Some parastatal bosses are reportedly contemplating suing the government over a Ministry of State Enterprises and Parastatals directive that salaries be cut by up to 75%.
Report by Nqaba Matshazi
There are reports that some parastatal bosses were reportedly paying themselves up to US$20 000, but they have been ordered to cut that down to US$5 000, triggering the threats of lawsuits.
State Enterprises minister, Gorden Moyo, said he had heard of the threats, but maintained that most of the lawsuits had little chance of success, as most parastatal bosses had awarded themselves illegal increments.
“There can be no litigation in this case,” he said.
“The initial salaries were illegal and there is no way the government should be dragged down by companies that are not performing.”
Moyo said parastatals were initially supposed to present proposals for their salaries and allowances to their respective boards, then ultimately to the minister who made the approval.
He said, with the directive to cut salaries, the government was looking at the enterprises on a case-by-case basis and did not have a one-size-fits-all policy.
Moyo said the government had come up with a template to determine allowances and salaries of parastatal bosses, with revelations that most were overpaid and were bleeding the fiscus.
This comes as the comptroller and auditor-General is scouring through financial statements of most parastatals, a process expected to reveal the extent of bloated salaries state enterprise bosses were awarding themselves, at the expense of loss-making firms.
“We have studied the salaries of the private sector, local authorities and the informal sector,” Moyo explained.
“From there, we compared them with parastatals in the region and we came up with this formula.”
He said, in crafting the policy, they had also looked at the state of the economy and it did not make sense that people were awarding themselves huge salaries, while the country and the rest of the citizens struggled to get by.
Moyo said there had been a review of the revenue generated by each state enterprise and that this would determine the salaries of the top bosses. “We compared the salaries and there was an issue of sustainability and reasonability, given our economic situation,” he said.