EDITORIAL COMMENT: More jobs means faster economic growth

WITH the accelerating inward investment into Zimbabwe and the expansion of the economy, formal employment has been rising rapidly, with the National Social Security Authority now recording about 700 000 jobs in the formal private sector. Added to this are the State employees in the civil service and the uniformed forces.

This would suggest that well over 1 million Zimbabweans have formal employment above the level of a domestic worker, and have a fixed monthly income, income tax deducted as PAYE, and some sort of pension contributions via NSSA or the civil service schemes.

Perhaps more importantly, formal employment also comes under the national employment councils in the private sector and the service commissions in the public sector.

The national employment councils lay down the grading schemes and the minimum wage for each grade, with the service commissions setting similar grades and salaries in the State sector.

Few formal employees are totally satisfied with their salary, and all want more, but at least they have their pay carefully and legally laid out and their career path is usually mapped as well.

A lot of the private sector growth has arisen from the new investments, both foreign and domestic. When a new mine is opened, or a new factory, a new supermarket or a new formal shop, the workforce will be recently recruited and be added to the totals.

The rise in formal employment is thus directly related to economic growth. What is not captured by NSSA, or for that matter the State service commissions, are besides the domestic workers, many of the very large number of self-employed people and almost no one active in the informal sector.

Yet these people are earning incomes and other benefits and at some stage in the national statistics need to be included.

While some in self-employed and informal sectors are there because they could not find formal employment, others, although still a minority, earn more working for themselves than those with similar qualifications would earn in formal employment.

Self-employment does not necessarily equate to low incomes and there is an increasing number of people in that group who are making a decent living.

For a whole lot of reasons, the prime State agency for maintaining the database of those in employment should probably be Zimra, the tax authority.

For a start Zimra is not worried about how you earn your income, and whether you pay your taxes through PAYE from a formal employer or every quarter on the profits of a personal business. So Zimra does group together everyone earning an income.

Secondly major efforts are being made to have all income earners registered with Zimra, even if their income is too low to be subject to tax. Zimra should still have the name and details, along with the zero tax bracket, on record so that as income rises taxes start flowing. It is wrong to try and run the country off the taxes paid by formal businesses and the million or so formal tax payers.

Zimra statistics would also allow differentiating Zimbabweans over how much they earn, rather than in what sort of sector they earn that money.

This is important when we look at our journey under Vision 2030 to becoming an upper-middle income country.

As Government has been stressing this must also mean a reasonable distribution of income, that is most households must also be middle income, if the status is to mean anything at all.

One problem that has, in the past few years, made consistent progress in pay and earnings difficult has been the bursts of inflation that we have suffered. These have largely been driven by hidden inflows of money supply and the pressure on the exchange rates.

At present, the Government and the Reserve Bank of Zimbabwe believe they have found all sources of creating new money and have switched the taps off.

At the same time, the new ZiG currency was launched, with more than three-fold cover in gold and foreign reserves.

So far it has been acting as a real currency, subject to exceptionally small daily movements in value in the commercial banking sector but nothing dramatic.

This should rapidly push Zimbabwe into normal inflation, a few percent a year, meaning that gains in salaries and earnings can now be retained, instead of being suddenly eroded in a month. As that happens then progress becomes faster. One point to note is that the large number in employment creates more employment.

All those people need to buy a wide range of products, which someone has to make and others to sell, and the more people there are with reasonable jobs the higher the demand for a whole lot of things and for a whole lot of services.

So that requires factories and shops to hire more people, adding to the demand, and even the semi-formal and informal sectors win with more people wanting their services and products.

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