Mangudya spot-on on salary hikes

HARARE - Reserve Bank of Zimbabwe (RBZ) governor John Mangudya must be applauded for his stance on a moratorium on the civil sector pay, given the state of our economy.

This also comes as his Finance ministry boss Patrick Chinamasa has echoed the same sentiments about the need to curb these demands, which have been gobbling up nearly 100 percent of national budget.

But the refreshing aspect though about Mangudya’s proposals is his response measures in the form of a push for price reductions and the consensus he has built with some key unions.

In his pro-poor and second monetary policy, the ex-CBZ Holdings Limited chief executive offered alternative solutions, which are not only better than the inflationary salary hikes, but can help bolster his “competitive business” plan or policy.

In his 2015 monetary policy statement, Mangudya rightly said, “Given the lack of competitiveness and its negative effects on the economy, we do not see any room for wage and salary increases within the national economy”.

“Instead, the prevailing circumstances call for a downward adjustment in the prices of goods and services in order to promote competitiveness and ultimately for the recovery of the economy. Further wage and salary increases would only serve to choke the economy,” added Mangudya.

And he is not alone in this thinking. Recently, Chinamasa also said it was unfair for civil servants to continue demanding salary hikes from the cash-strapped government. The Treasury chief said salary increments are “unsustainable and short-sighted” in a depressed economy like Zimbabwe’s.

We totally agree with both the monetary and fiscal authorities. The civil servants wage bill is funded by tax payers’ money and hiking their wages certainly increases the burden on tax payers. More worrying is the fact that civil servants wages will gobble 81 percent of Zimbabwe’s $4 billion 2015 budget.

Surely, the whole nation cannot work to foot public service wages. We also applaud the civil sector for accepting a salary hike moratorium following engagement with Mangudya.

Under the current harsh economic environment, we strongly feel that instead of addressing the welfare of consumers from the demand side of the equation by increasing wages and salaries, government must address the non-competitiveness challenge from a supply side of the equation, which is for the reduction in prices to increase the purchasing power of the United States dollar.

As Mangudya said, the issue is not about salary hikes, which have inflationary effect, but about Zimbabwe’s pricing structures or model. If prices are slashed in line with lower fuel costs and the availability of change, as Mangudya suggests, it will also ensure broader participation of the poor in the economy. Crucially, as the central bank chief said, we need to focus on economic revival and competitiveness and pro-poor policies.

Comments (4)

one would wonder why civil servants are always crying for salary increments as if they are the only ones working in zimbabwe. if they were to understand where their money come from then they would consider other ways and means of helping the economy instead of always asking for quarterly salary adjustments. the minister of finance and his counter party the governor of the reserve bank of zimbabwe should be applauded for the suspension of salary hikes until such a time when the economy improves. it is a well known issue civil servants salaries come from tax payers money which are collected by the government, now that the industry is closing shop and most job losers are flooding the vending market, where is the government getting the money from to offer salaries to civil servants.

chimuti usatya - 13 February 2015

its unfortunate we hear such big minds when the economy is in the intensive ward. Zimbabwean economy need to be addressed from a price point of view . The problem is we have people who are awarding themselves haft salaries and it is from people such as these who always see nothing wrong with the current state of things. It is a US Dollar that we use and we should adopt international prices to say the least. Our prices can not compare with S, Afr RAND across the Limpopo yet its inferior against the US DOLLAR. Reduce price to 2010 period and our economy will pull out of this comma. The minister and the governor should act now and people will stop accusing ZANU PF and our beloved President.

KEN BUNU - 14 February 2015

let comrade chinos unleash "the reduce prices to 2010 period" I you everyone will join except the thieves in high places.

widzo - 15 February 2015

Daily news have you also ganged to savage civil servants who living hand to mouth? Do you forget in such a short space of time. These civil servants are simply crying for the fulfillment of the promises made to them. It smacks to hear someone saying civil servants are "always" demanding salary increments when the actual fact is that those adjustments have never been effected at all. Why do you protect ministers who are working on protecting their own jobs on the expense of the suffering and poverty stricken workers? How long will it take to adjust those prices by industrialists? Make a simply survey to measure how these civil servants you are ganging to savage are living. After having a clear picture then you'll be insane to support that train of twaddle.

Regalia - 16 February 2015

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