Editorial Comment: Don’t increase civil servants’ salaries

04 May, 2014 - 00:05 0 Views
Editorial Comment: Don’t increase civil servants’ salaries Minister Chinamasa

The Sunday Mail

Minister Chinamasa

Minister Chinamasa

The Source (April 30, 2014) reported one Alfred Makwarimba, a trade unionist, vowing to “fiercely resist” government plans to liberalise labour laws and adopt productivity linked wages, slamming the plans as the work of a “right wing” Zanu-PF faction.
Put simply, the new system would allow companies to pay based on productivity. A small-scale enterprise with US$20 000 of capital and generating US$2 300 of profit monthly would not be burdened with the same wage requirements as platinum miner with US$500 million of capital generating equally handsome profits. In the same way, a struggling enterprise would not be put in a position where it must either pay a certain unaffordable amount or not employ at all.

Government has also intimated plans to amend labour laws to make it easier to recruit as well as fire employees. The unions are beside themselves, enraged by this apparent assault on the rights of the worker.

The minimum wage actually does more harm than good, especially in a weak economy and in the absence of government safety nets to aid those who happen not to have jobs. An upcoming business, which could possibly falter within 16 months, could certainly make use of skilled graduate labour that otherwise remains unemployed. If that business can pay US$180, that is money the said graduate did not have. Insisting a business pay a minimum wage in line with the PDL is demonstrably unreasonable as it ignores the very real possibility that businesses just cannot afford to pay at those levels.

It would be reckless for Government to discourage a graduate from taking US$180 when the same government has nothing in the way of unemployment benefits to cushion the person seeking employment. The unions make the mistake of believing businesses can be forced into making irrational decisions. This is certainly not the case. Capital would prefer to earn interest in a bank than to engage in production and pay unsustainable salaries. While workers would be encouraged by bold minimum wage declarations the unfortunate reality is that such jobs will unlikely materialise, at least not in the short to medium term.

Meanwhile, Government is grappling with how to meet increments promised to civil servants. A casual glance at the region and even internationally suggests that civil servants are already sufficiently remunerated, especially given our national circumstances. A police officer in Ukraine earns US$250.

Civil servants point out that you cannot live on their current remuneration. This is true. However, the solution is not to increase salaries but bring our pricing back under control, this through a significant inflow of cheap long-term capital. It should be possible to pay off a mortgage at US$280 monthly but the capital to fund significant capital projects and the finance buyers is unavailable leading to a situation where a substandard apartment in the city is attracting ridiculous rentals of up to US$1 000. It is not so much that civil servants are receiving slave wages as they often suggest.

Government for its part needs to urgently intervene in accommodation and food security. Significant investment in housing projects could see rentals fall by as much as 50 percent. In the same way if ARDA somehow managed to accomplish its role as initially envisioned food prices would equally fall.

Increasing salaries for civil servants will not solve the problems they face. Finding money to oil the economy will. Chinamasa faces a herculean task.

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