THE government’s decision to dump the United States dollar and adopt some form of local currency will hit workers the hardest as their incomes have been eroded with the floating of the exchange rate, experts have warned.
Reserve Bank of Zimbabwe (RBZ) governor John Mangudya’s hugely anticipated monetary policy statement delivered last Wednesday effectively brought back the local currency.
The RBZ denoted the existing electronic balances, bond notes and coins in circulation as realtime gross settlement (RTGS) dollars, making them the official legal tender after a decade of a multi-currency system.
The central bank also removed the 1:1 peg on the local currency against the US dollar, practically de-dollarising, in a move which authorities hope will curb growth of the parallel market and ease foreign currency shortages that have crippled business.
However, labour expert Abraham Kavalanjila described the RBZ measures as daylight robbery against workers, as they eroded the value of salaries paid in local currency.
“This is daylight robbery against workers,” he said.
“In my view, the workers’ salaries need to be reviewed in line with what the unions were demanding.
“The creation of a new currency will leave the worker the poorest human on this land of Zimbabwe.”
Civil servants have been demanding payment of their salaries in United States dollars, arguing that the devaluation of bond notes on the parallel market had significantly eaten into their incomes since October last year.
Since December last year, doctors and teachers have embarked on crippling strikes in an effort to force the government to review their salaries, but to no avail.
Kavalanjila said it was clear that salaries had been eroded by a factor of five, the highest possible rate of RTGS$ to the US$, considering that they were originally pegged in bond notes at a rate of one is to one.
“The workers were paid in bond notes that government said were equal to the US$, which was a lie,” he said.
“What the government did (last Wednesday) was to say we now agree that the bond note is not equal to the US$.
“What unions now need to do is to review the salaries based on the poverty datum line guided by the new prices of basic commodities.”
Zimbabwe Congress of Trade Unions president Peter Mutasa said the new fiscal measures announced by the RBZ spelt doom for workers who were already underpaid.
“It means that all our salaries, which were eroded by the parallel market rate are now being eroded officially,” he said.
“There is now a mismatch between the incomes and cost of living and 95% of the working class has now been thrown into abject poverty,” he said.
“The monetary policy is anti-worker and there is nothing new about it. We had this in 2008 and the results were disastrous. We are expecting that the economy is going to sink further.”
In 2008, the then central bank governor Gideon Gono abandoned the willing-buyer, willing-seller priority-focused twinning arrangement exchange rate after the interbank rate had failed to attract foreign currency to the formal market.
So subdued were the official exchange rates that the local currency traded at ZW$100 330.21 against the US dollar compared to a record $9 million on the parallel cash rate which surged after the increase of daily withdrawal limits by the central bank.
efrey Matenje, a labour expert, said employers must brace for a fresh round of salary negotiations in response to the currency reforms.
“The salaries have just lost two-thirds of their value. Businesses can adjust pricing, but in all fairness we need to have wage negotiations starting with the largest employer, which is government. I could be wrong, but salaries and wages should go up.”
For Desmond Tshele (34), who works for a Bulawayo company as a cleaner, the latest currency adjustments would condemn him to abject poverty.
“This is absolute disaster. I have been impoverished,” Tshele, a father of three, said.
Tshele earns $300 bond a month and with the RBZ devaluing the local currency, it means that he will now be taking home less than US$100.
“Life is tough, how can I take care of my family with this paltry salary? Remember, I must take my kids to school, I have to pay rentals, I must get transport to work, I need to feed my family and clothe them.
“It’s a very difficult situation,” he said.
Joseph Gunda, the Confederation of Zimbabwe Industries (CZI) Matabeleland chapter president, said although the RBZ had adopted proposals made by business, the floating of the exchange rate would leave workers exposed.The Standard