangagwa is determined to ensure that civil
servants earn handsome salaries that are above the poverty datum line with the
recent move by Government to increase their salaries and offer a cushion
allowance as compassionate gesture to protect them from inflation and the
effects of Covid-19, a top Government official said yesterday.
In an interview with The Herald, the Deputy Chief Secretary
to the President and Cabinet (in charge of communications) Mr George Charamba
said the 50 percent salary increase to civil servants that will be accompanied
by a US$75 allowance, does not preclude the bargaining efforts that the
Government workers are making.
Mr Charamba said the decision to roll out the US$75
cushioning allowances to civil servants and US$30 to pensioners, was taken
after Government took into account the ravaging effects of inflation, the
Covid-19 pandemic and the disparities between its workers and some employees
and persons with access to free funds.
He said Government was touched by the plight of civil
servants that after seeing their salaries being eroded, they have to confront
run away prices in the country’s retail shops, hence the immediate intervention
that, however, does not preclude negotiations with trade unions.
Mr Charamba said the pending Midterm Monetary Review and
also Supplementary Budget will likely factor the concerns of Government
workers.
“This Covid-19 salary review does not preclude or outlaw
collective bargaining which is ongoing, if anything, it is an extra string on
the bow of union leaders because the sum effect of this 50 percent salary
review plus allowances is to move towards the poverty datum line. They must
sing hallelujah and say we have had this gain from a compassionate employer
which brings us nearer to the poverty datum line, that means we still have an
opportunity of pushing for yet another significant review which will be
accommodated in the Midterm Review and also Supplementary Budget,” said Mr Charamba.
As of March this year, Zimbabwe’s poverty datum line for a
family of five stood at $6 420,87, and Mr Charamba said the Government is
determined to make sure that its workers earn decent wages.
“Speaking from where I sit, there is huge sympathy for the
bargaining efforts of the civil servants through their unions. Which means at
the end of the day, come three months, we are likely to see a civil servant who
is earning handsomely, the key thing being we don’t want to cause shocks that
we are experiencing now where the money is eroded by inflation,” said Mr
Charamba.
Amid protests from some union leaders that they were not
consulted, Mr Charamba said the unionists should show leadership by accepting
the compassion from Government and then bargain later.
“You can’t stand in the way of compassion in the name of
unionism. Zimbabwe will be a first in the world to have civil servants who go
on strike on account of the employer’s benevolence, the employer has decided to
show compassion without the rigmarole of collective bargaining, you can’t get
incensed with the employer improving your welfare, in any case they cannot
protest on newspaper pages while they accept the same facility on their
payslips. It will be a real lack of leadership on the part of the unionists,”
said Mr Charamba.
Detailing the ordeal that civil servants now face, Mr
Charamba said after Government reviewed salaries in February, through way of
allowance, so much has happened that led to the compassionate decision to offer
its workers a soft landing that was motivated purely by concern for workers.
“So many things have happened since February and the
allowances that we were giving them were due to lapse this month. The emergence
of Covid-19 only exacerbated what was already a bad situation for the civil
servant. Inflation spiked to the current level which is over 700 percent, and
when you have such a hefty upward trend in inflation, the inevitable result is
that wages and salaries will get eroded because they will fail to catch up with
the general pricing trend in the markets, wages end up being worse off. That
inflation was traceable to a number of factors including market rates
movements.
“There has been terrible movement in the money market
particularly with the exchange rate because of depressed production levels in
the country, which means depressed earnings from exports and also because of a
number of illicit activities that continue to take place in the market. The
brunt of all that was borne quite acutely by the civil servant because the
civil servant has no option beyond earning in local currency and the salary
reviews which are given by the employer. He has no other opportunity of getting
money in any other currency. This is very much unlike in different categories
of other employees in this economy who have other options to get foreign
currency.”
He said that while civil servants are stuck with their
salaries, others are dependent on various sources of income that include
foreign remittances that amount to US$1,2 billion annually, free funds from
various sources that amount to US$500 million, small-scale miners who sell
their gold to Fidelity and earn around US$650 million and also smuggled gold
that amounts to US$900 million annually.
“We have a civil servant who is earning in local currency
and then we will have a double disparity — disparity on the basis of sheer
income levels, then disparity on the basis of soft versus hard currency. If you
add to that the issue of inflation, the exchange rate, then you have a cocktail
of real diminution of the welfare of the civil servants,” said Mr Charamba.
Apart from that, he said although civil servants find
themselves earning far less than most people, they still have to confront hefty
prices in the same shops with those with the buying power.
“You can see the predicament of the civil servant. This is
before we incorporate Covid-19, we are just talking about the hard realities in
the labour market and also in the goods and services market. You see instant
disparities that exercise the mind of Government.
“Then came the issue of Covid-19 which ensured that
children are not going to school, workers are not going to work, the informal
markets which could have provided some release for poorly remunerated civil
servants were closed against growing consumption in the household of each civil
servant.
“This is the cocktail of the disaster that was faced by the
civil servants and I must say, realising the predicament of the civil servant,
the President then instructed the Ministry of Finance and the Reserve Bank to
work out a package in the interim pending the Midterm Review and the
Supplementary Budget. We just realised that the situation was so dire that we
couldn’t wait until the Midterm Review and Supplementary Budget.
“Something had to be done to ameliorate the social economic
condition of the civil servant who was facing eroded salaries against
skyrocketing prices, some of them asking for hard currency, so what we then
have by way of a package was simply to come up with a cushioning allowance, a
Covid-19 reprieve that was given to civil servants. The expectation was that
once that is done for civil servants then the rest of the sectors in the
economy will follow suit because the predicament of the civil servant echoes
the predicament of other employees except a few other categories.”
Furthermore, Mr Charamba said of the five distinct
scenarios that the Ministry of Finance and Economic Development had, they
settled with the option of giving civil servants US$75 with the overall
intention of maintaining economic stability.
“The Finance Ministry computed a basket of basics, which is
what gave them that figure and they also looked into the inflows of foreign
currency, the cost of the goods and what the economy could afford.”
Zimbabwe has around 330 000 civil servants, and taking into
consideration that a family of five would be expected to live on depressed
income, the Government saw it fit to cushion its employees through the US$75
allowances and the salary increase.
And to guard against the potential misuse of the
US$-denominated cushion allowances, that come to a combined US$32 million per
month for both civil servants and pensioners, the Government decided to secure
the money through forms of FCA accounts.
Key considerations that the Government took include the
market shocks implied in an increase on its wage bill from 30 percent of annual
revenue to 40 percent.
Apart from having to contend with an increased wage bill,
Government, which is already stretched by the novel pandemic, that entails lots
of imports, also wanted to minimise the disruption on its balance sheet.
The increased demand for goods and services on the market
that will be brought by increased earnings by civil servants will also act as a
stimulus to economic growth, through demand-led economic recovery, Mr Charamba
said.
“If that money to civil servants is left uncontrolled it
would feed into the black-market and also it would also result in flight of
foreign currency to neighbouring countries. Once that happens, this country
becomes a net loser by way of foreign currency earnings, add to that the other
leakages, we will drift towards an anaemic situation. So we introduced a
facility, which while enhancing the capacity of the civil servant, curtailed
abuse of that facility. Not only curtail abuse but also harness economic
growth, that is when we came up with plastic money.
Mr Charamba said the logic behind the plastic money is to
ensure that civil servants get basic goods with the Government ensuring that
utilities bills will be paid in local currency.
“We have made sure that basic utilities will be paid in
local currency not in foreign currency. The idea is not to encourage a
migration, from a local currency to a foreign currency, it is to give continued
validity to the local currency and utilities are one such, you cannot say you
want to settle your bills in foreign currency, that should be covered by the 50
percent salary increment,” said Mr Charamba. Herald
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