Govt to cut wage bill to 52pc
Golden Sibanda Senior Business Reporter
GOVERNMENT will progressively stagger the reduction of its wage bill to 52 percent from 82 percent of expenditure by 2019, as part of widespread reforms to turnaround the economy.
Finance and Economic Development Minister Patrick Chinamasa said last week that the move is meant to ensure that more resources go to other expenditure items other than wages.
Minister Chinamasa said this after meeting the International Monetary Fund team that visited the country last week for article IV consultations and review of the staff monitored programme.
IMF mission chief Domenic Fanizza last week said that due to the Government’s crippling financial limitations, it needs to keep its primary accounts close to balance, get fresh lines of credit as well as significant investment to support economic activity.
“We are going to enter into a process of progressive, staggered reduction of the wage bill up to 2019. Hopefully by 2019 we should have got our wage to something like 52 percent of total expenditure,” the minister said.
The 2015 civil service audit report prepared by Government regarding plans to cut the wage bill concluded that Government could save as much as $400 million if recommendations contained in the report were taken on board.
Some of the suggested ways to trim the wage bill included adoption of centralised staff recruitment, merging some departments, streamlining roles or functions of some departments and cutting salary support to grant aided public owned institutions.
The recommendations have reportedly already been adopted by Cabinet. Minister Chinamasa is on record as saying Government does not necessarily have to retrench to cut the wage bill, but simply has to rationalise and review its operations.
While Government recognises the need to direct the biggest chunk of its expenditure to capital formation, IMF and World Bank have repeatedly called on the authorities to cut its wage bill and redirect the funds to critical areas such as health, education and infrastructure, which are not in the best state.
Government’s capacity to direct meaningful funding to capital projects and key socio-economic programmes such as health and education is due to the current poor performance of the economy, which has resulted in falling tax revenue.