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The impact of recent salary increases by the Mugabe regime
Sokwanele
June 06, 2006

http://www.sokwanele.com/articles/sokwanele/impactofsaleryincreases_6june2006.html

What did they do?
At the end of April, the Mugabe regime announced pay increases for teachers, the army and the police.

According to The Herald (the state-controlled daily newspaper), the lowest-paid soldier will now earn a monthly salary of $27.2 million - R800 or USD 130 - (previously Z$10 million), and a teacher will earn a minimum of Z$33 million per month - R970 or USD157. Bear in mind, too, that Zimbabwe's poverty datum line (PDL) currently stands at Z$35 million, so that lowest-paid soldier is actually earning less than this basic minimum.

It is sobering to look at just how far that money goes, in a country where inflation for April (the latest figures available) is 1042.9%, the highest in the world.

Let's take the case of a hypothetical teacher - call her Mrs Moyo: she probably receives about Z$28 million after tax each month, maybe a little less - R823 or USD133. How far does that salary go?

Well, she's got 3 children of school-going age: 2 are in primary school and 1 has just started high school: that's Z$2.5 million for each of the younger children, and a further Z$9 million for the eldest one, or a total of Z$14 million - R411 or USD66.

Then, because she's at work all day, and her husband passed away a year ago, she employs a domestic who looks after the 2 younger children, and helps around the house - she knows that she's meant to pay the lady Z$2.6 million, but she just can't afford it, and the lady's desperate for a job and has agreed to accept $1.5 million (because that's better than nothing at all).

She walks to work, and so do her children - leaving home at 6.30am - that saves her the cost of transport.

But her next major expense is, of course, food. Take a look at what some of the things in her shopping basket cost

• 10kgs mealie meal (the local staple) for Z$250 000
• 750ml cooking oil Z$290 000
• 1kg sugar Z$390 000
• packet usavi mix (gravy) Z$82 000
• loaf of bread Z$100 000
• 500g pasta Z$270 000
• litre milk Z$164 000
• 250g mince meat Z$227 000
• 50 teabags Z$140 000
• 5 bananas Z$170 000
• 1 bar laundry soap Z$173 000

Say she is buying double the above quantities (which won't last her family more than a few days), that costs a total of Z$4 512 000 - R132 or USD21. In reality, she probably has to spend that amount at least 3 times a month - and that's a very meagre diet for the family.

Now, as an aside, (which would be humorous if it were not for the devastating poverty of the population), she would have to take 90 bank notes of the highest denomination of Z$50 000 with her to pay for her shopping - that's a pile about 1 cm high, or half an inch for those of you still using the imperial measurements! In reality, she probably needs to pay with Z$20 000 notes, as these are more readily available - that's a mere 225 notes, about 2.5 cms high (and don't forget the weight and the security issues of carrying this sort of money around with you). Frequently, in fact, you see some of the slightly more affluent people paying for their month's grocery shopping with piles of cash 25 cms (or 10 inches) high or more!

So, after school fees, food, and paying her domestic worker, Mrs Moyo has spent (in fact she has overspent) her entire net salary of Z$28m.

Mrs Moyo is a regular church-goer, being part of the Mothers' Union of her church. She prays each night that none of her children will get sick, because the regime has just increased hospital charges - the consultation fee in the outpatients' department of the central hospital has gone up from a very nominal Z$300 to Z$760 000(R22 or USD3.60) for adults and Z$380 000 for children (for children alone, that's an increase of over 1000%).

The frightening thing about the rise of more than 1000% in school fees, is that large numbers of children will drop out of school, and others will not even be able to get any education at all. This is the second time this year that school fees have been hiked and, according to the UN Children's Fund (UNICEF) statistics for the period 1996 to 2004, only 44 percent of boys and 42 percent of girls who were enrolled in a secondary school actually attended classes (probably due to hunger and poverty). This is a grim future for our children, and for our country too.

Why did they do it?
Leaving aside the impact on the individual, we need to look at why the regime had this apparent fit of generosity in increasing civil servants' salaries.

Some weeks ago now, the leader of one of the two factions of the MDC, Morgan Tsvangirai, threatened mass action on the streets during the winter months (June or July, we assume). Clearly this is not a threat to be taken lightly by the regime, knowing as they do just how much the populace is suffering - indeed starving. Hence it was imperative to get the army and police on-sides. There had been several reports of discontent brewing in the forces, particularly among the lower ranked members, and it seems that the regime was concerned that they might disobey orders and even join hands with the demonstrators against the Mugabe regime. This threat had to be quashed. Hence the pay increases.

But how will the regime find the money to effect these pay increases? A respected Zimbabwean economist, John Robertson, has been quoted as saying that the Zimbabwe government has only one option "and that's to print money", and that a supplementary budget would have to be drawn up shortly as a result. He is also quoted as saying that in four months' time, civil servants will probably be asking the regime to double wages again.

Reliable estimates of the cost of these recent increases is in the region of Z$50 - 60 trillion (that's 60 with 12 noughts after it!) - R1765million or USD286 million. And already, recently, it is reported (in the Zimbabwe Independent) that the RBZ printed $46 trillion to pay the IMF and finance its operations, with President Mugabe's blessing.

What's that going to do to inflation?! It will spiral exponentially - completely out of control. Even the best estimates made at the end of March - before these salary increases - which looked pretty dire at the time, will appear like lead pellets beside a 30cm diameter cannon ball.

There's also the fact that the Treasury Bills (the loans that the regime makes to the public, in order to raise money for its spending) are due for repayment in June. That means that the Reserve Bank will theoretically have to find money to repay the public both the capital amount and the interest due. We say "theoretically" because in practice they do have some options: they can roll-over the bills and interest (ie tell the lenders that they can't have their money back yet, but can have it back later, with more interest for those extra months); they can also roll-over the bills and interest, but unilaterally decide on a much lower interest rate (they can pluck their own number out of thin air, and make it compulsory); or they can roll-over just the bills themselves, repaying the interest to the lenders; or, indeed, they can repay the lenders the whole amount (and surely they can only do this by printing yet more money).

We wait - with all Zimbabweans around the world - to see what the actual effect of all this will be.

Meanwhile, listen to what our leader, Robert Mugabe said just a few days ago while addressing hundreds of youth that gathered at the ruling party Zanu-PF's headquarters for the National Youth League Assembly: "During the next couple of months, prices will go down and if not, government will take steps to have central control of the economy". What absolute nonsense! It is government itself which has caused inflation by its price-fixing mechanisms, profiteering and unrestricted spending and, as we've noted above, the situation is going to get worse - much worse - rather than better.

How long must we put up with this self-serving regime? How long before change comes, as no doubt it will? Pray that the change will be non-violent, because people's patience and resources are running out fast.

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