Memory Nguwi We surveyed 45 organisations to assess the general practices concerning the payment of employees’ salaries in United States dollars. Below I list the key findings.
- The organisations in the Non-Governmental Organisations (NGOs), mining, construction and telecommunications sectors pay salaries largely in USD.
- A majority of the respondents (70%) pay a certain percentage of their employee salaries in USD.
- Participants are unsure of the impact of paying employees in USD on the company revenue and productivity.
- A significant number of organisations are receiving USD local sales enabling them to pay staff in US dollars.
- The highest staff cost to income/revenue ratio is in the following sectors: NGO, professional services and quasi-government.
- Challenges of USD salary? Inconsistent availability of the USD to pay salaries.
- Employees have their salaries in Zimbabwean dollars (ZWL), but we pay USD using the prevailing Auction rate every month. The auction-rate is going up every week, eroding the USD component.
- Transfer challenges between banks.
- Funding challenges. The donor community considers Zimbabwe zero inflationary because we are using the dollar, but the dollar in Zimbabwe is subject to inflation. So we have not had any funding for salary increments for many years now.
The allowances are not significant for staff to open Nostro accounts.
- Challenges of not paying in USD
- High labour turnover.
- Low staff morale.
- Regular reviews based on black market rates.
- Medical aid shortfalls.
- Reduced employee engagement.
- Theft and abuse of property.
Comments on remuneration It is a mixed bag now, and unfortunately, goods and services pegged in USD are increasing in price, which will push employees to demand USD increases that will not be sustainable.
- It will be difficult to pay employees adequately without addressing the parallel market resurgence.
- Organisations should strive to pay at least some USD.
- Hard to comment because there is no steady market for comparison purposes. You also cannot compare with the regional competitors.
- The biggest problem is the need to pay salaries to cushion workers against the cost of living. The cost of living is driven by increases in school fees, medical costs, rentals, food, etc. However, employers are not responsible for the cost of living.
- Employers must pay for the worth/value of a particular Job to the employer and not the cost of living. The fact that an employee has a high cost of living is a personal circumstance. The fact that they have 10 children is no reason for them to demand a high salary.
- The environment has huge uncertainty resulting in a constrained remuneration strategy.
- There is a need to move towards the total cost and align performance to productivity.
- The economic environment is shifting more and more towards dollarisation. Companies should shift towards paying a greater portion of the salary in USD and a lower portion in ZWL. Ideally, pegging the whole package in USD is more realistic.
It is inescapable that most local organisations have started paying their staff a portion of their salaries in USD.
The change has been largely necessitated by the rising cost of living and the need to retain and attract staff. It is also evident that those organisations that largely depend on USD local sales to pay salaries in USD may face sustainability and even viability challenges. For the organisations that earn their income largely in exports, it is understandable that they also pay salaries in USD. Even for this group, sustaining such salaries is key when adjusting salaries. The euphoria around the rush to pay salaries in USD is likely to be short-lived for those that may have decided to take this route without a full proof strategy to sustain revenue inflows in USD.
In addition, we hope that those without sustainable USD income will not rush to make USD salaries contractual. It would be too risky to do so, given how the local economic environment can affect USD sales.
The best approach for this group is to peg salaries in USD but pay using the local currency at the prevailing rate. While paying in USD may ease some employer turnover worries, it is not enough to sustain low turnover. It would help if you worked on other factors that make people stay within an organisation, especially organisational culture.
- Nguwi is an Occupational Psychologist, Data Scientist, Speaker, & Managing Consultant- Industrial Psychology Consultants (Pvt) Ltd, a management and human resources consulting firm. https://www.thehumancapitalhub.com email: [email protected]
