CZI calls for internal devaluation of US dollar

01 Mar, 2015 - 01:03 0 Views
CZI calls for internal devaluation of US dollar

The Sunday News

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Shepias Dube Business Reporter

THE economic challenges facing the country are largely due to the “use of a strong currency in a weak economy” hence the need for an internal devaluation of the United States dollar, Confederation of Zimbabwe Industries president Mr Charles Msipa said. Mr Msipa said industry supported calls by central bank Governor Dr John Mangudya that the panacea to the country’s economic misfortunes is slashing salaries and prices of goods and services.

“As industry we agree that there is merit in pursuing an ‘internal devaluation’ of the US dollar through restraint on wages and salary reviews, and the reduction of prices of goods and services to conform to regional levels,” he said.

Proponents of the idea argue that Zimbabwe has the highest minimum wage compared to other countries in the region, and is also the most expensive country hence the need to revise down salaries.

They say while labour wanted salaries to go up, the reality was that industry cannot even sustain existing salaries hence the need to trim the salaries while encouraging the industry to reduce prices to increase local consumption.

However, in order to be sustainable, Mr Msipa said a reduction in prices has to be supported by a broad range of measures.
“Industry must come up with initiatives to drive greater efficiencies and productivities and eliminate waste at firm level.

“There is also need for policy measures to reduce the cost and improve the ease of doing business-that address reduction in the cost of power, water, finance and taxation, levies, permits and regulatory costs,” he said.

Mr Msipa said labour laws in the country need to be revisited as the existing legislation is choking both private companies and parastatals.
“Labour costs form a significant part of cost structures, and the current laws on retrenchment make it unaffordable for firms to retrench employees when they need to right size in line with market trends,” he said.

The CZI boss said policy measures noted above to reduce the cost and improve the ease of doing business have been adopted and endorsed by Cabinet and the private sector is ready to collaborate with Government and labour in the implementation of the measures.

Mr Msipa urged labour to come to terms with reality and embrace the eminent changes even if it may mean retrenchment, saying it is better to lose a few jobs than to have the entire economy crumbling.

“The magnitude of our economic challenges requires a social contract between Government, labour and employers to ensure the correction of prices of goods and services and wages and salaries,” he said.

However, trade unions have since accused employers of destroying the spirit of social contract by adopting the big brother attitude of dictating instead of engaging on issues affecting the economy.

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