Wage pressure a threat to Zim economy

WHILE politics remain the most obvious threat to Zimbabwe’s economic recovery, wage pressure is emerging as the most formidable menace to an economy that looks on the mend but remains very fragile.

 

With public servants threatening to shut down schools, hospitals and the state bureaucracy unless given more, Zimbabwe’s fragile coalition government faces its first real test from a restive populace unhappy about unfulfilled promises.

Long used to incessant feuding and pointing fingers at each other, the coalition partners now have to put up a united front against a whole new common enemy in the form of higher wage demands.

The International Monetary Fund said last week that containing government spending, particularly public sector wages, would remain the main challenge for Zimbabwe going forward.

“This is a longstanding issue in Zimbabwe and it continues to be a challenge to get the consensus to hold back public wage increases,” observed Sharmini Coorey, Deputy Director of the African Department.

Civil servants are demanding a minimum wage of US$500, more than double the average  US$200 which most government workers earn and have threatened to strike to force the government to accede to their demands.

Finance minister Tendai Biti has said the government does not have the money and already spends 60% of its revenues on salaries for civil servants.
Consultant economist John Robertson said funds to meet the civil servants’ demands were not provided for in the 2011 budget, causing a dilemma for Biti and Public Service minister Eliphas Mukonoweshuro.

“The January salaries paid to the military and civil servants reflect my concern, and we now hear of plans for strikes and other protests. As about one third of Zimbabwe’s working population draws a government salary, this disappointment is affecting the business sector too,” Robertson said in a commentary last week.

Analysts warned last week that the handling of the civil service wage dispute could ultimately be the turning point for the coalition government.

“The looming civil service strike could prove costly for both Mugabe and Tsvangirai. The Prime Minister will have to prove to those who voted him in that he is still together with them while the strike action will hand Mugabe a long rope with which to hang himself,” analyst Donald Porusingazi said.

Zanu PF is believed to be the force behind the strike action, clandestinely urging the government workers to down tools in order to portray the MDC-T as an uncaring party that does not keep its promises.

But Porusingazi said the invisible Zanu PF nudge on the civil servants could backfire for Mugabe’s party, which has been in power since independence in 1980.

“Zanu PF must be careful not to create conditions of open confrontation between civil servants because it could end up being engulfed by a fire it would have started itself. I am sure the party’s strategists are aware of the perils of such a confrontation spilling into the street,” he said.

The analysts also noted that ongoing talk of elections later this year or in early 2012 could pile additional pressure on both Mugabe and Tsvangirai to support increasing civil service salaries –– even beyond government means.

None of the coalition parties wants to be seen to be the one against giving more pay to public servants ahead of polls. –– Zimonline.

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