Government employment costs 51 percent of revenue in 2014; pays out US$465,76 million in 2 months to February
GOVERNMENT employment costs in the two months to February amounted to $465.76 million mainly weighed on by 2014 bonus payments. Last year, the total employment costs amounted to $2,1 billion which is about 51% of the total revenue of $4.12 billion.
Figures from the Accountant-General’s Department show that Government paid out $299.33 million in January which included most of the bonus payments and $166.42 million in February. The costs had a negative variance of 57% against the targeted $362.1 million.
The civil service has a total staff compliment of 226 000 including members of the defence forces. Excluding the defence forces the civil service total stands at 186 000 with the ministry of Primary and Secondary education accounting for 128 000 of the staff. The ministry of Health has the second highest number of workers with 36 000, Higher Education comes in third with 16 000 and Agriculture is fourth with 14 000
Although the first quarter Zimra figures are not yet out reality on the ground is that government is struggling to collect revenues to finance its operations.
It is believed that at the present moment Treasury is funding salaries for government employees at net salary level. This has seen pensions, medical aid and other stop order facilities going to companies such as micro finances and retailers that give civil servants services on credit going for months without being paid.
The lack of fiscal space has seen Zimra adopting orthodox methods of collecting taxes. Such strategies include garnishing accounts of companies in tax arrears and carrying out blitzes on vehicles. At one point the commissioner general of Zimra suggested that civil servants’ salaries be slashed by 20%. Furthermore, he tried to get the Zimbabwe Republic Police to remit the fines they collect to treasury.
A holistic approach is however required to correct all the ills surrounding the civil service and the economy as a whole. Challenges besieging the civil service sector include a bloated work force often associated with the existence of ghost workers, duplication of roles as well as an unskilled labour force. The much talked about civil service audit should now take off. This will improve efficiency within the respective government departments.
If authorities are sincere about cutting down their expenditure then it should be across the board including ministers. Perhaps starting from reducing ministerial allowances and those of members of the August House. The best way to do it is foregoing the purchase of vehicles which seems to be a priority on their part.
It is also high time that government should spare a thought for foreign capital. Government collections are declining in line with the slump on the tax base. The contribution of corporate tax for instance is coming off as companies continue to struggle. The past year has seen an increase in the number of companies recording losses, with 60 firms going into judicial management while 87 were liquidated.
Firms in the manufacturing sector for instance require cheap and long term funding to retool their productive facilities and to use for working capital. It is therefore important for government to create a conducive environment to attract foreign money. One key area is to revisit empowerment laws which have largely been described as an elephant in the living room. The recent move by government of giving power to line ministers to determine the shareholding foreigners can hold in an entity on a case by case basis does not work. This is because it makes the whole process open to manipulation and corruption.
Focusing on wrong priorities is the other reason why pressure on part of treasury remains high. Is now the right time to hold by-elections when the government is failing to pay salaries on time? The inclusive Government successfully suspended such and the same thing could be done now especially considering that Zanu PF will maintain the majority until 2018.
It seems that the powers that be are focused are on driving their political agendas at the expense of economic growth. Twenty one months have gone since the last presidential and parliamentary elections were held but the country remains in an election mode. It is again this uncertainty emanating from the political front that is driving away offshore money.
Another solution to reducing the burden on part of the government is to privatize some state owned entities that continue to drain the fiscus. In addition to providing income to government, selling some assets will ensure that they are managed better by private players. Continuing to hold on to such assets will result in them losing value and at the end they will be snatched by foreigners for a song.
In reality civil servants were not moved by the decision to suspend bonuses that are usually paid at the end of the year. Their worries for now are whether or not their April salaries are coming through. We have gone past the stage of living hand to mouth. Our revenue collections are now not enough to cover our needs and at this rate the economy will come to a screeching halt. -FinX