Felex Share Senior Reporter
Government will not pay civil servants annual bonuses for the next two years as a way of creating fiscal space to stimulate full economic recovery.
Finance and Economic Development Minister Patrick Chinamasa told journalists in Harare yesterday that the suspension of bonuses was “one of the many” drastic measures Government would take to create fiscal space to finance Zim-Asset, the country’s five-year economic blueprint.
“To achieve this, Government has decided to suspend bonus payments to civil servants in 2015 and 2016 and the situation will be reviewed in 2017 in the event that we are able to build enough capacity,” he said.
“Other measures to create fiscal space are being explored and will be implemented as soon as they are approved by Cabinet.”
Minister Chinamasa said the economy had been experiencing structural changes, with most people venturing into the informal sector and this translated to a shrinking tax base.
He said Government could not continue relying on a “discretionary” tax policy to generate revenue.
“It is now time that I put the money where my mouth is and the challenges we have had with the payment of bonuses are a reflection of the challenges that our paymasters, the industry, have been experiencing,” Minister Chinamasa said.
“It is a paradox that industry has been struggling to pay salaries and let alone bonuses, while Government continued to pay. Our industry needs breathing space and heavily taxing the productive sector is not sustainable. We cannot kill the goose that is laying the golden egg.”
Minister Chinamasa said the bonus obligation for 2014 was $172,6 million, with $159,3 million having been paid to various Government departments, while $13,4 million was outstanding for State universities.
He said Government would take pragmatic decisions on whatever is “thrown up” by the ongoing civil service audit he was spearheading together with Public Service, Labour and Social Welfare Minister Prisca Mupfumira.
“We are not going to hesitate to take the bold decision necessary to recover the economy,” he said.
“I want to save jobs and will do everything to save jobs, but we need to agree that we have to take daring measures to reduce the wage bill, which is $260 million every month.”
Minister Chinamasa said Government was working on modalities to get money out of the informal sector through payment of taxes.
“One approach we are taking is to identify champions in the informal sector and see whether we can have strategies to nurture them so that they become formal and we are able to collect taxes,” he said. “This is a process which cannot happen overnight.”
When asked if he had consulted civil servants, Minister Chinamasa said: “I felt that I should not leave this issue late. I want them to know it in good time so that they can order their finances accordingly.
“It would have been fair to announce this in September when expectations are high, but I felt I should tell the reality and the reality is we will not pay, there is no capacity.”
He said bonus was not an entitlement and workers should deserve it through performing.
Civil servants team leader and Zimbabwe Teachers Association president Mr Richard Gundane said to avoid total rejection of its policies, Government should consult them on such issues.
“We must be thought of, informed and we agree, not to be thought of and acted upon,” he said. “This is something they should revisit because it is sad that it comes after last Friday’s National Joint Negotiating Council with Government negotiators where nothing of that sought was discussed.”
Government struggled to pay bonuses last year and had to stagger them, with some civil servants getting their 13th cheque this year, while others are yet to be paid.