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Sunday, 1 December 2013

Zambia on Strike

The Government is facing increasing industrial strikes by public sector employees. Nurses and midwives in many parts of the country, including major cities of Lusaka, Livingstone and Ndola have been on strike again just over a month after calling off a 7-day strike. The workers resumed work last month believing that government had promised to address their grievances, only for Health PS Peter Mwaba to refute any promises. (Source: ZNBC, MuviTV)

The nurses alongside other public sectors workers who were promised by GRZ wage increases of up to 200 percent. But somewhere along the line the political promises and the final written bargaining package did not match. What politicians hailed the "unprecedented rise" in public sector wages, for some people it turned out to be a mere 4% rise. That is what sparked off the protest. According to Leonard Hikaumba (ZCTU) the workers are willing to go back to work "as long the government comes out clearly on the position of what they had promised".

Workers at the Luapula Water and Sewerage Company (LWSC) went on strike this week over delayed three months salaries. LWSC Managing Director Sebastian Chilekwa says the reason workers have not been paid their salaries is because the company is not collecting enough revenue to meet the wage bill. He has requested GRZ to assist the company with a grant of K1.9 million to clear the outstanding wage bill. (Source : ZANIS)

Government has also been facing more strikes in the legal world. This week it announced that it has dismissed 18 state advocates for engaging in what it described as an ‘‘illegal industrial action’’ demanding K3,600 non practicing allowance which is said to have been abolished. Of the 18 dismissed state advocates, 16 are female lawyers. For the past two weeks the state advocates were reporting for work but did not attend to cases or go to court which resulted in cases being adjourned and piling up at the ministry. ( Source : Daily Nation)

The public sector wage demands are a huge problem for the PF government because having blown the fiscal deficit this year, it agreed with the IMF important cost cutting measures to restore fiscal credibility as part of its Article IV consultation. The 2014 Budget optimistically projects a 6.6% deficit next year, off the back of a budget 30% larger than the 2013 budget.

To meet this 6.6% deficit projection, Chikwanda is planning to borrow substantially abroad most of it going on towards meeting the wage increases from last year. A $1bn Eurobond is planned before Christmas. He also promised to implement a wage and hiring freeze to keep a lid on spending. But this is problematic because the pressures on wage increases are becoming difficult to contain. So the borrowing surely must now rise substantially.

Many sector employees are not happy with what has been delivered from the last wage increases. Especially havIng now seen GRZ increase ministerial and presidential salaries again. Private sector wage increases in mining (at 25%)and other sectors to competitive wage bargaining, as expectations are wage inflation revised upward. In addition, some workers expect GRZ to tread softly with their demands given its stance with Konkola Copper Mines.

The other pressure on the wage bill is coming from future policy plans. GRZ is planning to build 220 new primary and secondary schools, 3 new teacher training colleges, 5 new trades training institutes, 650 health posts and infrastructure for new districts and provincial capitals. These things require hiring workers on higher wages than currently (the new demands affect future employees).

The upshot of all this pressure is that Zambia is becoming increasingly in debt, even as the Kwacha weakens, credit rating worsens and debt repayments go up. Zambia will definitely break the 10% fiscal deficit barrier in 2014, and of course missing the fiscal target two years in a row. Wherever you look the macroeconomic fundamentals are being eroded. It is important that PF and Zambians realise that there's much to economic policy than merely infrastructure development.

Chola Mukanga | Economist 
Copyright © Zambian Economist 2013

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