Zimbabwe to raise public workers’ pay again

The lowest-paid public sector worker earns 430 Zimbabwe dollars ($49.54), which unions say has been hit by inflation of 97.85% in May
Zimbabwe to raise public workers’ pay again

The Zimbabwean government is ready to raise civil servants’ pay for the second time in three months as incomes have been eroded by soaring inflation, the country’s Finance Minister, Mthuli Ncube announced on Monday, after a labour group threatened protests.

Zimbabweans are angry as year-on-year inflation of around 100 per cent has eaten the value of their wages and savings, recalling the horrors of the hyperinflation era in 2008. 

The country is grappling with a severe shortage of U.S. dollars, fuel, bread, medicines and 17-hour daily power cuts, which have forced businesses to use expensive diesel generators. 

READ: New “Zimbabwe dollar” unsettles citizens, currency relaunch advances

Currency reforms introduced last month to ban the use of foreign currencies and make the interim RTGS currency the sole legal tender have done little to instill confidence that people’s living standards will improve soon under President Emmerson Mnangagwa, who came to power after Robert Mugabe was removed in a 2017 coup. 

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“I have a (wage increase) figure already, and I am just waiting to hear from the unions. We will be meeting them tomorrow to hear their figures,” Ncube told a meeting with local businesses in Harare. 

Ncube says the government’s budget was in surplus for the first 6 months of the year. 

The lowest-paid public sector worker earns 430 Zimbabwe dollars ($49.54), which unions say has been hit by inflation of 97.85% in May. A union official said a meeting will be held later on Monday to agree a position that they will present to the government on Tuesday.

READ: Zimbabwe announces end to foreign currency use amidst spiraling inflation

As inflation soared, the government hiked the overnight interest rate to 50% last month and Ncube on Monday said the central bank wouldn’t hesitate to raise rates again to deal with people speculating on the value of the local currency. 

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The Zimbabwe dollar was trading at 8.86 to the greenback on the official interbank market, bringing its total losses to 27% since June 24 when the government ended dollarisation. On the black market, the unit was trading at 10.5 to the dollar. 

Central bank Governor, John Mangudya told the same event that Zimbabwean individuals and companies held around $1 billion in foreign-currency accounts, around three months’ import cover. 

The Zimbabwe Congress of Trade Unions threatened “mass action” last month after the government made the RTGS the sole legal tender and renamed it the Zimbabwe dollar. 

READ: Zimbabwe declares interim RTGS dollar sole legal tender

At least, three people have gone to court to challenge the government’s move but Ncube said he was “very prepared for the fight” in court. 

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Patrick Chivaura, acting CEO of state power utility ZESA Holdings, told the same meeting that the end of dollarisation was hurting its ability to deliver power because mines could no longer pay it in U.S. dollars. 

ZESA needs $14 million for monthly electricity imports from the regional power market, Chivaura added.

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