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Wednesday, 16 October 2013

How much should President Sata earn?

The Daily Nation reports that President Michael Sata’s annual salary has been increased to K414,406 with a special allowance of K108,934 barely a year after his salary was increased to K327,000 in 2012. The President's annual salary now stands at K0.5m. This is set out in SI 91 of the Presidential Emoluments Act signed by Finance Minister Alexander Chikwanda. Government has also increased salaries of cabinet ministers and statutory offices.

This is the third time in two years that the presidential salary has been increased. The first two increments having been effected at 100 per cent of the annual basic pay. The salary increases come against a backdrop of health workers including nurses, council workers and other public service workers having gone on strike after receiving a four per cent increase.

There are two observations worth making on this. First, we are all to blame for not paying careful attention to the laws of the land. A piece of legislation was passed in 2009 that everyone interested in Ministerial pay should have read and be aware of. The Ministerial and Parliamentary Offices (Emoluments) (Amendment) Act, 2009.

Section two of the principal act was amended with the following key clause inserted: "There shall be paid to the holder of an office specified in the Schedule such salary and allowances as the Minister responsible for finance may prescribe, by statutory instrument, in consultation with the Standing Orders Committee of the National Assembly". A similar clause was added in relation to constituency allowances.

What this meant was that Cabinet sets the pay for ministers and MPs through a statutory instrument. Parliament has no say. It cannot even oppose - it can only be consulted. It is just the way life is. This was created by MMD to bypass the public. It is there in our laws. And PF have been using it ever since to increase their wages as they see fit.

The second observation is that we must focus on the real issue. The central issue is not about the level of pay but the basis on which the pay is set. It is certainly true that the wage increases under PF are crowded by lack of consultation and seem to have been undertaken under the cover of darkness. But focusing on the increase only without calling for a broader discussion on appropriate rationale and benchmark for pay robs us of an invaluable opportunity to once again transcend the debate.

Increasing wages for members of Cabinet is not necessarily bad. There are actually positive things associated with it. For example, it may realign the incentives for foreign travel. One of the reasons members of the cabinet are always on the road is because they feel the need to supplement their “low salaries” with travelling allowances. The more they travel the more money the earn. Of course to make sure the incentive to stay at home is stronger, we need to reform the allowances and travel expense system.It costs more money than wages.

That really is where the debate should - how do we reduce the incentive for unnecessary ministerial and presidential travel? The word there of course is "unnecessary" - some travel is necessary, but Zambians are losing staggering amounts of money on meaningless adventures by government officials. Much more than on wage increases.

A higher salary may also make Zambians care more about the performance of those who hold various offices. If these people are being paid vast amounts of money we may care more about their output. In particular, the first thing we must demand is value for money. In a way we do not care how much ministers earn as long as they are delivering. This is where the debate should be - how do we ensure the public is able to monitor more clearly ministerial performance?

To simply argue that the presidential and cabinet wage increases are high and therefore should not be increased is intellectually poor. We must argue that it is high because the president and cabinet current provide poor value for money at that level. And yet, that is not what is often discussed. Public critics of the latest increase have focused purely on "uniformity". They say the president's wage should rise in proportion to all the workers. But this argument ignores the differences in human capital and incentives they face in their jobs.

My hope is that we will finally start to have a reasonable debate that reflects the nuances I have cited. What may be included in this debate could be a “performance” related pay structure linked to achieving certain deliverables that are linked to overall wellbeing of the nation.

Chola Mukanga | Economist
Copyright © Zambian Economist 2013

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