Govt’s populist decisions on bonuses will backfire

The government put itself in a difficult position when it pledged to pay civil servants bonuses against all sound economic advice.

Source: Govt’s populist decisions on bonuses will backfire – NewsDay Zimbabwe January 27, 2017

It was clear from the way that the government paid the 2015 bonuses that paying last year’s was going to be mission impossible, but as with everything in this country, the authorities sought political capital and took a populist decision and this is coming back to haunt them.

The government has then come up with a number of proposals to give civil servants stands instead of cash in paying bonuses, which is another weird proposal, raising a number of questions.

Where is the government going to get so much land to house its staff numbering more than 250 000 and where will it get the money to service the stands?

If the government has no money to pay bonuses, then surely it does not have money to service stands.

Paying bonuses in cash is a less financial and logistical nightmare for the government compared to stands and the issue of giving out land could be nothing more than the authorities saying they do not have money, but are too proud to admit it.

If the government wants to dole out stands to its workers, then it needs a well thought-out plan rather than this knee-jerk approach, where it realises it has no money and is looking for a way to placate its restive staff.

The government has to stop approaching everything from a political viewpoint and allow reason to dictate some of its decisions.

The Zimbabwe Revenue Authority last year missed most of its tax collection targets, meaning it was going to be impossible for the government to meet its obligations if it did not cut on its expenses.

But the authorities want to plough on, as if all things are constant, when in reality they have not been for a long time.

The private sector has long cut down on its workforce, while some companies have cut the salaries of their staff in response to the failing economy and the government should have long followed suit.

In a nutshell, the government must cut its coat according to its cloth, as anything other than that is economic suicide.

Why the government insists on not cutting its workforce, while at the same time paying annual bonuses is a mystery.

The economic situation is unlikely to improve anytime soon, while the pressure on revenue from the wage bill will certainly increase, which will be worsened by bonus payments.

The government has to be pragmatic about this, otherwise these populist decisions of not cutting the workforce and continuing to pay bonuses will backfire spectacularly.