The government of Zimbabwe is considering a salary increase for civil servants according to the minister of Public Service Sekai Nzenza. The government has been negotiating with civil servants on salaries as current salaries have suffered a major loss of value due to the loss of purchasing power of the currency, the rebranded Zimbabwean dollar that was so dubbed as the multi-currency era came to an end. Meanwhile the IMF, with whom the nation started a staff monitored programme, have cautioned against wage increment as this would likely adversely affect the fiscal surplus the nation has managed to record in the year 2019.
The economy of Zimbabwe has seen a terrible year and hardest hit are employees who in spite of price increases of between 175% and 558% depending on you ask have only seen marginal salary increments in comparison. In the month of the July, the government of Zimbabwe awarded civil servants a ZWL$400 (US$39.53 using the official exchange rate) once off cushioning allowance. The government continues to negotiate with workers representatives and after meeting with the Apex council that represents all civil servants they will now sit down in the National Joint Negotiating Committee to come to some agreement with civil servants on wage increase.
President Emmerson Mnangagwa recently spoke during the National Heroes Day celebrations about a wage increment for military service personnel. In the past Finance Minister, Professor Mthuli Ncube has spoken about his desire to increase the wages of the civil and even went as far as to challenge the private to increase salaries for their employees too.
However, the IMF has cautioned against salary increases which it points to as one of the many causes of the trouble the nation finds itself in. Between 2010 and 2016 the government increased salaries from 40%of tax revenue to an astonishing 90%. This was said by Patrick Imam, IMF resident representative for Zimbabwe. The IMF points to the fact that such levels of wage increase were unsustainable and lead to the ballooning of domestic from US$250 million in 2013 to US$9 billion in 2018. A wage increase without a sufficient increase in tax revenue would be ill-advised according to the IMF. But Zimbabwe has very few palpable options to increase tax revenue.
Image from Bloomberg.com
Both the government and the IMF have forecast economic decline for 2019. And this was before crippling electricity shortages dealt a blow to productive industries. The alternative energy source diesel has seen constant price increases, coming weekly now.
