Govt walks tight rope on job cuts

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The advice provided by the International Monetary Fund to the government to reduce the number of civil servants through retrenchment provides a tough policy choice for Finance Minister, Patrick Chinamasa. The IMF has previously provided such advice on several occasions to government receiving similar responses.

Minister Chinamasa’s position on this matter is guided by government and Zanu PF’s position that retrenching civil servants is not in the best interest of the workers, the economy and the government itself, including Zanu PF. Retrenchment throws people out of work and into the street. In order to retrench the civil servants, government has to compensate them. This would be an even burdensome obligation considering the amounts of funds that would be required as compensation.

Retrenchment will go against Zanu PF’s election promise of guarding against job losses and actually increasing them. Government is the largest source of employment for Zimbabweans, currently employing about 230 000 workers. The civil service employment costs consumed about 70% of total government expenditure, according to Minister Chinamasa in his 2014 budget speech.

This left government with 30 percent to invest in its core business of providing social services such as health, education, infrastructure, social services, etc. Clearly, this percentage is not adequate by any standards. An ideal public sector expenditure structure would be about 30 percent of total expenditure going towards salaries while 70 percent goes to the provision of public services.

It is tempting to view civil servants as a drain on the fiscus, yet they have sustained the economy through spending, savings and investing during the difficult economic times when private sector companies have been scaling or closing down.

Chinamasa does not want to retrench civil servants, adding to the already high numbers of the unemployed. The retrenchment of civil servants has a multiplier effect as each worker has dependents, both immediate and extended family.

However, the number of workers currently employed by government is not sustainable. The longer it takes to solve this problem, the more likely unintended consequences will happen. For instance, government might end up having to borrow even more to finance salaries, or reduce its role in providing public services because the bulk of the revenues will go towards paying civil servants’ salaries. In the latter case, that would mean government privatizing the provision of public services or relying on non-governmental organisations.

A bloated civil service will prevent the uptake of technology to make processes fast and efficient. If the civil service lags behind in technology, it will be difficult to work in sync with the private sector which they are tasked to regulate.

Government will not consider lowering the percentage of expenditure going towards salaries by lowering them because they are already at rock bottom. Minister Chinamasa and his Cabinet colleagues understand this dilemma, but hard choices have to be made.

Minister Chinamasa should resist the temptation of kicking the can down the road so that the current government does not have to make the necessary tough decisions that will set in emotion the reduction of employment costs. It would be a political strategy that allows the country to be continuously troubled by high employment costs until it is solved by the future generations. By that time, things might have deteriorated significantly.

Minister Chinamasa suggested that he would address the employment cost in the long term through growing the economy and improving the gross domestic product. The likely assumption made by Minister Chinamasa is that the current number of employees will remain static over time, so that the expansion of the economy will justify the staff compliment.

A second assumption could be that government believes the rationalization of employment levels will occur slowly over time through natural attrition such as retirement, resignations, etc. without corresponding hiring. The danger is that government loses on hiring new people with new ideas, and fails to fill up critical positions.

Clearly, government will have to grow the economy in a robust manner to satisfy these assumptions; otherwise the high employment cost structure will worsen the condition of public finances. In order for government to do so successfully, it needs to establish a firm foundation now, upon which to build a viable economy. That is why it is critically important that government deals ruthlessly with corruption so that resources are directed to their proper use while sound and ethical decisions are made by civil servants.

It is in the best interest of the civil service to build a viable economy, because it will allow a greater number to, not only be employed, but create sustainable opportunities for everyone around them.

Becoming efficient and a catalyst for economic growth will allow the civil servants to save their jobs in line with Minister Chinamasa’s long term vision through growing the economy.Advertisement