via Editorial Comment: Regulate public sector remuneration | The Herald January 27, 2016
The remuneration of top executives in public institutions needs to be realigned to the situation on the ground. The urgent need for such restructuring has been made clear by the case of Harare Central Hospital CEO Mrs Peggy Zvavamwe reportedly prioritising a luxury vehicle ahead of service at an institution that mostly caters for low income people.
There is splitting of hairs on the acquisition of the top-of-the-range vehicle with Mrs Zvavamwe defending herself saying the purchase of the vehicle was planned for while sources say the purchase should have been done through a bank loan so as not to affect cash flows.
The bottom line is that the institution cannot afford the $88 000 vehicle unless it has come as a grant or a donation. The hospital is meant to be providing urgent medical services for the people, not to provide a cushy seat for anyone.
The CEO may have been well within her rights to demand what her contract says is due to her. The blame goes to the employer who has failed to offer a sustainable package.
The same goes for other public institutions like municipalities and parastatals. It is high time that the powers that be come up with realistic income structures for the top officers in public enterprises. The value of the US dollar was distorted at the time of dollarisation some years back. While the civil service started off with blanket $100 monthly allowances and has been gradually increasing salaries, many entities were at the other extreme with top people awarding themselves very high salaries.
The bubble burst and prices have plummeted as the supply of the money dwindled on the market.
Reserve Bank of Zimbabwe Governor Dr John Mangudya has said the deflation that the country has been going through is a logical process of self-correction as the economy adjusts to the real value of the US dollar versus the artificial devaluation during the hyper-inflationary era.
Many private enterprises including big brands like Econet and FBC Bank have since effected salary cuts. Presumably when their income levels rise, their remuneration packages will be adjusted accordingly. So top people understand that they have to earn the top dollar and will perform accordingly. Surprisingly, the same logic has been absent in the public sector. This has resulted in an anomaly where top people at public enterprises earn more than their private sector counterparts, without the bother of performance-based measurements.
Obviously this means that resources are being diverted from service delivery at the cost of the ordinary person and the situation cannot be allowed to continue.
What we need now is to have the Public Service Commission and other stakeholders come up with realistic terms of service for high ranking public employees.
That means that there must be legislation enforcing the set guidelines instead of the issuance of directives that seem to never go anywhere beyond the pages of the newspapers.
Many may remember that after the scandal of mega salaries broke out in the media in 2013 it was announced that no public enterprise boss would earn more than $6 000 inclusive of allowances, which translates to a total of $60 000 annually.
One then wonders how the $88 000 vehicle fits into that equation. The situation is not peculiar to Harare Central Hospital: an audit of Mutare City Council accounts showed that the directive was ignored with executives awarding themselves double the limit as basic pay, on top of other allowances.
There is need for regulated remuneration guidelines in public institutions to ensure that no one is overpaid. For example, the responsible authorities could introduce a law whereby no CEO takes home more than 20 times what the least paid worker gets.
That means if lowest worker is grossing $250 monthly, the CEO cannot get more than $5 000 inclusive of allowances.
Unless Government moves in to effectively stop the rot, we will continue to see a situation where public institutions offer shoddy services and fail to pay the real workers while top management lives large.