Mashudu Netsianda, Senior Reporter
INDUSTRY and employers have lauded the Government’s decision to remunerate its workers in foreign currency, saying they were also open to paying theirs in US$ with some players in the private sector already paying salaries in forex.
The Public Service Commission (PSC) has 170 000 workers while the Health Service Board has about 30 000 employees.
Government on Wednesday announced a flat non-taxable Covid-19 allowance of US$75 for civil servants and increased their salaries by 50 percent while pensioners who retired from the civil service will also get a flat non-taxable Covid-19 allowance of US$30 per month.
PSC Secretary Ambassador Jonathan Wutawunashe, said the foreign currency allowances will not be disbursed in notes form. He said civil servants will use their nostro bank account electronic cards to swipe for their purchased items at points of sale.
Civil servants and Government pensioners were advised to immediately open United States dollar denominated Nostro bank accounts with their banks to facilitate the payments.
Employers Confederation of Zimbabwe (Emcoz) president Dr Israel Murefu said the Government’s decision to pay allowances for its workers in foreign currency was commendable.
He said although it was not compulsory for their members to pay forex salaries, options were open for those with capacity.
“Each organisation will do what is feasible within its own operations. For example if an entity is earning their revenue in foreign currency, we have no problem if they also pay their employees in forex, but if they are generating revenue in local currency it will be a problem because there is no market where you can buy forex to pay employees,” said Dr Murefu.
He said some companies, particularly in the mining sector, were already paying their employees in forex.
“We have some players who were already paying in forex before Government made its announcement. This is not anything new, but we are saying employers will not be forced to pay their workers in forex. They will have to pay in the currency they are comfortable with or in the currency in which they generate revenue,” said Dr Murefu.
“Unlike Government, which is a single entity that makes its decisions as an entity, we are an association of many individual players and a federation of many associations.”
Zimbabwe National Chamber of Commerce (ZNCC) Matabeleland president, Mr Godwin Muhoni said:
“While we applaud Government for introducing forex allowances to civil servants, it is also worthy to note how that money is going to be generated because it is an issue of production which answers that question. When there is no production, it means you are creating more problems. However, let’s wait and see more details,” he said.
Mr Muhoni said the fact that Government has started paying its workers in forex, industry will be under pressure to pay forex as well. He said if companies start invoicing in foreign currency, they will also be obliged to pay workers in that currency.
“If Government allows us to invoice in US dollars and also be paid by our clients in that currency, which means whatever I produce or supply and whoever I supply pays in US dollars and therefore there won’t be any reason for people not to be paid in foreign currency,” he said.
“It is clear that people have rejected the local currency as it continues to depreciate in value. There is now a floating system which says prices must be labelled in both local and foreign currencies and possibly there might be local currency stability if some of these things are going to be corrected.”
Confederation of Zimbabwe Industries (CZI) president Mr Henry Ruzvidzo said although they commend the position taken by Government, their position would be based on their capacity to pay workers in forex.
He said the approach by Government to include allowances in forex is a signal to the rest of the economy coming hard on the heels of the announcement of a foreign currency auction system.
He said in the event that necessary conditions were created in the foreign currency auction trading system, there would be stability such that workers wouldn’t mind getting paid in local currency.
The Reserve Bank of Zimbabwe (RBZ) on Wednesday announced a foreign currency auction trading system, which begins next week Tuesday to replace the fixed US$1:ZW$25 exchange rate.
RBZ said approved importers would be bidding every Tuesday through their banks for the foreign currency earned by exporters or through offshore facilities arranged by the monetary authority.
It is believed that the system would bring transparency and efficiency in the trading of foreign currency.
Confederation of Zimbabwe Retailers Association president Mr Denford Mutashu said Government, by virtue of being the biggest employer, tends to give direction on how the private sector should remunerate its workers.
In a statement, the Apex Council chairperson Mrs Cecilia Alexander said the interim measures announced by the Government to remunerate civil servants in forex is a step in the right direction.
“As much as this represents a step in the right direction in terms of acknowledging the need to pay workers in United States dollars, the Apex Council stands by its position paper that it presented to the National Joint Negotiating Council (NJNC) demanding that salaries for civil servants be paid in United States dollars, and that figure be a product of negotiation,” she said.
Mrs Alexander said matters to do with conditions of service should be a product of consultation between social partners.
She said the 50 percent salary hike was a unilateral decision by Government.
Mrs Alexander said Government should address the plight of its workers by considering paying them in United States dollars as the economy has effectively dollarised.
Zimbabwe Teachers’ Association chief executive officer Dr Sifiso Ndlovu said although the amounts given to them will alleviate challenges faced by civil servants, they were insufficient.
The lowest paid Government worker earns about $3 000 before deductions. Nurses this month received their June salaries minus $2 000 from around $6 000 in May while other civil servants received salaries less by $490 or more.
According to the Consumer Council of Zimbabwe (CCZ), the monthly low-income urban family budget for a family of six rose to $8 725 last month, up from $4 378 in January.
CCZ said a family of six now requires $5 551 for groceries a month while a further $2 666 is required for other basics such as housing, transport, health and clothing.
Basic commodities, although priced in local currency, are largely pegged on the US$ equivalent on the black market.
Government said in arriving at the decision to review salaries, it took due regard of the fact that addressing the wage challenges faced across the civil service requires a holistic framework to ensure that it does not impose a negative shock in the market.
The interim adjustments to cover three months starting this month, were put in place while a comprehensive impact assessment and a framework for mitigating against the downside macroeconomic risks of the wage proposals made to the Government on the budget and the economy are being worked out. — @mashnets