Minister admits govt using wrong business model on labour costs

via Minister admits govt using wrong business model on labour costs – NewsDay Zimbabwe March 5, 2015

PUBLIC Service, Labour and Social Welfare minister Priscah Mupfumira yesterday admitted that government was using a wrong business model which allowed labour costs to gobble 80% of its total revenue.

Speaking during a business breakfast meeting organised by the Employers’ Confederation of Zimbabwe (EMCOZ) in Mutare, Mupfumira said the unsustainable labour costs had forced government to financially starve other key areas such as health.

“It’s a wrong business model which says out of the total revenue, 80% goes to salaries. That is wrong,” Mupfumira said.

“Are we in the business to pay salaries or for the sake of improving ZimAsset? As government we are concerned that 80% is going to salaries yet we need money to pay for road maintenance, buy medicines and not to pay people who spend the day sitting.

“The government is concerned that how should we get out of this situation. We need a paradigm shift because we need money to develop, improve and grow and as government we say this is a serious issue and we are looking into ways to address it,” she said adding that several local authorities were experiencing the same problem.

Mupfumira’s remarks came at a time when Treasury is struggling to raise civil servants’ salaries. EMCOZ president Jack Murehwa challenged government to come up mechanisms to rescue the economy.

He said it was depressing that 4 610 companies had closed shop since 2011 causing the loss of 55 443 jobs in the formal sector.