adminSamuel Myambo
THERE is an age-old adage that instructs us to cut the cloth according to one’s means. This adage applies to individuals, families as it equally applies to corporates as well as nations.
A person, family, corporate or nation that ignores the wise counsel of this adage, does so at their own risk and will have only themselves to blame for the consequences of their mistakes.
During the past few months, there has been a raging debate over the country’s huge employment costs, both in the public sector and the private sector with no solution in sight on what to do to rescue the country from this albatross that is hanging on the neck of Zimbabwe’s economy.
Admittedly, Zimbabwe is one of the countries in Africa with very high employment costs, both in the public sector as well as in the private sector. As expected, industrialists have argued that the huge employment costs are weighing down on the country’s efforts to turnaround the economy and make it less competitive in comparison with our neigbhours south of the Limpopo.
In particular, industry insists that as long as salaries and other attendant costs remain as high as they are, it will be difficult to attract foreign direct investment which is key to increasing our country’s capacity to produce and export. This is so because the bulk of the money generated by both Government and industry is going towards payment of salaries and other fixed employment costs. In addition, our existing cocktail of fragmented labour laws makes it almost impossible to retrench staff, even when production is running at zero.
Government is not spared either. On the contrary, Government has acknowledged that service delivery is suffering in the public sector because 83 percent of Government’s monthly income is going towards civil servants’ salaries and other employment costs like pensions, etc.
If we add other fixed costs of running a country or government like fuel, office rentals and stationery to the 83 percent salary bill, this means that virtually every cent that Government collects every month is going towards recurrent expenditure with nothing being spared to oil the wheels of service delivery.
Since the state of Government’s finances is the mirror of any country’s economic well-being, it can easily be concluded that the situation that obtains in Government mirrors the situation in the entire public sector which includes the local authorities, parastatals and State-owned enterprises.
It is against this sad background, that the public debate that I made reference to at the beginning of this article has been ignited.
I have found the subject so compelling that I thought it is time we put our heads together as a nation to save our economy. After all, we are our own liberators. Aren’t we? To this end, I am proposing that a cocktail of drastic measures be taken to address the issue of employment costs in both the public and private sectors.
First, it is my considered view that we have reached a stage where we need to accept that when we introduced the multi-currency system in February 2009, everyone was still suffering from the hangover of the hyper-inflationary environment of 2008, and hence we all made mistakes by overpricing our goods and services including labour.
Now, with the benefit of hindsight, we need to swallow our pride as a country by slashing salaries and allowances by 50 percent across the board in both the private and public sectors.
Monthly allowances, travelling and subsistence allowances earned by our esteemed legislators, councillors and board members of corporate entities in both the public and private sectors should also be treated the same without exception.
This drastic measure, though it may sound unpopular as is the case with all genuine medicines, will see both the public sector and the private sector making huge savings on monthly salaries which savings should be channelled towards service delivery and production respectively.
In particular, Government’s salary bill will be drastically reduced from the current level of 83 percent to about 42 percent of Government’s monthly income.
However, in order to cushion workers in the private sector like those employed in farms, plantations and domestic work, some of whom are earning salaries below $200 per month, it may be necessary for Government to set a minimum wage for these sectors so that workers are not condemned to abject poverty when their remuneration is halved, as is being proposed in this article.
It is also common knowledge that pension payouts in both the public and private sectors are chewing a large chunk of resources that otherwise should be going towards production and service delivery.
So, the second measure to be considered is that of reducing by 50 percent all Government and private sector pension payouts that are above $200 per month. Again, the effect of this measure will be similar to that of the first measure, with the savings being channelled towards service delivery and production.
In particular, the savings made from reducing the public and private pension payouts (above $200 per month) should enable pension funds to provide to our local banking sector, cheap money for onward lending to the private sector so that industry increases its production capacity and becomes more competitive.
Thirdly, all the social partners in Zimbabwe need to agree on freezing salaries and allowances (once they are halved) and bonus payouts, across the board in both the private and public sectors for an agreed period of time, of say three to five years.
While this will prove unpopular, we ought to appreciate that other countries like Swaziland have done it before since about 2012.
In addition, the above austerity measures will need to be complemented by a freezing of all vacant posts in the public sector for another three to five years to ensure that the government salary bill does not balloon again.
This will give Government ample time to implement the process of restructuring its departments and ministries in order to improve efficiency as was recommended in the 2015 Public Service Audit Report.
However, the only sectors that may be excluded from the freezing of vacant posts might be such as national security, health and education.
Another measure that might help to speed up the public sector restructuring process, might be that of reducing the normal retirement age in government and public sector organisations from the current 65 years to 60 years across the board.
This will see thousands of filled posts in government becoming vacant immediately, thereby further reducing employment costs especially in those areas where people are redundant.
At the same time, in those areas where staff replacements will be necessary, this measure will create potential employment opportunities for new and young blood from our institutions of higher learning.
Lastly, since the author is proposing a reduction in workers’ salaries across the board as a panacea to our economic challenges that are characterised by low productivity and service delivery visa-vis high fixed employment costs, the need to reduce public transport fares, public school fees and public hospital fees by the same margin as workers’ salaries becomes inescapable, if the measures proposed above are to bear some positive fruits.
In conclusion, former Reserve Bank of Zimbabwe Governor, Dr Gideon Gono, once said that ‘extraordinary situations require extraordinary solutions’. I rest my case.
- Samuel Myambo is a public policy analyst and writes in his personal capacity. He can be contacted on the following email address: [email protected].
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