Private sector braces for pay hike demands
Private sector braces for pay hike demands
THE private sector is priming for widespread salary increment demands following a recent 15 percent salary bump for civil servants, a local research firm has said.
Despite general employer sentiment that Zimbabwean wages are too high, IH Securities noted in its 2018 Consumer Sector report that government’s move was going to cascade to the private sector and inspire salary increase discussions with employers.
“Traditionally the private sector has always taken a cue from the civil service when it comes to wage/salary negotiations and industrial action; we do believe that the salary demands and capitulation of the government in awarding the 15 percent increment will trigger demands within the private sector as well,” IH said in the report released early this week.
Already, the Zimbabwe Banks and Allied Union formally demanded a 60 percent salary increment from the Bank Employers Association of Zimbabwe for banking sector employees with the employers countering with an offer of around 3,4 percent.
In the tourism sector, employees have been awarded a five percent salary increment announced by their National Employment Council in May this year.
This comes as most Zimbabwean businesses have lamented that that the cost of doing business in Zimbabwe is high because of high labour costs.
IH warned that while these developments were positive for consumer spend and general demand, they were going to come with inflationary pressures and higher operating costs for already burdened corporates.
“…they do imply some inflationary pressure as well as forward pressure on margins as corporates absorb potentially higher costs on labour,” IH said.
Government increased civil servants’ salaries by 15 percent following nation-wide strikes that brought state-hospitals and schools to a stand-still earlier this year. There are approximately 250 000 workers in the civil service, representing 35 percent of the formally employed working population.
IH highlighted that although civil servants are least likely to be classified as low-income earners, the income gap remains vast.
“…However, there are great pay disparities between the least paid civil servant (grade B1) alongside civil servants in grade D1 (mainly teachers) and the top management which includes deputy directors, in grade E1-5, with grade B1 earning $296 and grade E5 workers earning a net $508.
“Nonetheless, the 15 percent rise is likely to significantly impact consumption with improved disposable income increases the propensity to shift from staples like maize meal to non-staples such as rice and pasta,” the researchers said.
In 2017, $3 billion or 73 percent of the total government budget was channelled towards the gross wage bill, this translates to an average per capita monthly wage of $1 000.
The Progressive Agriculture and Allied Industries Workers’ Union of Zimbabwe has also been lobbying the government to increase the minimum wage of farm workers by 100 percent from $75 to $150 per month following a salary increment of 4,2 percent or $3/day in 2017.