With all the madness running amok in our economy there’s one central issue that’s been recurrent. It’s the fact that salaries of most local workers have remained static despite the rising inflation and loss in strength of the RTGS$. As much as most paymasters would have loved to address the salaries issue it’s been majorly unsustainable for them to effect pay raises. So the salaries situation has significantly eroded the buying power of most consumers. The waning buying power has also negatively affected some businesses who have realized declining sales owing to that. Effectively that has led to a rise in poverty levels in the country
Why Pay Raises Have Been A Tall Order
Salaries are a component of operating costs for any business. The forex shortages, rising inflation and weakening RTGS$ have culminated into an increase in operating costs for most businesses. This has put most businesses in a fix where they have to prioritize other operating costs at the expense of salaries. The major crux has been the weakening RTGS$ which has basically eroded the value of the salaries. So putting in place pay raises has been an unsustainable consideration for most businesses. After all, for those businesses still operating it’s somewhat a privilege because many businesses have actually closed shop. So it’s quite a perplexing situation for most people as salaries have remained static whilst prices have incessantly shot up. While pay raises have been an uphill consideration some banks have recently come up with measures to cushion their employees from the prevailing hardships.
FBC Holdings Limited
On the 20th of June, the CEO issued a circular to the effect that their staff would be getting a once-off cost of living cushioning allowance. This move was borne out of the appreciation that the cost of living has skyrocketed. So the Board of directors approved that all staff members would get twice their monthly salary as a once-off allowance. The hoped objective being that at least their staff would be able to get some relief in meeting their living expenses. The allowances are going to be paid out to all staff this week.
On the 17th of June, a staff notice was issued citing an appreciation that there’s a difficult financial situation that’s prevailing in the country. Thus the bank decided to pay out a once-off payment of an additional salary cheque this month. They’re trusting that this gesture will somewhat alleviate some of the financial hardships their staff are currently facing.
Some Of The Public Reactions To These Developments
The general consensus across social media (particularly Twitter) was that the gestures are quite commendable. It’s noteworthy because other paymasters haven’t been able to do this. However, several people seemed disturbed by the fact that still, the money wouldn’t be enough to alleviate financial challenges. This holds true across the board particularly for those with substantially-sized families. Some also couldn’t help but mention that civil servants would also really need such interventions. There were of course suggestions that a long-lasting solution would be placing the salaries in USD. We know now that’s going to be out of the picture since the multicurrency regime has been scrapped as from the 24th of June. One reaction I found interesting was that the fact that these banks can manage to do this implies they could have been doing it all along. In fact, the pith of this comment was insinuating that banks have always been profiteering and so this really mustn’t be applauded as it indicates that banks are actually making a killing. So basically these cushioning allowances got mixed reactions from across the Zimbabwean populace – but half a loaf is always better than nothing though.
Now that the SI 142 of 2019 has been put into motion what can we expect? Does it mean the value of people’s salaries is going to be restored? After all, is it even a good move to scrap the multicurrency regime now? These are some of the many questions that have been the object of topical discussions since news of the SI 142 got into the public domain. By the way, the SI 142 stipulates that all foreign currency is no longer legal tender in Zimbabwe as from today and that the Zimbabwean dollar (at par with the bond or RTGS$) shall now be the sole legal tender. The RBZ has since issued a press statement citing some of the support measures they’ll effect to strengthen the local unit of account. One the measures are that banks shall direct to the central bank the RTGS$s that they are holding as counterpart funds for foreign currency historical or legacy debt that government through the RBZ, is assuming a 1:1 rate between the RTGS$ and the USD. The crux of this measure is to mop up around RTGS$1.2 billion from the market by the end of this week.
One thing is apparent in light of all this, there’s a lot of uncertainty up ahead. The recent development according to my own opinion is meant to serve the government more at the expense of the general population. Take for instance the clauses of the SI 142 that stipulate that the Nostro FCA (foreign currency accounts) won’t be affected and that customs and exercise duty will still have to be paid in forex. That suggests to me that they want to get a hold of forex from the people. Plus consider the fact that if forex is no longer legal tender locally it means those with forex will be forced to convert to the ‘Zimbabwean dollar’ to make purchases. Ultimately the central bank ends up in possession of the forex. So overall I think this whole setup is a decoy for an elaborate plan by the central bank to smartly take forex from people’s hands. Let us know what you think in the comments below.