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Davies Ndumiso Sibanda, Labour Matters
WAGES and salaries will likely become very difficult to negotiate in 2019 due to galloping inflation and the ripple effects of fuel price increase.

Where wage negotiations have started, workers have pushed for US dollar denominated salaries or bond related increases that are pegged against the illegal parallel market rates.

Many employers on the other hand have rejected paying salaries in US dollars because they either do not make any US dollars or make very little amounts US dollars, which get allocated to key imported inputs.
John who works for a company with branches all over the country was employed from Mutare where he got a house and his family lives there and later he was transferred to Bulawayo where he now works.

Twice a month, he could visit his family for a total of $60, making each round trip $30.

Today a single trip costs between $70-$90 one way, meaning that if John were to continue with these trips he needs $360 from his salary of $550 net, which leaves him with $190, an amount that is not adequate for his rentals, his upkeep and his family’s.

There are many employees in a similar position as John whose salaries have been completely eroded.

These are the workers who are pushing unions to negotiate a living wage.

Employers have also not been spared by the economic challenges that are there as most inputs are now denominated in the US dollar which businesses are obtaining at a huge price using various creative methods, e.g. where an item costs $1 000 and the business cannot pay in hard currency, suppliers may demand up to $5 000 in Bond or RTGS.

The ripple effects of these high prices are eventually felt in retail outlets where the price of basic commodities has risen 4-5 fold while salaries have not moved.

We have just completed a survey on feasibility of payment in US dollars and our observations were that very few employers and employees want to talk about the subject where workers get hard currency as payment.

Where no such payments are made, there is a huge outcry for payment in US dollars.

There are a few exporting companies and some non-exporting companies who trade in US dollars that are paying part of workers’ wages in hard currencies but the models vary from organisation to organisation.

Given the environment above, it is very difficult to predict how the negotiations are going to move ahead given that both employers and trade unions agree that the elephants in the room is the bond notes and the RTGS and both parties are in agreement that wages and the cost of living are not walking together as wages are lagging behind.

They also agree that payment in US dollars is the way to go and they also agree that most employers have no capacity to pay in US dollars.

The big question is how then do the parties agree on what should happen in terms of salaries and wages given the fact that despite all these challenges accepted by everyone, workers are clear in that they want an increase.
Another problem is that the business environment is so volatile to an extent that long term commitments are not viable and nobody is committing to a long term agreement.

Employers are saying we cannot commit ourselves on a long journey as we are not sure about monetary policy changes and inflation.

The workers are also saying the same. The big question is then, if parties agree to something, how long will be the agreement’s life.

In conclusion, 2019 wage negotiations are likely going to be very difficult, delicate and painful to the parties requiring that those who do the negotiations become responsible and innovative in order to keep businesses and jobs.

– Davies Ndumiso Sibanda can be contacted on: Email: [email protected]