HomeCommentBloated wage bill compounding govt financial woes

Bloated wage bill compounding govt financial woes

THE unprecedented move this month by government to defer payment of civil servants salaries speaks eloquently of the continued parlous nature of the state’s finances and the unsustainability of the bloated civil service wage bill.

Candid Comment with Stewart Chabwinja

In a country where uncertainty wrought by an unstable political and economic situation, one of the enduring problems has been salary payments and dates for civil servants.

There will be increased pressure on the dwindling state coffers after government awarded civil servants a pay increment last November which, revealingly, it is yet to fulfill. Finance minister Patrick Chinamasa’s “We are not yet in April” retort being the closest to an official explanation.

No doubt government must remunerate civil servants adequately. They deserve to earn well above the poverty datum line — as government promised ad nauseum in the run-up to last year’s general elections — commensurate with qualifications and experience. Regrettably, the workers continue to grit it out, often under hard working conditions, only to get a pittance as reward.

Yet equally government is stuck in a catch-22 situation. The wage bill, which currently translates to over 70% of government’s total revenue collections, remains the elephant in the living room. Once government starts implementing the salary adjustments, which will see the lowest-paid civil servant getting US$375, up from US$297, its proportion could increase.

This extra burden come at a time government’s revenue base continues to shrink as more companies succumb to a hostile operating environment and retrenchments intensify, thus reducing revenues from personal and corporate tax.

Paradoxically, it requires increased funds to rehabilitate ageing infrastructure and fund surging social obligations. The “new economy” lauded by the ruling Zanu PF party, whose support base would be small and medium enterprises, will not help much in this regard as such enterprises resist paying tax.

A much-touted solution to government’s cash crunch is a significant cut in the public sector wage bill to below 40% of revenue, which entails a significant but strategic trimming of the civil service. This is the route which many companies continue to take to remain viable, as downsizing, where it is an alternative, is the lesser evil compared to closing shop.

For Zanu PF, which baits voters with populist promises — including pledges to create 2,2 million jobs in the next five years — this option is a definite no-no, as confirmed by Chinamasa this week.

Zimbabwe is not prepared to slash its public sector wage bill to meet debt reduction plans agreed with the IMF as this would entail too many job cuts and a political backlash.

This brings into question Zimbabwe’s commitment to the ongoing IMF’s Staff Monitored Programme in an attempt to clear US$10,7 billon in external debts and regain access to critical international credit.

In January government missed its US$278 million revenue target by US$12 million. As government ducks and dives on the size of the civil service, the wage bill will remain the millstone around its neck.

Whatever the dilly-dallying, at some point, authorities will have to bite the bullet on the wage bill and public sector reforms.

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