Zimbabwe bans wage, prices increases

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By Godfrey Marawanyika

ZIMBABWE President Robert Mugabe has banned all pay rises without authorisation and given himself extra powers in a new bid to curb the world’s highest inflation rate, state media said today.

As part of the measures, all rents, school fees and service charges must be frozen for the next six months.

"No one in private or public sectors can now raise salaries, wages, rents, service charges, prices and school fees on account of increases or anticipated increases in the consumer price index, the official and unofficial exchange rates, or valued added tax and duty," said the government-controlled Herald newspaper.

Increases in salaries or fees can only be made with specific approval from the national incomes and prices commission, a body headed by Mugabe, and without any link to the inflation rate which currently stands at over 7,600 percent.

"The net effect of the charges will be to push inflation down since all increases will be by less than the current inflation rate," the report said.

"Those who breach the standards set by the commission when increasing pay, fees or prices can be fined...jailed for up to six months, or given both punishments," it added.

The latest edicts come two months after the government effectively ordered retailers and businesses to halve their prices, resulting in widespread shortages and a strengthening of the black market in the southern African nation.

Retailers had previously been hiking their prices on a daily basis to keep pace with inflation.

Employers had also been raising salaries every month in order to cope with the price rises, although the unemployment is currently running at 80 percent.

While the monthly rate of inflation did slow in July, economists say that the government cannot hope to improve the crisis by circumventing market forces.

Independent Harare-based economist John Robertson said the latest government move was a result of crumbling government revenues and warned that it could have repercussions within the army which has so far stayed loyal to Mugabe.

"I just wonder when they will try and reverse the laws of gravity, because this does not work," he told AFP.

"Many soldiers and teachers were now demanding salary reviews, but government has just dressed things up, pretending that it is protecting the private sector yet demands for salaries are coming from the civil servants."

Thomas Mwsiti, an economist with 4Cast research, predicted that the ban on pay hikes would be impossible for the government to impose.

How can you freeze everything for six months? This does not make sense," Mswiti said.

"What the government has to do to address is the supply side of things."

Mugabe has blamed the country’s economic woes on limited sanctions imposed by the European Union (EU) and United States over claims that he rigged his 2002 re-election.

The 83-year-old, who is hoping to win a seventh term of office in elections next year, has also accused parts of the business community of siding with the opposition in order to topple his regime.

Nelson Chamisa, spokesman for the main opposition Movement for Democratic Change (MDC), said the wage freeze order was "a sign of desperation and lack of policy."

"This was symptomatic of a regime which has run out of ideas," he added. - AFP

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