HomeBusiness DigestWage bill threatens fiscal stability

Wage bill threatens fiscal stability

A REPORT that reveals Zimbabwe’s bloated public sector wage bill poses a serious threat to fiscal and macro-economic stability, bears testimony that government has a long way to go before it right-sizes its 550 000-strong workforce.

BY KUDZAI KUWAZA

The report titled Wage Structure and Labour Costs in Zimbabwe: An Analysis of Flexibility, Competitiveness and Equity, conducted by the Labour and Economic Development Research Institute of Zimbabwe and commissioned by the United States Agency for International Development, says the country’s high wage bill has resulted in low investment in capital projects.

“The analysis has shown that the public sector wage bill poses a serious threat to fiscal and macro-economic stability as the country has one of the highest public employment costs in Sub Saharan Africa,” the report, which analyses the wage structure and its determinants in both the public and private sectors and its impact on the economy over the period 2009-2015, says.

“In particular, the public sector wage bill has far out-stripped growth in real GDP. The high public sector wage bill has crowded out necessary public investment in capital projects and the social services.”

Treasury spends more than 80% of revenue on civil servants salaries leaving very little fiscal space for capital projects. Under pressure from the International Monetary Fund, the government carried out a civil service audit between February and April last year aimed at flushing out ghost workers, redundancies and the duplication of roles.

What has also compounded the situation is the sagging revenue inflow, which comes against the backdrop of falling commodity prices on the international market and scaling down of operations by some companies.

The audit was also meant to establish which ministries or government departments were overstaffed with the aim of rationalising.

The audit revealed that at least US$388 million could be saved yearly if recommendations are implemented.

It found that in the Ministry of Primary and Secondary Education, schools are overstaffed by 5 588 teachers. The report recommended that recruitment of temporary and relief teachers be put on hold until excess staff is absorbed.

“In the long-term the teacher establishment should not exceed 102 600,” the report says.

In the Higher Education ministry, the audit established that teacher training and polytechnic colleges are overstaffed by 1 716 lecturers, and recommended recruitment of lecturers be frozen until excess staff is redeployed.

Some cabinet ministers such as Prisca Mupfumira (Public Service) have however ruled out retrenching any of its workers which will make cutting its wage bill to the required 40%, as announced by Finance minister Patrick Chinamasa last year, difficult.

However, not all in government are singing from the same hymn sheet as revealed by chairperson of the Public Service Commission Mariyawanda Nzuwah.

Nzuwah told the Parliamentary Portfolio Committee on Public Service, Labour and Social Welfare last month that ministers were largely responsible for the bloated government workforce since they demand additional staff in their offices.

“The other day, I was ridiculed by President (Robert) Mugabe that I am the one who is responsible for the bloated civil service,” Nzuwah told legislators.

“The President said he only appointed ministers, deputies and permanent secretaries and it is myself who employs the rest of the civil service. But the problem is, once a minister is appointed, he wants to bring his own staff.

“I have had phone calls from ministers, including Provincial Affairs ministers. There are 10 and they would come to you and say, ‘I was appointed by the President and I want a personal secretary, I want a director or deputy director to co-ordinate activities in the province so that I can effectively discharge my duties’.”

That the issue of the wage bill has been discussed for years without substantive action to tackle the anomaly shows that government is not serious about downsizing its workforce according to economist and Buy Zimbabwe chairman Oswell Binha.

“The talk of cutting the wage bill did not begin yesterday. We have four policy statements talking about the wage bill, but nothing has been done,” Binha said. “We always seem to magnify intentions and magnify processes, but without ever celebrating results.”

He said although “it is a political minefield”, there is need to cut redundant workers in government to create space for critical expenditure such as infrastructure rehabilitation.

“Technically, they must just reduce the number of civil servants. We are not educated to prove economics wrong. They must just do the right thing,” Binha pointed out.

Binha’s assertions are not without foundation.

More than 75 000 ghost workers, most of them unqualified Zanu PF militias and supporters, were unearthed in the civil service through a comprehensive payroll and skills audit done by Ernst & Young (India) on behalf of the Ministry of Public Service.

The discovery included thousands of ghost workers — including 6 861 employed in one day in one ministry. However, government has turned a blind eye to these findings, carrying out its own audit instead. This means the ghost workers exposed in the Ernst & Young audit remain on the government’s payroll.

Indeed, last year’s audit revealed that the Ministry of Youth, Indigenisation and Economic Empowerment employs at least five youth officers in each of the country’s 1 200 wards, who gobble up about US$2,5 million in salaries every month. The youth officers, according to the audit, have no job description although they are known to mobilise on behalf of Zanu PF during elections.

The government wage bill will only be reduced if government embarks on a comprehensive retrenchment exercise, according to economist John Robertson.

Robertson added that there is also need for wage cuts in the public sector given the strengthening of the United States dollar, pointing out that this has already become commonplace in the private sector.

Recent Posts

Stories you will enjoy

Recommended reading