Zimbabwe proposes wage freeze

HARARE – Zimbabwe's central bank on Wednesday proposed a wage freeze, arguing that the country's ailing economy could not absorb any salary increments, in a move that drew immediate rebuke from workers' representatives.

"The Reserve Bank is of the considered view that the national economy is not able to sustain any further increases in wages and salaries," Bank Governor John Mangudya said in his 2015 monetary statement.

He said the welfare of consumers and employees "should be addressed through the reduction of prices, disinflation, so that current wages buy more."

"We need to think in terms of value," Mangudya insisted. "This way, even those not working will have their welfare increased, as they will be able to buy more from a U.S. dollar."

The southern African country has been trading in U.S. dollars and the South African rand since abandoning the Zimbabwean dollar in 2009 amid a bout of hyperinflation.

"It is imperative to note that Zimbabwe's wage bill as a percentage of revenue is higher than all the regional countries, despite the country having the lowest population with the exception of Botswana," said Mangudya.

According to the World Bank, Zimbabwe's wage bill chews up close to 86 percent of the country's revenue – a figure that should be reduced to some 30 percent. 

Last year, Finance Minister Patrick Chinamasa said mounting pressure on the national wage bill could only be addressed through retrenchment, but that the treasury did not have funds for the exercise.

Mangudya's announcement comes at a time when Zimbabwean workers – especially civil servants – are calling for salary increases, saying they are earning below the poverty datum line of about $600.

"We are really hurt and angered by his [Mangudya's] statement," George Nkiwane, president of Zimbabwe's Congress of Trade Unions, told the Anadolu Agency.

"We hope he comes to his senses and gives workers what is owed to them," he added. "We are suffering."

Cash-strapped Zimbabwe, where unemployment continues to hover at around 85 percent, faces a host of economic challenges.

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