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Employees suffer wage deficit: Report

Kudzai Kuwaza

THE salary of an average Zimbabwean worker is not enough to cover basic expenses and an employee typically needs an additional ZW$500 to live comfortably, a survey says.

According to a report by the Industrial Psychology Consultants (IPC) titled Cost of Living Expenses Report, the National Employment Council (NEC)’s employees earn an average of ZW$1 825 per month, but have expenditures averaging ZW$2 266, leaving a deficit of ZW$441.

“The NEC employee does not meet a basic standard of living. The gap between the NEC employee’s income and expenditure means they will have to make some very tough choices about which basic costs of living are most essential in any month,” IPC noted in its report. “The negative difference between income and expenditure is a clear indication that this employee is struggling to meet a basic standard of living in Zimbabwe and facing significant financial hardship.”

According to the report, non-managerial professionals earn an average of ZW$4 546, but as a result of ballooning expenses which include rentals, the workers are left with a paltry ZW$185.

“The officer or professional had ZW$185 left after meeting their estimated basic living costs. The increase in rental cost has resulted in very low financial position for the officer or professional,” IPC notes in its report.

The income for executive levels surpasses their estimated basic living costs by ZW$12 675 per month, according to IPC.

“With that amount left after basic living costs, they remain in the best position of their households,” the IPC observed.

The senior manager level had ZW$3 606 left after meeting their estimated basic living costs while the middle manager level had ZW$1 673 left after meeting their estimated basic living costs, IPC says.

“The money left (for the middle manager) is too little to cover for the unexpected or non-essential expenditure,” IPC noted.

The expenses for the various employment levels that the report looked at include rent, food, transport and utilities.The report noted that the current economic decline will erode wages.

“The cost of living in Zimbabwe has significantly increased compared to last year. Households are feeling the heat as poverty levels surge at alarming levels. The country is still facing massive de-industrialisation, company closures, foreign investor flight, job losses and decline in agricultural productivity and escalation in poverty levels. Inflation is on an upward trend,” IPC said.

“Employee remuneration has been eroded by a factor of 15, which is the average exchange rate now. It is safe to say at this stage most employees are struggling to make ends meet given the depreciation of their salaries and rising inflation.

The subsequent business challenges emanating from the policy changes have brought in new challenges related to how people are remunerated. Slow employment creation and high cost of living expenses in urban areas will result in reduced remittances to rural areas and contribute to rural poverty.”

The IPC’s recommendations include restructuring the wage system and making the remuneration system flexible and competitive in line with the cost of living, linking wages to productivity, exempting low wage earners from paying Pay as You Earn and reducing tax on all performance-related pay for lower level staff or tax performance-based pay at half the current rates.

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