Industry leaders hail CEO pay cuts

Chronicle Reporters
Captains of industry and Zimbabweans have welcomed government’s decision to slash salaries of parastatal bosses and local authorities saying the move will ensure level of salaries reflects performance of the economy. They also said the move would restore sanity in the economy as there was a lot of distortions as a result of the unrealistic salaries.

Government has with immediate effect capped the salaries of these bosses at $6,000 pending finalisation of a new salary structure being crafted by the Cabinet Committee on State Enterprises and Parastatals Development.

Finance and Economic Development Minister Patrick Chinamasa said on Tuesday that bonuses should be paid based on performance.
In an interview on Wednesday, Confederation of Zimbabwe Industries president Charles Msipa said salaries should be based on productivity.

“As an initial measure it is a positive step and we welcome that as the private sector,” he said. “Salaries should be commensurate with the level of productivity and profitability. That is the guiding principle that guides us in the private sector.

“It is a good step, but Government must work to complete the evaluation of productivity differentials because a $6,000 salary for ever may not be equitable.”

Msipa said after the evaluation it could be established that the $6,000 might be high or too low for some entities.
Zimbabwe National Chamber of Commerce president Hlanganiso Matangaidze said sanity should prevail in the economy.

He said some of the salaries were obscene and in the process crippling operations of the concerned entities.
“Some of these salaries were out of this world,” he said. “The new salary structure is reasonable considering that most university chancellors are also earning salaries in that range.

“When the country is fighting corruption such measures should be taken,” he said.
Members of the public also applauded the government move saying the outrageous salaries of senior managers were bleeding state enterprises and local authorities.

“We want to commend government for taking such a decisive move which confirms its commitment to fighting corruption. This is likely to boost investor confidence,” said Blessing Mkhwananzi, 27, a student at Bulawayo Polytechnic.

“Countless kick-backs that made the cost of doing business prohibitive were a result of these salaries. Government should follow this up by putting in place a monitoring mechanism to ensure compliance.”

Blessing Zibusiso Dube, a business woman, said the outrageous salaries that CEOs used to pay themselves was a reflection of the potential of the country’s economy.

“A holistic approach to this issue might be the solution. The mega salaries show that the economy has the potential to grow.
“Government needs to take advantage of this potential as it implements programmes to turnaround the economy,” she said.
Dube said Zim-Asset looked impressive on paper and what is probably required is commitment to fighting corruption.

However, Bongani Ngwenya, the Dean of Faculty of Business at Solusi University warned the new salaries might force skilled people to resign and seek greener pastures outside the country.

“From an economic point of view, this may be difficult to enforce as government did it unilaterally. We have to ask ourselves if these people are going to continue being productive,” said Ngwenya.

He said the money saved by reducing salaries of parastatal bosses would not have a significant impact on the economy.
Bulawayo United Residents Association chairperson Winos Dube said while government’s decision was laudable in the short term; it might backfire in the long run.

“Will we be able to attract the right people for these jobs? Will we get the right performance? The new salaries are a massive climb-down from what these guys have been getting.

“It might trigger a brain drain whereby skilled people might seek employment outside the country where salaries are higher,” said Dube.
He said an exodus of skilled people would cost the nation dearly.

“We are totally against the old salaries but it has to be considered that the affected people have been sending their children to very expensive schools. Government has to control everything from school fees and prices of basic commodities in order to justify the new level of salaries,” said Dube.