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to wage bill disaster for economy
Mangudhla, The Independent (Zimbabwe)
August 16, 2013
Robert Mugabe’s recent pledge to increase civil servants salaries
by year-end would spell disaster to the bleeding economy, analysts
During his Heroes’
Day Commemorations speech, Mugabe promised to address the issue
of salaries and living conditions for civil servants by year-end.
He said despite
budgetary constraints, government managed to increase the basic
salary and allowances of public servants by 5,3% with effect from
January this year as well as introduce allowances for members of
the public service based in rural areas.
to augmenting the monetary allowances for members of the public
service, Mugabe said government was offering other incentives such
as housing, residential stands and training loans.
is committed to improving the pensions and general welfare of war
veterans, ex-detainees and heroes’ dependants. In this regard,
the National Heroes Dependants Assistance Fund, which was established
to provide monthly allowances for both surviving spouses and minor
children under the age of 18, will receive support from government’s
empowerment schemes,” he added.
While some economists
contend Mugabe is just politicking and will not follow through on
his promises, others believe the president-elect will deliver on
the promise to regain support.
An analyst who
requested anonymity said the new government could simply bring some
of the diamond money, previously unaccounted for, into formal circulation
and fund such an initiative.
constitute a significant portion of the country’s formal workforce,
hence fears that an increase in their wages could, as in previous
instances, result in increased inflation driven by higher rentals
and higher prices of basic goods and services.
Robertson said Mugabe’s move is ill-timed as other economic
variables are at variance with a civil service wage rise. He said
a decision to spend more on civil servants from the country’s
tight budget would crowd out social services expenditure.
not be able to run this economy properly if we take more to pay
wages. In fact, that’s the reason education, health and power
stations are not working properly,” said Robertson in a telephone
He said government
needs sound economic policies to stimulate activity and increase
all revenues so as to support a wage rise.
give higher wages when you don’t have activity. You have to
start where the money comes from,” Robertson said.
which are used to pay civil servants are a function of economic
activity and for him (Mugabe) to have more revenue, we need more
economic activity, more investment and more production. That means
we have to mend what has been destroyed, we need to start with farming
and the land reform.”
economic analyst Erich Bloch said while it is critical to increase
civil servants’ wages, a viable plan needs to be in place.
servants are grossly underpaid, but if we are to increase their
wages in this current situation it means we have to cut down on
other expenses and reduce the budget deficit,” he said.
should be a tremendous reduction on travel costs by cutting down
on these huge government delegations and we should also remove ghost
workers who were exposed by an independent audit so that we can
use the money they are getting to pay more to real and existing
an Ernst & Young audit report, government could have as much
as 75 000 ghost workers who gobbled close to US$18 million per month
since 2009 in wages.
assertion resonates with Confederation of Zimbabwe Industries’
immediate past president Joseph Kanyekanye’s argument in 2012
that there is need to actually retrench a significant portion of
government employees in line with the current budget’s limited
salaries were gobbling up nearly US$2,6 billion in 2012, which translated
to 70% of the government’s total revenue collections. Government
spends around 35% of GDP compared to 27% on average for Africa and
25% for Asia.
Over half the
total expenditure goes towards salaries for 230 000 civil servants,
the highest ratio of public service wages to gross domestic product
in sub-Saharan Africa except in Lesotho.
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