MARTIN TARUSENGA
The Business Times article of 26th July 2018 “IPEC cannot resolve pensioner problems” charged that Insurance and Pensions Commission (IPEC) is egregiously using ‘Insider-Outsider labour markets’ tactics to maintain the insurance regulator’s personnel (from IPEC Board to IPEC management) in employment, in circumstances when they are manifestly incapable of resolving pensioner problems. This is in the face of confirmation that pensioners were prejudiced and must be compensated.
To be sure the Insider-Outsider labour markets theories forecast that the insider component of the labour markets have that bargaining power to avoid dismissal and wage reduction, leading to persistent unemployment in a given economy. The labour markets are considered as consisting of hired workers (insiders), and unemployed workers (outsiders). The bargaining power is acquired as the insider component, tacitly agree with firms not to reduce wages (in circumstances when it is only the firms that incur the costs of hiring and firing), even when macroeconomic demand for goods and services in the economy is faltering, requiring a decrease in wages and prices.
This Insider-Outsider socio-economic phenomena is part of the so called ‘sticky’ wages and prices narrative, within the so called New Keynesian macroeconomic theory espoused in the early 1980s, to explain how persistent unemployment arises, all other things equal or all other things being done appropriately. Among these things that should be done appropriately include transparent results-oriented/ performance-based governance practices aimed at increased productivity, control of money supply, control of government spending and taxes.
The new Keynesian macroeconomics incorporating this ‘sticky’ wages and prices phenomena is considered to be one of the workhorse framework for modern macroeconomic policy-setting by governments in progressive economies. In the face of persistent unemployment and inflation (so called stagflation), for long periods up to the 1980s in the US and United Kingdom, President Reagan and Prime Minister Margaret Thatcher are known to have ultimately reduced inflation, increased employment and productivity, by (among other things) doing away with union-negotiated pay policies, reducing taxes, reducing government spending and government’s span of control especially in areas considered private sector. The epithets Reaganomics and Thatcherism would respectively come to refer to these two leaders’ implementation of the macroeconomic theories.
The removal of union-negotiated pay policies that had led to persistent unemployment, in particular, would reduce firms’ costs of hiring and firing, as the firms could more easily do away with nonperforming labour units, thereby drastically reducing the Insider-Outsider barriers in the labour markets.
There are similarities in the current state of the economy in Zimbabwe on the one hand, and that of the UK and the US in the 1980s, on the other, when the operational dynamics at IPEC and its regulation of the pensions and insurance industries are taken as a microcosm of the macroeconomic dynamics in Zimbabwe overall. The Business Times article in question highlights the recent IPEC announcement, as an anti-competitive stance, and a bid to keep jobs that IPEC officers can’t do, in the process sustaining unemployment in the pensions and insurance industries and Zimbabwe overall. The IPEC announcement discouraged pensioners from approaching pensioner organisations for help on how they can secure their rightful benefits, rather encouraging the pensioners to approach the regulator. As corroboration that IPEC officers and its Board can’t do the job, the article provides details of IPEC failures over the years.
Further corroboration of IPEC incapacity would be submitted to a pensioner organisation by pensioners reporting that IPEC officers were ‘advising’ them that the benefits that they were entitled by insurance companies were adequate and correct, directing them to the courts if they are still not content with this advice.
This IPEC ‘advice’ is being given without any categorical substantiation of why IPEC considers the benefits correct, when the Report of the Commission of Inquiry on benefit conversion to US$ condemned these benefit entitlements as incorrect. In a letter dated 17th July 2018, the IPEC Manager, Insurance and Micro Insurance, Cleophas Mabvunure, would for instance respond in this vein to a former holder (Mr. Shonhiwa) of two Old Mutual insurance policies.
The IPEC response was made after Shonhiwa had appealed to IPEC to consider what he considered to be his rightful benefits, from the two insurance policies. Without a substantiated opinion of his own of what constitutes the rightful benefits from Mr Shonhiwa’s two insurance policies, without proving Shonhiwa’s counter benefit proposals wrong, and without demonstrating why the Old Mutual entitled benefits are correct, it is reasonable to conclude that Mabvunure cannot help Shonhiwa and is not fit and proper for this regulatory job. In another instance, instead of taking a professional position on benefits unsatisfactory to a pensioner of the Standard Chartered Bank Pension Fund as calculated by the Fund’s administrators, and on those benefits proposed by the pensioner, another IPEC officer would get the pensioner to rewrite his problems on some form for onward submission to the administrators – in a clear instance of procrastination.
Several other pensioners of this Pension Fund have apparently been subject to the same frustrating ‘advice’ and procrastination, without any results. There are many other documented pensioner reports demonstrating the incapacity of IPEC management and its Board to resolve the pensioner problems, and the same IPEC officers’ resolve to stay on the job through prevarication and other tactics.
In so failing, IPEC as regulator (and the responsible Finance Ministry), are turning a blind eye to equally incapable insurance companies and other pension houses, who have now similarly taken to using their insider power to remain in the jobs they can’t do. Apart from continued failure to pay rightful benefits, a significant number of senior management in insurance companies and pension houses have been in the jobs for many years while the institutions they run continue to lose value, in the process of course increasing unemployment.
From quite a significant number of long term business insurance companies and pension houses in the 1980s, Zimbabwe has now got just 9 of them. Some of the senior managers have gone full cycle, switching the institutions, while running down value. The incoming President and Government of Zimbabwe must get to grips with IPEC’s role in prejudicing pensioners, in the process causing persistent unemployment and inflation in the economy.
Martin Tarusenga is General Manager of Zimbabwe Pensions & Insurance Rights, email, martin@ zimpirt.com; telephone; +263 (0)4 797 020; Mobile; +263 (0)772 889 716
Opinions expressed herein are those of the author and do not represent those of the organisations that the author represents
