Government is in danger of missing its target of reducing its wage bill by 45 percent between now and 2018. Finance and Economic Development Minister Patrick Chinamasa, in his 2014 National Budget presentation, unveiled an ambitious plan to reduce the wage bill.“Mr Speaker Sir, the wage bill at 75 percent of the 2013 Budget continues to account for a disproportionate share of overall budget expenditures. The disproportionate share of our wage bill in the total Budget implies that we are only leaving under 25 percent of Budget resources for both Operations and the Capital Budget,” he said.
“Mr Speaker Sir, it is, therefore, critical that we grow the economy, to allow us to do more meaningful review of the public service remuneration structure, while at the same time creating additional budgetary resources for social expenditures and growth-enhancing infrastructural expenditures.
“Pursuant to this, as we implement the Zim Asset priority programmes, Government will be operating on a gradual Budget wage bill reduction strategy. This should see us reduce the wage bill from the prevailing absorption of 75 percent of the Budget in 2013 to 55-65 percent by 2015, further reducing to 30 percent by 2018.”
However, the recently effected civil service salary increase is set to feed an already unhealthy situation that sees nearly 75 percent of Government revenue going to settle employment costs.
A whopping US$155 million is now required every month to settle the wages of 230 000 civil service members. Just to put the latest wage bill movement into perspective, Treasury pocketed US$248 million against a targeted US$273,26 million in February.
Recurrent expenditure chewed 96 percent of the money realised, a situation which observers note is unsustainable. They argue that a reduction of the wage bill is of paramount importance but can only be realised through the implementation of painful, but critical, measures.
“One question that needs to be asked is: Can our economy afford to have 230 000 civil servants? The answer to this question should then guide us going forward.
“If the answer is ‘no’ then there is need to trim the civil service to sustainable levels. This will be a painful but very important exercise that needs to be done as a matter of urgency,” said an economist with a Harare-based financial institution.
However, a United Kingdom-based economic commentator, Mr Brighton Musonza, reads it differently.
He argues that: “Government cannot just throw people into the streets. It has to be a radical economic reform or shift for them. Because for every austere policy reducing public expenditure on a wage bill, there has to be a policy that is sure of private sector growth to take on board the people made redundant.
“A public service reduction only works with private sector growth, but, unfortunately, we see local companies closing due to many adverse conditions dominated by the ill-advised continued use of multi-currency.”
Mr Musonza argues that the country is best served with a return of the local currency. The need to explore non-monetary incentives for civil servants has also been suggested as a necessary move.
Minister Chinamasa has already hinted that Government is crafting measures that will see housing schemes being introduced for civil servants. Progressive Teachers’ Union secretary-general Mr Raymond Majongwe says of the non-monetary incentives idea: “It’s an option worth pursuing but needs to be implemented after wide-ranging consultations rather than being forced on the workers.”
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