COMMENT: Follow Govt’s bold move on forex bonuses

22 Nov, 2021 - 00:11 0 Views
COMMENT: Follow Govt’s bold move on forex bonuses

The Chronicle

For long grumbling over low salaries and their loss of value in a high-inflation environment, civil servants will, starting this week, receive their annual bonuses in foreign currency.

Announcing the decision early this month, Finance and Economic Development Ministry Permanent Secretary Mr George Guvamatanga said the Government was guided by the developments in the market, had considered the plight of workers and the need to cushion them from the adverse effects of fluctuations in exchange rates.

He said this year’s 13th cheque would be paid in US$ at 100 percent of the pensionable emoluments – basic salary, housing and transport allowance –  capped at a maximum of US$700 whilst for those with pay scales exceeding the balance of the 13th cheque will be payable in local currency.

Civil service pensioners will, too, receive their bonus payments of US$100 plus a bonus payment of US$80 for spouses.

At the weekend, Public Service, Labour and Social Welfare Minister, Professor Paul Mavima said the bonuses should have been paid together with the November salary but will now be in workers’ accounts starting this week. “Normally it is those in the education sector that start receiving and from my understanding, the bulk of the civil servants will receive their bonus this month and the rest next month,” he assured.

Given the difficulties that civil servants have been facing in recent months, they should find this year’s bonus payment in hard currency very, very welcome.  The payment will assist them meet their day to day obligations in a more meaningful way, something they have been struggling to do over the past few months of salary erosion, galloping prices and greater market preference of foreign currency.  Indeed, the Christmas and New Year period would be festive for Government workers.

The Government deserves commendation for demonstrating that it recognises the difficulties that the economic situation is causing on civil servants’ salaries and wellbeing.  It deserves the plaudits for taking the decision to deal with that by paying its workers in a currency that is reflective of market imperatives at this time.

Many employers in the private sector are known to take cues from what the Government does in terms of worker remuneration.  We urge them to do the same this time – pay their workers their 2021 bonuses in foreign currency as well.

Doing so should not be a problem, we are sure, because many companies are already charging for their products and services in foreign currency, while, of course, also accepting local currency.  So they have foreign currency in their reserves to be able to give that bonus cheer to their workers this month.

However, as the Government has said, the US$ bonus payment is a once-off.  It, indeed, must be a once-off in the broader scheme of things.  We want the local currency to keep its place as the main transactional currency in the country, not the US$.

Yes, the foreign currency payment will give the worker some temporary relief, but an economy where the local currency is dominant is what gives a more permanent sense of wellbeing.

In that vein, we want the Government to intensify implementation of its strategy towards consolidating the position of the local currency.  It is great that Finance and Economic Development Minister Professor Mthuli Ncube has always made it clear that the Government will not dollarise the economy again.  Everyone knows how the economy regressed during the 2009-2016 dollarisation era.

Yes, inflation dropped and wages retained their value.  More people were better able to plan and save.
However, the benefits were only temporary and actually damaging for an economy with a long manufacturing capacity and history.

We became an importing economy.  Industries were not manufacturing.  Our exports, produced in an economy that used the strongest currency in the world, lost competitiveness.  Because the country wasn’t making anything, only importing, jobs were lost; nay exported.

The Government is aware of this, which is why officials have made it clear that the bonus payment is only for this month.  We are optimistic that civil servants, will appreciate this position.

In recent weeks, the Government has been fine-tuning the foreign currency auction market and fighting to meet the US$ allotments to successful bidders.  This will boost access to foreign currency by companies through official channels, thus discouraging them from relying on the black market whose resurging influence has coincided with wage erosion and rising inflation.

If more foreign currency is available through official channels, inflation would not spiral out of control, prices would stabilise, the local currency would regain value, the economy would find its footing and there would be no need for anyone to demand payment in foreign currency.

It is crucial for the economy to continue growing its exports so that foreign currency continues flowing in.  Also crucial is the need for more foreign direct investment to flow; as it flows foreign currency would flow into the economy.

The Government is doing a good thing paying its workers and pensioners a US$ bonus which we urge the private sector to emulate.  This will give the worker the respite he/she deserves.

However, we want the Government and all concerned to intensify measures that are ongoing for the local currency to regain its value and influence in the economy.

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