Someone trying to explain inflation, according to an article I read in Zambia – I cannot remember exactly where-had this to say: When a man went into a coffee shop and ordered a cup, he was asked to pay $500. When he went back for a second cup, he was told the coffee was now $850. When he pointed out that he had just bought another cup for $500 a few minutes before, he was told: “Sir, if you want two cups of coffee, and want to pay the same price, you order and pay for both at the same time.”
This story must be ringing true to most Zimbabweans. Prices have become so unpredictable that one always has to carry extra cash just in case. But while most Zimbabweans are whining, cursing ten devils and some unmentionables, only at times pacifying themselves with the new national anthem, Rambai makashinga (remain steadfast), those with access to foreign currency are finding things cheaper by the day.
The worst hit are workers whose wages are being eroded by the day while employers complain about ever increasing labour and production costs, yet their companies are making hefty profits.
According to the bread basket compiled by the Consumer Council of Zimbabwe (CCZ), the average employee has to work for five months to afford one month’s basic requirements.
The poverty line by the Zimbabwe Congress of Trade Unions (ZCTU), which is based on inflation figures released by the government, reduces this to two months.
But most people argue that the current official rate of inflation is inaccurate because the Central Statistics Office uses controlled prices to calculate inflation when very few people buy commodities at these prices.
According to the ZCTU, the national minimum wage in June should have been pegged at $88 863.25. The Consumer Council says a family of six needed $181 260 to meet its basic necessities during the same month. The ZCTU figure is based on a family of five, the national average family size.
A closer look at the prices quoted by the CCZ, however, shows that even their prices are below the market. For example, the council gives the impression that the price of mealie meal has declined from $5 000 for a 20kg packet in April to $3 700 in June when one cannot buy a 10 kg packet with this amount. It puts the price of bread at $550 a loaf when the cheapest price one can buy bread for is $700.
ZCTU figures show that the national urban poverty line almost doubled in the first half of the year from $44 697.31 in January. Urban centres in Matebeleland South are the cheapest to live in while Bulawayo remains the most expensive, beating Harare by almost $2 000 per person.
According to the ZCTU, the minimum wages announced by the government in April in the middle of a three-day stay-away organised by the labour movement to protest the arbitrary 300 percent in the price of fuel should in fact have been implemented earlier and were based on the poverty datum line (PDL) for January. The government gave the impression that the new minimum wages had just been agreed upon by the tripartite negotiation forum (TNF) which comprises government, labour and business.
According to the labour movement, the social partners had started negotiations on PDL-linked minimum wages soon after the signing of the Prices and Incomes Stabilisation Protocol on January 30, but the government “unilaterally” increased the price of fuel by almost 100 percent on 25 February before the negotiations had been concluded.
The labour movement says it complained to the government that this was in violation of the Prices and Incomes Stabilisation Protocol, “but in the interest of progress”, the TNF agreed on the new minimum wages, which were to be based on the January 2003 PDL levels adjusted upwards for the fuel price increase.
The minimum wages were to be $23 070 for agriculture, $42 168 for the agro-industry, and $47 696 for industry and commerce. The ZCTU says the government made an about turn and declined to implement the new wages. Instead, it invited all national employment councils to indicate whether they could meet these new wages or not.
The ZCTU declined to participate in this exercise insisting the government should simply implement the new wages through a statutory instrument as was done in 2001. Statistics from the labour movement show that wages agreed in 2001 saw the workers’s lot improve with those in agriculture getting 97 percent of the food poverty line up from 52.1 percent in 1995 while those in industry were receiving 94.8 an improvement from 51.3 percent in 1995. The wages had, however, plummeted to 22 percent for those in agriculture and 40.5percent for those in industry by the end of last year.
According to the ZCTU, the government once again increased the price of fuel, this time by up to 300 percent, on 15 March 2003 before any agreement was reached. The ZCTU organised a three-day stay-away to protest the increase starting April 23-25.
In an effort to win the support of the workers and break the stay-away, the government announced new minimum wages on April 24, but at the same time it stated that national employment councils would negotiate new gross minimum wages which implied that the new ages were not going to be enforced by law.
The ZCTU rejected the new wages because they were already outdated. The new minimum wages announced by the government in April were 51 percent of the poverty line for those in agriculture and 53.6 percent for those in industry at the end of June.
The ZCTU says because of hyperinflation, which has seen the poverty datum line increasing by an average of $10 000 a month, national employment councils should depart from the traditional method of annual negotiations and should negotiate at shorter intervals.
This is easier said than done. Though the business sector has joined hands with workers in their proposed stay-aways, they play a different ball game when it comes to hiking workers’ wages. Most of the companies are making hefty profits, even in inflation adjusted terms, largely because they are laying off workers.
But even those employed are becoming poorer by the day as their wages are eroded by escalating inflation and a weakening currency which has already lost more than half its value this year alone.
According to the ZCTU, the dollar in June was worth only 0.4 cents of the 1990 dollar. In other words it was worth less than half a cent of 1990. Put another way, one needed $250 to buy goods bought with $1 in 1990.
But the dollar could be worth much less because the ZCTU uses official inflation figures for its calculations. Most economic watchers believe inflation is perhaps double the official figure.
The erosion of the local currency is easily demonstrated when one converts it to foreign currency. The minimum wage for industrial and commercial workers in 2000, for example, was $3 109.76. This translated to about US$39 using the black market rate. The current minimum wage of $47 697 translates to only US$13 using a very conservative parallel market rate. This means that though the minimum wage has gone up more than 15 times in three years in nominal terms, it has declined by a third in real, or US dollar, terms.
This is probably more than most workers can stomach as they continue to cling to the belief that their currency still has value when a million dollars is only just US$300. In other words, while most workers are suffering, those with access to foreign currency are laughing all the way to the bank. Things are getting cheaper by the day with stoves now costing more than $1 million actually costing them half the price they were five years ago.
The bread basket compiled by the CCZ, for example, translates to only US$50. Now where in the world would one get 2kg of margarine, 40 kg of mealie meal, 6 kg of sugar, 500gs of tea leaves, 30 pints of milk, 5 litres of cooking oil, 30 loaves of bread, 2 kg of flour, 4 kg of rice, 1.5 kg of salt, 20 bunches of vegetables, 8 kg of beef, six bars of soap, and a three-roomed house, all for US$50?
The problem, of course, is that Zimbabwean workers are not paid in US dollars, pula or rand. And they are getting poorer by the day. The minimum wage of $70 in 1980, for example, now translates to a whopping $901 863.90.
|Urban Poverty line for family of five|
|Mashonaland Central||$95 115.30|
|Mashonaland East||$96 980.85|
|Mashonaland West||$85 010.05|
|Matebeland North||$79 883.35|
|Matebeleland South||$77 041.35|
|National average||$88 963.25|