Austerity: Eyes on the wrong ball Zanu PF acting Secretary for Information and Publicity Cde Patrick Chinamasa
Minister Chinamasa

Minister Chinamasa

Tichaona Zindoga Political Editor
On April 12, Finance Minister Patrick Chinamasa announced that there would not be bonus for Zimbabwe’s civil servants until 2017. He explained: “We will not pay because there is no capacity to do so . . . The issue of bonuses must never be an entitlement; hence we should begin to talk about

performance.”

“We will have to take bold measures in order to reduce the wage bill which is taking no less than 82 percent of the budget,” he said.

On April 18, though, President Mugabe literally reversed that position. “I want to make it clear that the report which was in the newspapers that bonuses were being withdrawn is not Government policy,” he stated. “The Cabinet did not approve that at all and the Presidency never, never was consulted on the matter. We were never consulted, the three of us — that is myself and the vice presidents — and we say that is disgusting to us and it will never, never be implemented at all,” said President Mugabe. He cheered up civil servants not to be “downhearted”.

“That will not happen . . . your bonuses will come to you,” President Mugabe said.

Only three months later, in July, the Supreme Court issues a judgment that opens a floodgate of job losses across private and, as we have lately come to know, and civil service. A sizeable chunk of civil servants did not receive their July salaries and have been all but sacked.

But President Mugabe is not a happy man at these developments.

Last week he bemoaned the massive job losses. He complained: “You say people must go — you do not care — where should they go? So we are going to look at the law. We do not want a law which is an ass . . . We can’t do that to our people. Where will they get the money to pay rentals and other bills? Anyway we are looking at that situation. Sorry, sorry that thing happened.” In the same week that President Mugabe said that, the Zimbabwe Independent newspaper wrote that, “Finance minister Patrick Chinamasa yesterday effectively came out in support of a Supreme Court ruling which has led to a bloodbath in job losses with about 9 000 workers kicked out of employment in two weeks.” The glaring discrepancies in what the President says and what the Minister is doing and saying is quite remarkable, if not shocking. In a nutshell, though, one can see President Mugabe being in a familiar territory of standing for the poor worker and seeking the security of jobs and benefits, which has been evident for much of the post-Independence period.

Many people had become used to the security of their jobs — even during the darkest years of 2007-8 — including benefits that the courts, and interestingly Minister Chinamasa, are now telling us are just but a privilege.

Full circle?

It’s déjà vu, for people who were old enough during the early 1990s when Zimbabwe dabbled with something called Economic Structural Adjustment Programme (esap) which was prescribed to us by the International Monetary Fund.

But to say this is déjà vu is a misnomer.

It is a full circle.

Zimbabwe is in fact following the same IMF prescribed measures but whereas then they were called esaps, today they are known to the world as austerity measures or spending cuts. Perhaps the new nomenclature is supposed to sound sexier.

Only, not quite, after we have seen the effects of the same in Europe — in Italy, Portugal, Spain and Greece — the most famous, while countries such as Serbia and Bulgaria and Belgium have been groaning under their weight. The people have also taken to the streets in their millions to protest these austerity measures.

Let us situate ours.

Zimbabwe entered into an agreement with the IMF under the so-called Staff-Monitored Programme.

Here is how the IMF describes the SMP:

“The 15-month SMP approved in October 2014 constitutes the lynchpin of the authorities’ roadmap for building a strong track record towards normalising the relationship with Zimbabwe’s creditors and mobilising development partners’ support. The main objective of the programme is to strengthen Zimbabwe’s external position as a prerequisite towards arrears clearance, normalisation of debt servicing, and restoring access to external financing.

“This will require further fiscal consolidation to rebuild the country’s capacity to repay; restoring financial stability; and mobilising international support for resolving the country’s external debt situation.”

The roadmap to achieving IMF’s holy economic grail involves: (a) reducing the primary fiscal deficit to raise Zimbabwe’s capacity to repay; (b) restoring confidence in the financial system; (c) improving the business climate; and (d) garnering support for an arrears clearance strategy.

Effects

The misery of job losses — by now slightly under 20 000 over two weeks — has been palpable.

More is likely to follow as companies and Government (apparently) are rubbing their hands in glee at the prospect of firing workers at short notice.

Good luck with the speedy amendments to the labour laws.

The sackings are mainly intended to release some the weight of the millstones sinking the companies. It is hardly conceivable that companies will suddenly become more productive or competitive. All they are doing is to free themselves of a burden that they did not know how to lose when retrenchment seemed the only option but an expensive one.

Meanwhile, demand for products, including newspapers, is spiralling down and too little money is chasing too many goods. You talk to people you get the uncomfortable feeling esap is here again.

Like those days of spending cuts and retrenchments of yore.

They come again.

Some people have been fearing that this would build up to another protest vote in an election not far off, just as the esap of yore gave us the first biggest opposition in 1999. Meanwhile, if labour continues to be rendered redundant, a year or couple on, desperate people will take up whatever will be on offer, even at less than their worth and they will not feel job secure or have any benefits.

Is that not what the capitalists think when they tell us about “improved business climate”?

Greece, grief or relief?

We have all seen and heard about what is going on in Greece and the spectacular grief that austerity measures have wrought in Europe.

It is very imaginative to think we may yet fare better. Academic arguments about the effectiveness of austerity measures abound. There is a paper titled, “The Effectiveness of Austerity” by the Durham University Economics Journal that seeks to look at the pros and cons of these measures. It says “austerians” maintain that a major cutback on governmental expenditure is a necessary course of action, which appeases creditors and increases confidence in the markets to facilitate the flow of credit, thereby boosting the economy.

However, the phenomenon is also under heavy criticism.

“Their rationale is that massive cuts in government expenditure, especially to essential public services, leads to a vicious cycle of depressed demand and subsequently higher rates of unemployment.”

Paul Krugman, an economist is cited as expressing disdain for austerians as “People [who] have been taken in by the cult of austerity, by the belief that budget deficits, not mass unemployment, are the clear and present danger, and that deficit reduction will somehow solve a problem brought on by private sector excess”.

Many people would agree.

The paper concludes that, “rather than impose strict austerity measures with massive budget cuts, governments should focus on bringing the various aspects of the economies back on the path towards positive growth and prosperity. Thus, the real problem is unemployment and poor growth. If these can be fixed, then as by-product of an improved and more robust economy, the debt burden of the various countries can be steadily resolved.”

And this is where our mega-deals come in. This is where the monetisation of our vast mineral wealth comes in.

This is where recapitalisation of agriculture comes in.

Sadly, we may be eyeing the wrong ball.

You Might Also Like

Comments

Take our Survey

We value your opinion! Take a moment to complete our survey