…As cost of living spikes
TINASHE MAKICHI/ LIVINGSTONE MARUFU
The Zimbabwe Congress of Trade Unions (ZCTU) wants the government to come up with a clear economic reform strategy culminating in the redollarisation of the economy as the weakening local currency takes a rout
against the greenback.
The local currency has been depreciating against the US Dollar since it was restored as the sole legal tender after the government outlawed the use of the multicurrency regime last year. It was at 1:73 on the parallel
market and at 1:25 at the official rate.
Experts have also warned that the ZW$18 billion stimulus package announced by President Emmerson Mnangagwa following the outbreak of Covid-19 could stoke inflation.
Zimbabwe reintroduced its own currency last year, 10 years after using a basket of foreign currencies which was mainly dominated by the US dollar.
Business Times has established that the country’s largest labour movement,
which held a meeting with partners of the Tripartite Negotiating Forum (TNF), a social contract comprising government, employers and labour, threatened to launch a systematic resistance on Zimdollar salaries
citing worsening economic situation and rising inflation.
ZCTU president Peter Mutasa told Business Times that they will be taking a long term approach of resistance as they await government action towards addressing the plight of workers. The approach will involve engaging other
groupings that have been affected by the current economic deterioration.
“We have since given the government a notice and during our TNF meeting last week we told the government to deliberate in Cabinet on the way forward on the currency while also coming up with an economic reform strategy that is inclusive,” Mutasa said.
“We expected an announcement yesterday [Tuesday] after the Cabinet but it’s unfortunate we think they did not take up our proposal. This is the beginning of a long term approach on resisting the current economic reforms which have rendered all employees poor as the value of the Zimdollar continues to plummet.”
The payment of US$ dollar salaries would mean redollarisation
at a time monetary authorities are working on a dedollarisation
programme which it says would be complete in 5 years.
Employers’ Confederation of Zimbabwe president Israel Murefu
told Business Times that for those employers with capacity to pay
in foreign currency it should not be an issue and it is a welcome
development.
“The calls are not new because some labour organisations have
been calling for USD salaries or salaries indexed to the USD since
the promulgation of SI 142 which brought about mono-currency.
“But the law has now been amended allowing transactions in
USD. Those with capacity to pay in USD could go ahead and do so
and in fact in the mining sector many employers are paying in USD
because they generate almost all of their income in foreign currency,”
Murefu said.
Murefu noted that employees however cannot insist on USD salaries if the employer has no capacity and each employer can choose the currency in which to pay a salary between USD and ZWL.
The call for salaries in US dollars comes as the cost of living for a
family of six surpassed ZWL$8000 in May. According to the Consumer
Council of Zimbabwe the monthly basket for a family of six increased
21.67% to ZWL$8725.50 by end of May from ZWL$ 7171.22 by
the end of April due to rampant inflation, foreign currency shortages,
power outages and the increase in demand of basic products by
consumers during the festive season.
There have been rising concerns that the cost of living is rising against
stagnant salaries and the majority of workers are facing poverty and
deprivation exacerbated by annual inflation rate that shot up to
676.39% in March from 540.16% in February 2020.
The Consumer Council of Zimbabwe (CCZ) said there has been a decline in productivity by firms in the market due to the negative impact of the coronavirus but consumers have increased their demand of certain products in fear of future shortages.
“The cost of living as measured by CCZ low income urban earner
monthly basket for a family of six increased to $8725.50 by end of
May 2020 from $7171.22 by end of April 2020 figure, showing an
increase of $1554.28 or 21.67%.
“The food basket increased by $1435.35 or 34.87% to $5551.90 by the end of May from $4116.55 by the end of April 2020. The price of detergents increased by $118.93 or 30.64% to $507.10 in May from $388.17 the previous month.
“As CCZ we assume that the increase in the total figure of the basket can be attributed to the influence of the parallel market on exchange rates, limited supply of some basic products and panic buying by consumers because of the lockdown,” CCZ said.
The economy is currently experiencing subdued production across all economic sectors including Zimbabwe’s major economic drivers
which are gold and tobacco.
The shrinking purchasing power has caused government and restive
employees to be on toes, leaving the country on the edge of total
economic implosion.
According to CCZ, increases were recorded in margarine by $10.55 to
$84.29 from$73.74, while mealie meal increased by $362.08 to $485.99 from $123.91.
The price of fresh milk increased by $3.52 to $21.31 from $17.79,
while that of cooking oil moved by $17.22 to $76.29 from $59.07.
Bread price moved by $6.95 from $28.43 to $35.38, while that
of flour increased by $18.59, up to $99.62 from $81.03.
Rice price moved by $5.19 from $87.99 to $93.18, while that of onion moved by $20.38 from $61.64 to $82.02.
Salt priced moved by $5.56 to $27.82 from $22.26, while meat moved by $31.03 to $132.50 from $101.47.
Bath soap price moved by $4.80 to $26.33 from $21.53, while that
of laundry bar moved by $13.87 to $57.38 from $43.51.
The price of washing powder increased by $14.80 to $57.47 from
$42.67.
Decreases were recorded in tomatoes by $2.16 to $15.84 from
$18.00 and cabbage by $2.30 from to $31.61 to $33.91.
Mutasa said that figure was actually an understatement; however, it simply shows that almost all workers are now classified as working poor.
“Most workers are earning just 15% to 25% of the consumer basket
meaning that most of us can not secure basics. There is no doubt that
we are now a failed state, it would do well if the government would accept
and seek cooperation on getting out of this mess,” Mutasa said.
“Some are deliberately causing the crisis in order for them to
accumulate personal wealth. While the majority is suffering the few
elites are ripping off.”
Despite the efforts by the Reserve Bank of Zimbabwe injecting new
notes in circulation, low money supply by most financial institutions
still remains one of the major constraints that consumers are
facing in terms of accessing basic products.
The CCZ continues to encourage consumers to shop conscientiously
and to always buy certified products.
Economist Richard Mawarire said: “While the United States dollar is a worthy option in order for the economy to arrest the spiralling inflation and exchange rate volatility, most companies will not be immediately able to meet US$ salary bills at levels witnessed in the dollarisation era.”
