Angst in Zimbabwe as price hikes thwart salary increase relief

16 April 2019 - 13:38 By James Thompson
A young boy walks past empty shelves, including those for bread and meat products, in a grocery store in Harare, on October 9, 2018.
A young boy walks past empty shelves, including those for bread and meat products, in a grocery store in Harare, on October 9, 2018.
Image: Jekesai NJIKIZANA / AFP

Janet Ncube*, a nurse who like all civil servants received a 29% salary increment on Monday, got angry when she woke up to the news of an effective 94% price increase for bread only a day later.

Tuesday's bread increase follows that of beer, fuel and agro-based products that went up in early April.

As of April, the lowest paid public servant will now earn ZWL$600 (R23.18) - which is less than the cost of the monthly bread basket for a family of six pegged at ZWL$800 (R30.91) by the Consumer Council of Zimbabwe. The CCZ bread basket is even queried by economists who argue that the figure is an “understatement” and does not reflect the ongoing currency fluctuations.

The Zimbabwe Congress of Trade Unions (ZCTU) said the minimum wage should be paid in US dollars and proposed US$600 (R8,391.23).

"The national minimum wage is the only way to help the suffering workers. After getting reports from all the affiliate unions which represent workers across the country's economic sectors, the ZCTU general council set the national minimum wage at US$600 or RTGS$1800, a figure which is in line with the poverty datum line," said the labour union’'s president Peter Mutasa.

The Progressive Teachers' Union of Zimbabwe secretary-general, Raymond Majongwe, said poor remuneration had resulted in low morale among workers and employees were on the lookout for other opportunities.

"There can never be good service delivery when 95% of the workers are disgruntled," Majongwe said.

For Ncube, working for the government has always been a tough choice.

"Ever since I started working in 1990, life for a government worker has been tough and worse for the unemployed. No salary increment as far as I can remember has ever done well for us," she said.

In 1990, when she graduated from the school of nursing, Zimbabwe had just come out of a brief one party state rule and already voices of displeasure were being heard. At the time, the Economic Structural Adjustment Programme (ESAP), a neo-liberal market-driven policy measure, had been adopted - with resistance in some quarters.

Local musicians such as Edwin Hama sang 'Asila Mali' (we don’t have money) lamenting that he had counted change from the dollar after buying bread and was depressed. Another prophetic musician was Lovemore Majaivana who sang 'Lelilizwe kalilamali' (this country has no money).

Ncube, who was relatively young then, believes the situation has reached a dead end.

"Those songs are very relevant today. Actually more than they were then. At this point in time the leaders are clueless," Ncube said.

Zimbabwean consumers are faced with a dilemma: the prices of goods and services are soaring, but their disposable income is losing value.

Businesses have also made a difficult situation even more unbearable by demanding payment in US dollars. Discounts of as much as 70% on marked prices are offered for payment in US dollars - foreign currency which is scarce for the majority of the population.

The wave of price hikes has been sparked by the continued fall of the local unit, the RTGS dollar against the US dollar.

The rate of decline of the local unit is much faster on the black market, where most businesses turn to for the greenback.

Officially, the interbank rate is $1: ZWL$3.06 according to central bank data where businesses can turn to for the purchase of US dollars. Dollars are sold on "a willing seller and willing buyer" basis. But most banks are unwilling to part with the greenback, which fetches much more on the black market. The rate on the black market is $1: ZWL$5.3.

Thomas Moyo, a supermarket owner, said for him to restock, he had to change the prices of goods twice in one month, because of the freefall of the local currency.

"Products, such as margarine, that are imported had notable increases, because for me to buy the rand for restocking in South Africa, I just have to make it more expensive for the customer," he said.

The prices of goods such as margarine are much cheaper in hard currency in his supermarket; at $1.70 and more expensive if paid for in the local unit at ZWL$9.

"It’s cheaper to buy in forex and it's even better for me because I don't have to go to the black market and risk losing everything when the police pounce. When selling in RTGS there is no reason for me to have savings in that currency. It's counter-productive," Moyo said.

A finger is now being pointed by consumers at President Emmerson Mnangagwa's administration.

Matthew Ncube, a resident in Harare, said the government was failing the ordinary people on the streets - and it's made worse with the price increases coming a few days before the country celebrates independence from the British on April 18.

“When they canvassed for our votes, they said by April (this month) things would have normalised but what do we have? More worries. And if you ask me, there’s no independence to celebrate when we are poorer than we were during colonial rule,” he said.

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