FINANCE minister Mthuli Ncube wants to cut the civil service wage bill by $200 million in the next two years as the government battles to rescue the economy from collapse.
BY FIDELITY MHLANGA
Ncube is keen to whittle down the government’s wage bill as part of broader measures to bring down expenditure, which ballooned to unsustainable levels in the past few months.
On Friday, the renowned economist and former banker launched the Transitional Stabilisation Programme (TSP) that will inform the 2019 and 2020 thrust, which emphasises the need to drastically reduce government expenditure.
A report by the Parliamentary Budget Office, titled Ballooning budget deficits, a threat to macroeconomic stability, released last week, noted that 90% of government revenue was spent on employment costs and the figure could rise to 120% by year-end following a 17,5% salary increase for civil servants early this year.
About $3,3 billion had been set aside for employment costs in the 2018 national budget, about 12,62% higher than the $2,93 billion allocated in 2017.
Ncube said government would be moving away from the unfunded pay-as-you-go pension arrangement and adopt a defined benefit pension scheme or defined contribution scheme arrangement in line with best practices.
He also proposed to strengthen wage bill management, reduce travel expenditures, review fuel benefits expenditure from January 2019 and curtail acquisition and provision of vehicles by the state, including replacement of condition of service vehicles.
In addition, Ncube wants Zimbabwe to reduce it foreign missions.
“The (TSP) recognises the need to reform the civil service that way beginning to make inroads towards managing the wage bill, which currently constitutes a disproportionate share of total government expenditure,” part of the TSP document reads.
The TSP proposes austerity measures aimed at addressing fiscal and debt challenges for sustained macro-economic stability and growth, strengthening fiscal responsibility over control and management of expenditure and financing fiscal deficit requirements from the market and at market interest rates.
Ncube admitted that downsizing the wage bill would not be an easy task.
“By right-sizing I mean putting people off, retiring those who have reached the retirement age and also bringing in new skills by making sure that those who need to be retained are retained and incentivised to stay,” he said.
“So that’s what we mean by right-sizing so that we cut the cloth the right way. It’s not easy by the way for government or for any company. It’s an emotional process that’s still necessary.”
Ncube’s predecessor Patrick Chinamasa once tried to implement the same austerity measures, but was thwarted by former president Robert Mugabe.
In his 2015 mid-term fiscal statement, Chinamasa proposed to reduce the wage bill from 80% to 40% of government revenues by 2020.
In 2016, he also wanted to suspend civil servants’ bonuses to align government expenditure, but was blocked by Mugabe.