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The uniformed forces and civil servants are receiving their traditional annual bonus, with the first half this month as agreed with the civil service employee representatives, despite a brief tightness in tax flows.
The Government has made it clear that its commitments on all pay-related aspects for its work force and the social requirements of supporting the vulnerable, both rural and urban, in the wake of the major drought this year have priority, with other spending if necessary cut back or put on hold temporarily.
This solid commitment to those who do the work and those who need help must be commended, since these are critical promises made by the Government and will ensure that normal life can continue and that the expectations of so many people are being met.
The split in the bonus payments over two months has become the civil service norm in recent years as the Government remains determined to adhere to fiscal discipline and will not borrow or print money to pay salaries.
The same commitment to pay bonuses is needed from other employers, who have either made similar commitments or who very well know that their past actions mean that their staff have similar expectations. When a bonus has been paid every year for decades it has become a part of the traditional pay package, even when it has to be reset each year, as the Government itself well knows.
Even our income tax law takes the bonus payment into account, with a large slice, the whole bonus for those of middle and lower grades in both the public and private sectors, normally falling within a special tax-free zone, with the particular band adjusted yearly at Budget time, and everyone expecting a similar adjustment soon when the new Budget is announced by the Finance Minister.
Admittedly the self-employed, the one-person businesses and the informal sector might not have a formal bonus, but they still benefit from the near universal payment of bonuses throughout the private and public sectors from the extra money that flows into the market as people spend bonuses.
Admittedly, the strong advice for most receivers of bonuses is to use the extra money wisely, but that still sees it being spent over a wide range of services as people pay off debts, buy clothing, buy school uniforms and school supplies, and divert at least a modest portion to brightening the Christmas for themselves and their family.
Bonus money is a strong driver of the whole school uniform sector, for example, and a lot of that sector these days consists of small businesses who consequently receive what amounts to their bonus with the flood of extra orders.
With good rains now starting to fall across the country there is that traditional celebratory time coming up, after the hard work of planting and initial weeding around the tiny new plants, that fits in so well with the religious celebrations of so many Zimbabweans and the start of a new year. So the tradition of paying the bonus in November and December, and its knock on across most economic sectors, makes sense.
In the past, although not much in the recent past, some unscrupulous businesses pushed up prices without justification to grab as much of the bonus money as possible.
That unnecessary and unfortunate profiteering has been diminishing in recent years as stocks and supplies have become adequate.
Demand-pull inflation requires shortages to work, so those who hoarded stocks could profiteer, but these days the high levels of competition across the retail sectors and the general good business sense of so many in those sectors means that there are no shortages and that retailers have made arrangements to have adequate stocks on their shelves.
That combination means that price-gouging is not really possible, since the spending will simply move to the non-gougers.
The additional lack of pressure comes from the fact that quite a lot of bonus spending goes on extras and special items, rather than the general monthly bills, and those who supply the extras have had months to build up their stocks and are now rather keen on selling as much as possible, rather than selling a little at inflated prices, so they can also have their bonus.
In theory, a 8,33 percent salary rise across the board and an adjustment of the tax bands would produce the same result as a 13th salary deposit, but if most people were asked to choose they would almost certainly want to retain the 13 salary payments, rather than splitting the bonus over the other 12 payments.
In effect it enforces a short-term saving regime on most in the formal sectors, and provides something more like a genuine bonus for those in the informal sectors.
So, once again we would like to congratulate the Government on its determination to fulfil its promises, despite that slight dip in taxes over one month following the recent ZiG adjustment although tax flows by now should be normal again, and we hope the private sector, who adjusted their prices almost instantly and so had no dips, realise they have no choice, but to follow suit.
Online Reporter