HomeBusinessWage bill: An albatross around govt’s neck

Wage bill: An albatross around govt’s neck

FINANCE minister Tendai Biti last week stopped short of saying Zimbabwe desperately needs new shareholders when he said if the country was a company, it would have been declared bankrupt.

Presenting a statement on economic performance for the first quarter of the year, Biti listed a number of factors he said if not urgently addressed would slow down economic growth and reverse gains made in the past year.
The minister had projected 7%  growth this year but said the figure could be revised downwards due to high costs of production and subdued exports.
For him the writing is now on the wall. Zimbabwe cannot walk out of the economic woods alone. Foreign Direct Investment is still low owing to a high country risk.
According to the minister, state coffers are now under “stress”.
He revealed that for every US$1 generated by government in revenues, 70 cents goes towards the public service wage bill. This leaves government with 30% of its total revenue to meet its development obligations. The US$913 million wage bill constitutes 18% of the Gross Domestic Product (GDP).
This portion, according to Biti, is abnormal and unsustainable.
However, his remarks are likely to cause resentment and anxiety among public servants demanding a pay rise. Biti’s only hope lies in the ongoing public service audit which he expects would unravel dormant vacancies and ghost workers. He also proposed to “maintain a cap” on the wage bill by freezing non-critical vacancies. But this will not be the end to pressure on the fiscus.
He says existing labour laws would pile pressure on the fiscus should government decide to effect job cuts on its 236 000 staff complement.
Regionally the public service wage bill makes up an average 10% of the GDP and below 30% of total revenue.
“It is therefore imperative that government reviews both labour laws and related institutional arrangements with the view of bringing flexibility to the labour market and ensuring that wages are within the capacity of the economy,” Biti said.
He said despite workers getting some protection from sections of the Labour Act, companies intending to retrench workers will be left with a weaker position after paying out retrenchment packages.
“Even when you get retrenched, the retrenchment packages are way out of kilter with an economy that is using multiple currencies. In an economy that doesn’t have hyperinflation, it is crazy to have a retrenchment package of six months, 12 months for every year worked. It makes sense in hyperinflationary circumstances…But now what is simply happening is that companies are being bankrupted and that is the reality,” Biti bemoaned.
According to a recent Government Work Plan, the legislature intends to harmonise labour laws during the current legislative agenda for 2010 but analysts are sceptical that the process might fail to take off due to the constitution-making-process which is expected to resume in May. Parliament is leading the process of writing the new supreme law.
Labour and Social Welfare minister Paurina Mpariwa this week told businessdigest that her ministry would push for the reforms this year.
“The changes, if passed by parliament would also see government workers being administered by the Labour Act rather the Civil Service Act,” said Mpariwa in a telephone interview on Wednesday.
Should the Bill pass in parliament, working conditions of public servants will be the same as those of the private sector.
“We have received inputs from
the Zimbabwe Congress of Trade Unions and the Employers Confederation of Zimbabwe and very soon we will be inviting public input,” she added.
Mpariwa was this week quoted by online publications saying it was “disturbing” that “several” companies were seeking permission to retrench employees in order to make their operations viable.
Efforts to get comment from the ZCTU on what changes they had proposed to the Labour Act were in vain at the time of going to print.


Bernard Mpofu

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