PROSPECTS for high salary increments this year appear to be slim given that the banking sector which had over the years been used as the benchmark for pay hikes across all sectors is now limpin
A number of banks have embarked on massive retrenchment exercises aimed at reducing their overheads.
The overheads have largely been caused by high staff turnover which has constituted the bulk of the costs.
The Confederation of Zimbabwe Industries (CZI) in their monetary policy adjustment proposals sent to the Reserve Bank of Zimbabwe (RBZ) governor Gideon Gono noted that labour, which has been accustomed to very high wage increments in the past, must now take a more pragmatic option.
“As part of their support for the recovery programme, it is vital that labour mitigate their wage expectations in the light of the falling inflation rate,” the CZI said.
“If this does not happen there will be industrial unrest and work stoppages which will be a major setback to the recovery programme.”
So far among the high profile banks that have shed staff are Barclays, Standard Chartered, Kingdom and Trust Bank Ltd.
More banks have already told employees that they will be sending them home soon.
Senior economist for the Zimbabwe Financial Holdings Ltd (Finhold) Best Doroh said many firms would find it difficult to bench their salaries against the financial sector.
“It will be difficult for companies to base their salaries using the financial sector, given that some of the financial sector firms are already streamlining their operations,” Doroh said. “It is not going to be flamboyant just to award salaries. It is now time to consolidate and streamline some operations. Gone are the days when people used to bench salaries against the financial sector.”
Since 1990 when the economy was liberalised the banking sector has seen several indigenous banks emerging.
Up until this year some of the banks have solely been surviving on political patronage since they were not publishing their results in line with regulatory requirements.
“Employees cannot justify high salary increments because of the prevailing environment. Looking at what the banking sector has been going through since December, it’s very difficult for them to award salary increments,” said David Mupamhadzi an economist with Trust Bank.
He said as long as banks struggled to find survival strategies it would be difficult to get pay hikes.
“It is not only the banking sector that has been affected but other sectors like agriculture are facing the same problem,” Mupamhadzi said.
Last month a number of locally-owned banks were hard hit by massive capital flight due to widespread panic after two local institutions were forced to close by the curator.
Zimbabwe’s financial sector was this year rocked by new $7 billion central bank capital requirements and a crackdown on speculation.
So far the RBZ has bailed out six banks with liquidity support in a bid to rescue them from imminent collapse.
Senior bankers confirmed that the days of hefty bonuses in the financial sector were over.
Zimbabwe is grappling with an inflation rate of 583%, one of the highest in the world, unemployment stands at more than 80% and there are shortages of food, fuel and foreign exchange.
The financial sector has lately also been hard hit by allegations of breaching exchange control regulations.
Some banks have already been hauled before the courts for breaching the law. However, the institutions have threatened to mount serious legal challenges against the charges.
Bulawayo-based economic commentator Eric Bloch said despite the problems in the banking industry there would be some increments.
“There is no doubt that there will be salary increments. During the past three months some firms, due to inflation, have awarded their employees more than 100%,” Bloch said. “There is a problem of growing skills personnel so this creates the need to review salaries regularly.”