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Friday, 30 November 2007

Zambia Statistics - November 2007

The Central Stastical Office produces useful monthly analysis. The November Edition can be found here. Inflation has continued a downward trend with the inflation rate for November recorded at 8.7 per cent. The November inflation rate represents a 0.3 per cent reduction compared to last month’s 9.0 per cent, largely driven by lower food prices.

5 comments:

  1. Cho,
    on the face of it, the single-figure inflation rate looks pretty impressive, for statistical purposes might I add. However, I'd like to know to what extent public-sector salaries have been suppressed, if at all, to achieve this because as many might know, they're a pivotal factor in controlling inflation.

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  2. Nice E,

    Its a valid observation.
    In the short term at least, wages are critical.

    There's no doubt that to control inflation at present, workers have had to suffer a little. What normally makes inflation run fast is high wages. So to really control inflation in the short run you got keep the wages under control. So in short the poor worker suffers. He / she has to accept bad terms year on year.

    Obviously Government cannot control what the private sector pays, so what it tries to do is control what the public sector wage bill. As you know Zambia has a large public sector. LPM announced earlier this year that 65% of Government revenue went on budget. To control inflation in the long term Government needs to ensure that negotiations of wages does not return to the FTJ days of 20% plus wage increases.

    But as you control inflation, you also weaken the trade union case for higher wages.

    I guess the point to also note is that low inflation is in the long term interests of everyone, including the workers. Low inflation allows companies to plan better for the future and hence should lead to more investment and lower interest rates and so forth.
    This benefits everyone.

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  3. Cho,

    I absolutely agree that low inflation is in everyone's best interest and that it is necessary to keep public sector wage bill "in check".

    However, my question focuses on the extent to which you do that. This is where I am leading to: if the public sector wages are suppressed such that there's a significant disparity with the private sector, then chances are your public sector workers will turn to corrupt practices to keep up. The fight against corruption may be futile.

    As someone else posted on your blog, I think, we're seeing clerks building mega homes, from their modest wages I wonder?

    One strategy in my view, in addition to controlling the public sector wage bill, is to get more workers off govt payroll and into the private sector. But that's a long term solution and to do that you will have to grow the private sector, increase production, encourage small scale schemes, entrepreneurship, etc.

    Easier said than done. True. But at least you have a holistic plan to work towards rather than just aiming to meet the HIPC/IMF conditions for more aid, while exacerbating other problems.

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  4. Nice E,

    I agree, the long term solution is effective "public sector reform". That includes both the reduction in the size of the public sector and ensure sufficient checks and balances are in place.

    Unfortunately, working towards a smaller public sector is unpopular. A quick scan of all the major political parties' manifestos shows a lack of long term view on: a) what they plan to do tp reduce the public sector pay burden to something manageable; and more importantly b) what is being proposed to ensure that the little that we have that can be spent on non-wage activities is being utilised properly.

    No political party would preach reducing the size of the public sector because it could cost them votes come election time. The bigger the size of the public sector relative to population, the more unlikely it is that any party will want to discuss the issue.

    So our hope must lie in ensuring the little we have being spent properly. I would venture to suggest three possible ways:

    First, more devolved responsibility along the lines suggested in my Participatory Budgeting blog - failed accountability is at the root of public sector dysfunction. A strong bond of accountability between citizens and the public sector would lead to continuous improvement in public sector service delivery. Participatory budgeting is an excellent way to do this at the local level.

    Secondly, Government needs to create stronger incentives for avoiding corruption. Both detection mechanism at the local level and stiffer penalties for corruption should be encouraged.

    And finally greater information - wide dissemination of information allows citizens to monitor public service deliver and gives them a platform for challenging how it is being delivered to them. An improvement in this area will ensure that the little we have is being spent wisely.

    Until we begin to have a debate around the pay burden imposed by the public sector, and how to ensure that the little we have is used efficiently, our development will be sluggish and often involve wasted resources. We must all work together to push political parties and Government to put this issue at the top of the agenda.

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  5. Hear hear! You've raised some very key points there. That's the voice of reason.

    Cheers.

    ReplyDelete

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