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Civil Service Pay Crisis: constitutional implications

 

In terms of the Constitution of Zimbabwe, the Supreme law of the land, there exists a social contract between government and the people. Every 5 years citizens go to the polls to elect the President and Members of Parliament. The President is mandated to appoint a Cabinet to assist him to run the affairs of the state. Once elected, the executive has a duty and obligation to provide public services as well as the needs of its citizens. Its a quid pro quo. In a democracy, if an elected government fails to provide for the social and economic needs of its citizens, it can be removed through the ballot. In an undemocratic society the government can be removed by popular uprising. In a despotic country the government can be removed by a military coup. This is how serious is the nature of the social contract between an elected government and its people. Luckily, Zimbabwe is a constitutional democracy.

The Bill of Rights is the cornerstone of our democracy. It provides for red rights, blue rights and green rights. Red rights are also known as political or civil rights. Familiar in this genre is the right to freedom of speech, assembly and association. Most people end here. Then there are blue rights, also knowm as economic rights such as the right to food, shelter, healthcare and employment. These are second generation rights. The third generation and last category of rights are called green rights. Typical in this genre are environmental rights. In Europe activists have taken this right as far as forming “green” parties or green movements.

This opinion piece focuses on blue rights and their implication on the labour market. As already indicated, blue rights are socio-economic rights. In regard to the labour, the right to a job is a human right. Hence the adage: labour rights are human rights. If according to the Zimbabwean Constitution, employment is a right it goes without saying that salaries are a right which should be paid as and when they are due. Failure to pay salaries as and when they are due clearly violates the Constitutional rights of workers. In this regard, government acted ulra vires the Constitution by failing to pay December 2015 salaries on time. Government violated the rights of workers rights to a decent wage and a decent life. Workers were not able to celebrate Christmas with their families because they were deprived of their right to do so by the witholding of salaries by government. For some who are Christians their religous rights were violated as they could not travel to shrines or places of worship of their choice to celebrate the birth of Christ. Whichever approach one uses to statutory and constitutional interpretation, I argue that the failure by governnent to pay December salaries is in clear violation of the Constitution. Human Lawyers have a job cut out for them.

Then there is the question of bonus. Is it a right or prividge? Since 1890, central government has never neglected paying bonuses. The payment of bonuses had become an entrenched practice. A tradition. In the past some witty musicians would compose and release bonus songs. The late musician, Patrick Mukwamba’s “Bonus” track made an instant hit on the local music charts in the 1980s. Such was the popularity of bonuses as to become part of the civil servant’s end of year compensation. An income earned by past practice for such a long time cannot be taken away unilaterally as bonuses were a legitimate expectation. I therefore beg to differ with those who hold a contrary view. It is my humble submission that at law the payment of bonuses had become an acquired right given the historical trend. This position should continue and I challenge jurists to pursue this matter to its logical conclusion.

Legal and constitutional matters aside, we are worried about fiscal sustainability. Fiscal sustainability is a derivative of what is called the fiscal stance. This refers to the state ‘s ability to collect fiscal revenues to meet its statutory obligations. The collapse of GDP growth from the Zim Asset target of 7% to 2.7% is a cause for serious concern. The shrinking of GDP growth implies the shrinkage of potential revenues. An analysis of governnent revenues will reveal that PAYE and Corporate tax has been declining over the past years. This is due to company closures and retrenchments. Effectively, government is now resting on one revenue pedestal and that is VAT. Given the level of imports and consumption, government has had to rely on VAT for most of its financial expenditure. Because government is now in fiscal coldron, it will have no choice but to increase VAT during 2016. Government is between a rock and a hard place. Raising VAT will provoke a public outcry. Failure to raise VAT will collapse the government as it wont be able to pay uniformed forces and civil servants. We can therefore see that the budget is nothing more than a recurrent expenditure tool. In November 2015, I warned that the budget is a pie in the sky and now chickens are coming home to roost.

Domestic revenues are part of a fiscal diamond comprised of official development assistance and foreign direct investment. In the absence of the other pinnacles of the fiscal diamond, it is crystal clear that government is not going any far with domestic revenue alone. That is the reason why Zimbabwe must open the doors for foreign direct investment. The country needs new money to boost money supply. Unlike the Zim dollar error where government could get seignorage revenues from printing money, Zimbabwe cannot create credit in a dollarized economy. The only game in town is FDI.

Zanu PF often asks the right questions but choose the wrong answers. For example on indigenisation the solution is not 51%. The indigenisation policy can be likened to an elephant in the living room. The indigenization policy is a red flag to investors. Recently there were serious policy inconsistences between 2 government ministers over the so-called clarifications on indigenization. The indigenization policy has been rationalized by:
(1) introducing empowerment credits to promote compliance (2) Empowerment levy on non-compliant companies (3) insistence on 51% in the resource based sectors (4) fencing off reserved sectors from new entrants.

These changes will not work. The indigenization policy is an outdated policy bordering on resource nationalism and an undertone of expropriation. What is required is a complete repeal of the law. No amount of tinkering will make the indigenization policy acceptable to investors. Elsewhere, indigenization attempts failed dismally. In South Africa they changed the ill- fated black economic empowerment program to the so-called broad based economic empowerment program. Instead of empowering the majority, only few connected blacks benefitted. The likes of Ramaphosa amd Sexwale. The BBEE program has bred a corrupt public tender system which is now deeply rooted. The same applies to Namibia and Botswana. They abandoned theirs midstream. What we ought to realize is that investors now consider Africa as the last frontier. There are 2 types of investors. The first category is called General Partners (GPs) which refers to Fund Managers who invest on behalf of family funds, endowment funds and hedge funds among other private funds. The second category of investors are called Long-term Partners (LPs). These are actually the owners of capital. In one of my investment promotion missions in London I was priviledged to address both the GPs and LPs. Every investor spoke glowingly about the opportunities in Zimbabwe. The human capital, the relative peace and stability and dollarisation. Almost all the investors said there is no way they could use borrowed funds to invest in a place where they are forced to cede 51% and lose controlling interest. They were talking business. And for the benefit of readers, London is probably the citadel of foreign capital. The response to indigenization is a big NO.

China is different. The Chinese are after minerals, oil, gas and agricultural commodities. Paradoxically Chinese companies are exempted from complying with the provisions of the indigenisation law. As for China itself, they abandoned their communist ideology. They adopted socialism.with Chinese chacteristics, a euphemism for market liberalism. The Chinese abandoned indigenization and welcomed foreign investors with no conditions attached. The result was a floodgate of investment from America, Europe and Taiwan. Taiwan businesses enjoy protection in China despite the One China Policy. Even the Asia-Pacific geo-politics has not changed China’s open door policy. The conflictual interests in the South China Sea has not affected foreign investors because their investments are.safe. In China they say that the colour of the cat is not important as long it catches the mice. To show how serious China is with FDI, China signed an MOU with Singapore in order for Singapore to build a new city ShenZheng based on the special economic zone concept. Shenzheng is on the southern part of China at the border with Hong Kong. Singapore built this town and administered it for 30 years. The town was handed over to China very recently. Today China is the second largest economy in the world. Thanks to it ” open -for -business” policy.

Zimbabwe is regressing by sticking to the discredited indigenisation policy.

So for as long as government buries its head in the sand, and pretend that indigenisation does not scare investors, the economy will not recover in 2016. In the absence of reforms, we should expect the deepening of the current fiscal and macroeconomic crisis which is unabated.

The jury is still out on the question why government cannot see this impending trajectory. Tendai Biti wants said money does not grow on trees. This wisdom is apparrently eluding the government.

Government has little room to manouvre. Apart from raising VAT, retrenchment of civil servants or cutting salaries is inevitable. 2016 is the year of tightening belts. Let us wait for legal battles to begin as the constitutionality of government failure to pay civil servants is brought to the foreground.

Source-ZImpolicy Dialogue 2016

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