New Civil Servants Wages To Wipe Out Budget Surplus – Economists

Spread This News

By Alois Vinga

ECONOMIC experts have warned that the just approved civil servants salaries will erode budget surpluses recorded by Finance Minister, Mthuli Ncube for most part of his tenure.

This will force government to overspend while pushing inflation to shocking figures with some predicting an annual expenditure running to $109 billion.

The remarks come when government this week reached an agreement with the Apex Council to increase civil servants’ wages by a margin ranging from 133 % to 172 % depending on salary grade.  

Under the new wage structures, the least paid government worker who used to earn $1 045 will be taking home $2 500 per month, while those earning $1 885 will pocket $4 631.

Commenting on the latest wage structures, economic expert, John Robertson, said while the salary adjustments are below the inflation rates, they are “unsustainably high.”

“The current salary adjustments at 133 % to 172% are lower than the inflation rate which is estimated to be over 500% but nevertheless, they are unsustainably high considering that the current civil service workforce has too many people than needed,” he said.

Robertson said there was urgent need to reduce the civil service workforce and then pay a reasonable number of employees.

“Even though government is recording budget surpluses, there is high risk these will be wiped out because the government is paying twice as much as it should be paid,” he said.

Another economist Naome Chakanya predicted that overall government expenditure will exceed the predicted figures.   
“Government will be forced to spend beyond what is budgeted due to the imminent risk of resorting to money printing. The new wage structures also calls for government to immediately unveil the supplementary budget because the resources that had been set aside will eventually be wiped out,” she said.

She said expenditure will be overstretched again, throwing the nation into the backyard of budget deficits.

Chakanya said such adjustments will impact, in turn causing high levels of inflation which will worsen the poverty situation for Zimbabweans.

Another economist, Brains Muchemwa said the new salaries will boost local demand.

“However, the source of financing of this salary increment is more important in determining the sustainability of the move and impact on inflation at a time the policy makers are finding it more difficult to manage inflation,” he said.