GOVERNMENT has awarded a marginal salary increment to the US$100 monthly allowance paid to civil servants after increasing the wage bill by about 40% that will result in an average salary of about US$140.
Finance Minister Tendai Biti in his mid-term fiscal policy review yesterday increased the civil service wage bill by 41% to US$48 million monthly from US$34 million to meet the salary adjustment.
The current wage bill accounted for 35% of government total expenditure and 13% of GDP.
Biti said government with effect from this month would review the remuneration framework of civil servants taking into consideration the need to differentiate between grades.
“I am, therefore, proposing to set aside an additional US$151 million to year-end to support implementation of a modest pay structure which begins to recognise grade, albeit initially across only limited differentiated bands,” he said. “In line with this, effective 1 July 2009, I propose to set aside an additional US$14 million per month over and above the current US$34 million to support a review covering the period from July 2009.”
A simple calculation of the money set aside for the salaries showed that civil servants would each get an average of US$140 monthly. The workers have since February been paid a US$100 allowance.
“Reviews that allow for decompression of the wage scale will improve motivation and retention of skilled civil servants. The Public Service Commission, guided by the above resource envelope, is working out the pay structure effective from July 2009 after which payments should be processed by month-end,” Biti said.
“To avoid crowding out non-wage expenditures, additional reviews will in future be implemented in line with international best practices with regards to the ratio of the wage bill as a proportion of total expenditure and GDP respectively at about 30% and 8%.
He said further reviews to the remuneration of government workers would be made in the next budget.
Biti added: “Government is also urging public servants, including pensioners, to exercise restraint on wage demands that are beyond the capacity of the budget and the economy at large.
“I also wish to emphasise that we cannot spend what we do not have and, therefore, the decompression of the wage bill I have made in casu is consistent with the total absence of fiscal space characterising this Government. We are no longer printing our own money, therefore, the days of inflationary and populist wage increases are gone.”
In the same review, Biti officially demonitised the Zimbabwe dollar and announced that government would raise US$6 million to purchase the local currency strapped in depositors’ bank accounts, as well as cash outside the banking system.
This measure would bring to an end talk that the Reserve Bank intended to reintroduce the local currency after President Robert Mugabe said his government intended to review the use of multi-currencies.
“The hyperinflationary environment, which became more severe in 2008, left the Zimbabwean dollar valueless, leading to the adoption of multiple currencies by government beginning February 2009,” Biti said.
“As part of the process to formally complete the transition into the multiple currency system, I propose the demonetisation of all the remaining Zimbabwe dollar balances held by the financial sector as well as notes and coins in circulation.”
Formal demonetisation, Biti added, should allow for settlement of all remaining Zimbabwe dollar transactions and obligations prior to the introduction of the multiple currency system in February.
“At the present moment, estimates indicate that about US$6 million will be required to purchase the entire stock of Zimbabwe dollar balances with banks as well as cash outside the banking system. However, current capacity to raise the required US$6 million is limited,” he said.
Biti, however, said the review of use of multiple currencies and the local unit would be undertaken once “there is clear evidence of a strong economy” characterised by a “sound track record of policy consistency” and implementation, a sustainable external position, and a strong financial sector, necessary to support and sustain the desired currency regime.
“Such a review will also consider a number of currency regime options, guided by the SADC objective of achieving a unitary currency by 2018,” he said.
BY BERNARD MPOFU