Govt in massive job cuts

LIVINGSTONE MARUFU

Cabinet has resolved, in an unprecedented move,  to cut its labour force in an attempt  to balance  the  growing cost constraints with the shrinking tax base   as the economic crisis has  worsened, it has been learnt.

The decision was made at a time when the government, which is heavily dependent on tax revenue to fund its operations due to a lack of budgetary support from the donor community, is struggling to control recurrent expenditure.

ZIMRA, the nation’s tax collector, is also having a difficult time meeting its revenue targets, mainly due to a declining revenue base that was further weakened by a contracting economy that was further impacted by company closures and an increase in job losses.

The dire situation was confirmed by the Minister of Information, Publicity and Broadcasting Services Minister Dr Jenfan Muswere.

He stated that the Cabinet  approved the move.

Dr Muswere said the decision was reached following a job appraisal exercise that the Public Service Commission carried out across 21 government line Ministries in order to determine the composition and value of jobs and functions  in government.

“The key findings of the evaluation exercise included the advancement via grade system which violates the principles of job evaluation that a job must maintain its grade throughout its lifetime unless the duties of the job have changed to warrant regrading, functional duplications and overlaps in roles within and across line Ministries, the duties and jobs of chief directors and directors being identical which situation must render one of the jobs redundant, the existence of more managerial jobs than non-managerial jobs, and the prevalence of dead-end jobs for specialists.

The findings of the job evaluation will result in the review of manning levels across all line Ministries at national and sub-national levels, rationalisation of staff, upskilling and re-skilling of members, adoption of a new compensation framework and the implementation of a new salary structure to conform with the principle of equal pay for equal work,” Dr Muswere said.

He added:  “Consultations are now underway for optimisation and rationalisation of the findings with a view to aligning structures to Vision 2030 as well the mantra of leaving no one and no place behind.”
Given the worsening economic situation, economists who spoke to Business Times, a market leader in business, financial and economic reportage, believe that the move was unavoidable.

“It’s a deepening economic  crisis which we are witnessing. The rate of informalisation and the rate of increase in cash economy which has been explained by the sudden decline in the contribution of  intermediated money transfer tax [IMTT] which used to contribute to about 16% of the total revenue going to Zimra has gone down to 3.4%, according to the Treasury during the Mid-Term Review,” economist Professor Gift Mugano told Business Times.

He added: “That was a very practical dipstick to show you the extent to which the informal sector has grown and how the cash economy is dominating the market.

“This means that the government is losing Value Added Tax in the process. Also corporate tax has gone down to 10% on average from 15%.”

Another economist, Persistence Gwanyanya, who is also a member of the Reserve Bank of Zimbabwe  Monetary Policy Committee weighed in saying: “Given the high levels of informalisation of the economy, revenue performance is heavily affected. More worrying is the fact that as informalisation increases, the tax burden is carried by a few formalised business entities, which is not a good sign.

“Those that are formalised will continue to carry an increased burden due to the fact that they are being overtaxed and carrying the cross of everyone in the economy. Following a high informalisation rate, our economy is proving to be more vulnerable to external shocks.”
Yet another economist, Dr. Prosper Chitambara, concurred saying that worsening economic crisis made job losses inevitable.

“The rationalisation of the staff  is the way to go  as there are a lot of opportunities to  eliminate wastage or duplication  within the civil service. It helps the government to enhance the efficiency  of spending to improve fiscal sustainability  and creates savings  for the government to redeploy to other productive sectors of our economy,” Dr Chitambara said.