Zimbabwe’s public workers have accepted a 29 percent salary hike for the country’s lowest paid employees.
The Zimbabwean government says this is good cushioning against double-digit inflation as well as a likely end to on-going labour strikes.Civil servants in the southern African country rejected a lower government wage offer twice in January.
Zimbabwe is gripped by a severe U.S. dollar crunch – causing an economic downturn characterised by shortages of fuel, food and medicine.
An agreement signed by the government and the top public workers’ union Apex Council says “a cost of living adjustment of $400 million (will) be effected across board for all members of the public service with effect from 1 April”.
This means the lowest paid worker will now earn a monthly gross salary of $570 from $441, said an official from Apex Council, which represents 16 public sector unions.
Zimbabwe’s central bank ditched a discredited 1:1 dollar peg for its surrogate bond notes and electronic dollars last month merging them into a lower-value transitional currency called the RTGS dollar.
Public workers will also be able to import vehicles without paying import duty and the government will provide buses to transport the workers, according to the agreement.
Analysts say wage pressures could see inflation accelerate, but Finance Minister Mthuli Ncube has stated that salary increases will be within its $8 billion budget for 2019.
Ncube expects the annual inflation rate to fall below 10 percent by the end of the year from 59.39 percent in February because the government would cut its budget deficit by half.