ZIMBABWE CONGRESS OF TRADE UNIONS (ZCTU)
This communiqué was issued by the ZCTU after a workshop on the State of the economy which was held on 16 September 2020. The workshop deliberated on the state of the economy, fiscal and monetary policies, insurance and pensions for workers, and the Global Compensation Deed. The following were the declarations:
I. STATE OF THE ECONOMY
ZCTU notes with dismay the fact that the chronic high inflationary environment the country is experiencing coupled with the pro-cyclical macroeconomic (austerity) policy thrust have disproportionately affected the working class and citizens through erosion of their real incomes. ZCTU observes that owing to the chronic high inflation, the economy has effectively redollarised; however, most workers are still receiving their wages and salaries in ZWDs.
The ZCTU further notes that the weak public health system; limited and inadequate social protection coverage; limited access to clean water and sanitation owing to years of gross underfunding exacerbated and exposed by the COVID-19 pandemic, have consigned the working class and citizens into a life of penury, squalor, despondency, indebtedness, and distress.
The ZCTU observes that while the country has recorded a nominal budget and current account surpluses, these surpluses have not translated into an improvement in the well-being/welfare of the citizens with the World Bank estimating that the incidence of extreme poverty increased from 29% in 2018 to 34% by the end of 2019.
Having reviewed the Transitional Stabilisation Programme (TSP), the ZCTU notes that while the TSP has clear macroeconomic targets, there are no targets on full and productive employment (decent work) creation and poverty reduction. The TSP is therefore not based on a holistic approach to sustainable development that integrates economic, social and environmental imperatives and considerations.
The ‘Zimbabwe is open business’ mantra has shown an obvious bias in favour of attracting FDI. Empirical evidence and case studies from both developed and developing countries have however shown that Micro, Small and Medium Enterprises (MSMEs) have the greatest potential of creating employment and sustainable economic growth if well harnessed and supported by a conducive policy, regulatory and institutional framework. MSMEs also have great potential of being successfully linked with local, regional and global value chains.
The ZCTU also notes the lack of genuine and effective social dialogue. The Tripartite Negotiating Forum (TNF) has been rendered dysfunctional with policies being implemented arbitrarily and thereby discriminating against the workers and citizens.
The ZCTU implores the government to adopt a holistic approach to development, integrating economic and social imperatives. In the words of Nayyar (2011), ‘it is essential to return to a developmental approach to macroeconomic policies that is based on an integration of short-term counter-cyclical fiscal and monetary policies with long term development objectives.
The ZCTU further implores that explicit employment and poverty targets be mainstreamed in all the macroeconomic and development policies including the National Development Strategy. Furthermore, employment creation must be an explicit monetary policy objective alongside price stability. Employment creation is very important in the fight against poverty as it provides an important link between economic growth and poverty reduction.
The ZCTU demands that the government adopts and implements the National Employment Policy anchored on broad-based social dialogue and consultations.
In view of the high levels of informality, the ZCTU notes the importance of the implementation of policies that facilitate transition from informality to formality. Integrating informal enterprises into the formal economic fabric is particularly vital for effective domestic resource mobilisation as it expands the tax base. Moreover, most formal businesses have strong linkages with informal enterprises which can be leveraged.
The huge external burden which remains a huge barrier to international reengagement as well as sustainable economic growth and development must be addressed in a transparent and accountable manner.
It is important to urgently address structural barriers to disability inclusion, gender equality and the empowerment of all women and girls to enhance their effective participation in the sustainable development process.
II. THE FISCAL AND MONETARY POLICIES
• Noting and concerned about the volatility of the ZWL$, lack of confidence and the re-dollarisation of the economy (as reflected in the Government introducing tax thresholds in USD, 2% tax in USD), yet workers are still getting wages and salaries in ZWL$.
• Further concerned with State’s failure to adequately provide public services especially in the context of the COVID-19 pandemic (health, water and sanitation, food security, adequate public transport systems, decent work, among others) in a country with vast resources.
• Worried by the chronic high inflation eroding budgetary allocations resulting in a lack of meaningful budget impact in improving the lives of citizens.
• Deeply concerned about the lack of effective consultations, ‘statutorisation’ and ‘cartelization’ of the economy.
• Extremely worried about the Government through the Ministry of Finance and Economic Development celebrating success as measured by nominal economic indicators such as budget surpluses creating a disconnect between economic indicators and the lived realities of workers and citizens.
Thus, in line with the above, the ZCTU demands the following:
i. Pegging and payment of wages and salaries in US$.
ii. A structural shift from measuring economic success using conventional economic indicators to measuring success by improvements in social-economic indicators (poverty reduction, decent employment opportunities, social service improvements, among others).
iii. Reorientation of the role of the State towards a Democratic Developmental State. Economic austerity has proven detrimental to the wellbeing of citizens.
iv. A human-rights centered budget that prioritise and seriously takes into account and fulfils the various African Declarations the government has signed to on health, education, social protection, agriculture, and infrastructure.
v. The forthcoming National Development Strategy (NDS) crafting process that is inclusive so as to foster national ownership of policies and cohesion among citizens.
vi. Consolidation of the fiscal space through inter alia:
ü Strengthening tax administration, collection, performance, compliance and broadening the tax base in a manner that is progressive.
ü Plugging leakages in resource revenues (Illicit Financial Flows - IFFs).
ü Operationalisation of the Sovereign Fund drawing lessons from best practices.
ü Addressing culture of corruption with impunity that is hemorrhaging the economy.
ü Reprioritisation and efficiency of expenditures.
ü Expedition of the implementation Extractive Industries Transparency Initiative (EITI).
vii. Addressing the increasing burden of unpaid care and domestic work by recognising, reducing and redistributing unpaid care work in the national plans and national budgets and effective implementation with clear and measurable targets.
viii. Addressing the country’s risk factors post COVID-19 recovery
ix. Ring-fencing the 2% tax revenues towards social service delivery especially in post COVID-19 recovery.
III. INSURANCE AND PENSIONS FOR WORKERS
ZCTU welcomed the findings of the Commission of Inquiry into the Conversion of Insurance and Pension Values from Zimbabwe Dollar to United States Dollar in September 2015. The well-researched and logically compelling findings of the commission, were adopted wholesale by Government. It is against this background that ZCTU would like to express concern at the pace at which the findings are being implemented, if at all. We note with concern unfortunate developments which suggest that the very opposite of the Commission’s recommendations regarding compensation and strengthening the regulatory capacity of the Insurance and Pensions Commission (IPEC). The Board of IPEC has gone back to being dominated by industry players, and is now for all practical purposes captured. The austerity programme being implemented under the Transitional Stabilisation Programme (TSP) has ushered in a new wave of currency volatility and chronic high inflation, which resulted in further loss of value and prejudice for policy holders and pension fund participants. The new dispensation has set the country on a course at odds with the very recommendations of the commission of inquiry.
It is against this background that the ZCTU:
· insists on the full implementation of the recommendations of the Commission of Inquiry with regards to financial compensation for workers and policyholders who lost value in 2008/2009.
· reverse the current wave of loss of value and prejudice being witnessed with the conversion of value from multi-currencies to the Zimbabwe dollar.
· Ensure that the proposed new pension funds act closes the financial services black hole that was responsible for loss of value for policyholders and pension fund participants.
· Empower IPEC as the designated implementing agency for the recommended compensation framework, with the capacity to hire expert staff to augment its technical capacity.
· Revamp the regulatory framework for the insurance and pension industry through enhancing the supervisory capacity in terms of head count, skills mix, right organisational structure, commencement of prudential supervision, regulation of market conduct, group-wide supervision of complex insurance structures and regulation of products offered by insurance companies.
· Develop a Financial Sector Development Plan which seeks to revive the insurance and pensions industry and participation in the economy for the common man.
· Review the NSSA Act to give workers and employers greater control in order to ensure transparency, accountability and good governance.
IV. GLOBAL COMPENSATION DEED
Whilst recognising the Constitutional provision for compensation on farm improvements for former largescale commercial farmers as well as the agreement between the Government and former farmer owners. Land is a national resource that must be dealt with openly and transparently. The ZCTU implores the Government to consider the following:
· The need for broader consultation on the mechanisms of the fund especially as regards the mobilisation of the said funds. The burden on the mobilisation of funds must not be imposed on the already over-burdened ordinary Zimbabwean taxpayer.
· ZCTU insists on a transparent and inclusive land audit report.
· The beneficiaries of the land reform programme must contribute towards the fund.
· The need to include former farm workers in the compensation deal.
· To ensure that the compensation package contributes to the revitalisation of the economy by settling the payments to former farm owners locally.
· To recognise the timing – the commitment to pay 50% of the compensation agreement in the first year will create undue pressure on the national fiscus. We propose payments be staggered over a longer period.
Finally, the ZCTU is concerned by the continued top-down approach to policy formulation by Government including frequent recourse to Statutory Instruments which violates the letter and spirit of Section 13(2) of the Constitution which states that, ‘Measures referred to in this section must involve the people in the formulation and implementation of development plans and programmes that affect them’ and the TNF Act. ZCTU insists that all policy processes should go through the TNF as required by the TNF Act.