Government to revamp institutional framework for wage setting after study finds Zimbabwe has highest labour costs

Cost-saving

Zimbabwe must come up with its own home grown solution to modalities of aligning remuneration with productivity

GOVERNMENT has started laying the groundwork for revamping the legal and institutional framework for wage determination as analysis shows that Zimbabwe has the highest labour costs compared to other southern African countries.

Secretary for Ministry of Labour and Social Welfare Ngoni Masoka in a keynote address during the validation workshop on the wage structure, said policy makers need to focus on how the institutional framework for wage setting could be revamped to bring about a remuneration system that promotes employment productivity, growth and competitiveness.

Masoka said his Ministry is also working towards promoting productivity related rewards in industry as well as its measurement.

“The ministry is working flat out to expedite the establishment of the Zimbabwe national productivity institute which when fully operational will promote productivity related rewards in industry as well as its measurement.

“The concept is to come up with scientifically determined benchmarks in order to facilitate productivity based collective bargaining,” he said.

He said Zimbabwe must come up with its own home grown solution to modalities of aligning remuneration with productivity as huge salary imbalances results in lower productivity and erosion of the latent pool in organization.

Meanwhile, according to a study report on the Wage Structure and Labour Costs in Zimbabwe, the country should undertake a biometric registration of all public sector workers and pensioners as a measure to clean the payroll database and improving pay role administration.

Labour and Economic Research Institute of Zimbabwe (LEDRIZ) senior economist Prosper Chitambara said that the biometric payroll data will then be used to effect salary payments.

“Government should undertake a process of biometric payroll registration of all the public service, the biometric payroll data will then be used to effect salary payments. Through the use of biometrics public service employees and pensioners can be accurately identified and remove ghost workers from the payroll,” he said.

Chitambara said Government employment accounts for a significant share of the labour force and trends and developments in public sector wages have an impact on the labour market, competitiveness, public finances and the overall economy.

“As such High public wages may induce a shift of resources out of the private sector into the public sector,” he said.

According to the study, unit labour costs rose to 0.33 in 2014 from 0.24 in 2012 in the mining sector, form 0.28 in 2012 to 0.38 in 2014 in the manufacturing sector. Electricity and water recorded an increase of 0.36 in 2012 to 0. 39 in 2014 while there was a significant drop in construction of 0.36 in 2012 to 0. 35 in 2014.

Finance insurance and real estate and distribution restaurants and hotels also recoded a significant drop in the period under revision as the recorded 0.45 in 2012 to 0.33 in 2014 and 0.32 in 2012 to 0.27 in 2014 respectively.

Transport and communications recorded a rise in unit labour costs from 0.2 to 0.23 in 2014. Chitambara said labour costs are higher in Zimbabwe than they are in Zambia, Botswana, and Mozambique. The country however has a labour cost advantage relative to South Africa.
The study recommended that the country establish Fiscal Rules to put a ceiling on the Public Sector Wage Bill.

“Allocate a minimum of 30%t of the Budget to development expenditure implying that recurrent expenditure (including the wage bill) should not exceed 70% of the Budget;

“Ensure that expenditure on wages and benefits do not exceed 35% of taxes and not more than 10% of GDP,” he said.

According to the study, Government expenditure show that revenues and grants rose from 12.6 % of GDP in 2009 to 26,7 % in 2015, Total revenue was 12,6% in 2009  to 24.9% in 2015 whilst total Government expenditure was 12,1 to 28,3 % in 2015. FinX

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