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What social contract?
Mail & Guardian (SA)
June 09, 2007

http://www.mg.co.za/articlePage.aspx?articleid=310893&area=/insight/insight__africa/

Zimbabwe's government this week said it had signed a "social contract" with business and labour unions, a deal it says will effectively bring an end to years of political and economic crisis within the next six months. But one of the key partners denies ever agreeing to any such deal, while a 50% increase in electricity charges by the state power utility just days after the announcement means industry will find it impossible to keep its pledge to freeze prices. Under the ambitious social contract, government would commit to creating an environment conducive to recovery, labour would agree to tone down its salary demands, while business would agree to freeze prices and pay workers a living wage. This way, the government hopes, Zimbabwe's economy can be pulled from the brink. Zimbabwe is in a hurry to be seen to be cooperating with its opponents in solving the economic crisis, hoping to impress a team of Southern African Development Community economic experts who are in Harare to assess economic policy. The team's visit is part of a regional push, led by President Thabo Mbeki, to solve the Zimbabwe crisis.

But, the credibility of what state media have been touting as a "landmark" agreement has been immediately challenged by the Zimbabwe Congress of Trade Unions (ZCTU), the country's biggest labour federation, which is allied to the opposition, and whose participation would be key to the success of any such deal. A spokesperson for the union says the minimum conditions it set for labour's participation in the agreement had not been met. According to ZCTU spokesperson Khumbulani Ndlovu, key among the demands is a firm commitment by President Robert Mugabe's government to end all intimidation of unions and pledge to respect workers' rights, such as the right to free assembly, which was recently curtailed by a police ban on opposition rallies and marches. "The ZCTU did not sign the purported social contract. We only signed the Prices and Incomes Stabilisation Protocol. We believe the social contract is not just about putting pen to paper, but that it is a process," Ndlovu said.

The Incomes and Pricing Stabilisation Protocol stipulates that wages track the poverty datum line and be reviewed on a monthly basis. But Labour Minister Nicholas Goche insists labour did agree to a deal. "As far as we are concerned, the unions signed." The ZCTU, however, charges that government brought in a rival labour group, the Zimbabwe Federation of Trade Unions (ZFTU), to sign on labour's behalf. The ZFTU is an avowed ruling party ally, but it has no affiliates among any of the major unions. Earlier, state media announced that after months of testy negotiations between government, business and labour, a number of protocols had been signed to stabilise the country's world record inflation, increase output from dormant factories, and reform an exchange rate system partly blamed for a wrecked industry. Sections of the agreement released to the public are packed with lofty promises or "deliverables". Government says that now that the three sides have agreed to cooperate, "the livelihood of the majority of Zimbabweans is expected to improve significantly within the next six months."

It also says that, as a result of the agreement, monthly inflation rates of 100% would slow to 25%, confidence in the economy would be restored and the country would be awash with fresh foreign investment - all within the next six months. Gideon Gono, Zimbabwe's reserve bank governor, gave a buoyant yet somewhat trite assessment of the pact: "Let us now all rally together. Let us commit to arresting any further deterioration in our economic environment over the next 180 days and set the scene for rapid recovery." But a key provision is that within days of the signed agreement Gono must allow the country's currency, the Zimbabwe dollar, to trade freely. This week there were no signs that any such policy change was imminent. Government still resists calls for an outright devaluation, despite inflation running at 3 714%, insisting that the United States dollar trades at Z$250. Black market dealers trade the US dollar at 200 times that rate. Government and the ZCTU have had bitter relations for years, especially after Morgan Tsvangirai emerged from labour in 1999 to launch the opposition Movement for Democratic Change.

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