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Far too many businesses and organisations in Zimbabwe operate secretly when it comes to staff remuneration, especially in the top levels and this secrecy is just as bad in the private sector as in the public sector and quasi-public sector.
There is no reason for it. In the private sector, shareholders are morally entitled to know, at least in broad terms, what they are paying those who manage their business and the boards of directors, who are elected by shareholders, are entitled by law to see the precise details of just what they pay in cash and kind these same managers.
It is the same with parastatals, State enterprises and local authorities. The shareholders, which in this case is all of us, should be allowed to know what is going on and should be allowed to demand value for money. The boards, or supervisory ministries, need to know full details.
And of course everyone needs to obey the law and pay their taxes, which means that the Zimbabwe Revenue Authority must be allowed to know who earns what and preferably have this information in a simple table that makes tax calculations so easy.
For some weird reason allowances have been allowed to dominate pay scales. Since the mid-1980s there has been no need for this. The tax liability on almost all allowances is exactly the same whether they are called an allowance or called salary.
It would make far better sense if all monthly payments that attract standard rates of tax were simply lumped together as “salary”. If a person is worth US$10 000 let that person be paid that as a salary, rather than have a salary of US$2 000 a month plus a bunch of monthly allowances totalling US$8 000.
The only allowances or benefits that need to be listed separately as the intermittent ones, such as for education, or those where there are different tax systems, such as for company cars.
The private sector and many organisations in recent years has come under pressure from external auditors most are obliged to hire to have everything out in the open on the pay slips, with no exceptions. Boards of directors can now at least see what everyone is paid and what they take home after taxes and levies. There is nothing wrong, as an employee moves up the tax brackets, in looking at take-home pay as the critical factor in remuneration since quite often what looks like a very grand salary is just ordinary once Zimra, NSSA and the like have taken their percentages.
Now it is the turn of the parastatals, State enterprises and local authorities. The Government was horrified, with good reason, to find some in these areas were being paid allowances but were not being taxed. That has ended.
Indeed this week they are participating in a forum, with Zimra, to get the mess sorted out.
In his keynote address to this forum the Chief Secretary to the President and Cabinet, Dr Misheck Sibanda, spoke of the progress in the reform of corporate governance in these sectors. For a start allowances can only make up 40 percent of total remuneration. So hiding payments is out; what a person earns has to be out in the open. And they have to pay taxes on this total, just like the rest of us.
The total packages now need to be specifically approved by boards and benefits, at least for top staff, by relevant ministries. And chief executive officers and the equivalent need to go on performance contracts with a maximum of two four-year terms. This should not be a hardship; the people we want in these posts should be able to move between the public and private sectors and if nothing else bringing in the virtues of each to fight against the vices of each.
If they are not that competent why do we want them running the State enterprises?
And finally all bonuses need to be performance related, at least for top staff. We have all read about the huge reforms in many other parts of the world over high bonuses given for failure. A first class person doing a first class job should be allowed to make a really good salary and bonus. But we need to reward success, not failure.
Certain posts, even in the quasi-public sector, might need fairly good pay to attract the right person; but let us know what the right person costs and let us know that the person chosen is, in fact, the right person for the job before we agree. And let that person justify every cent we pay them, by doing the job superbly well.
Online Reporter