What will stimulate wage growth?

04 May, 2018 - 00:05 0 Views

eBusiness Weekly

Chris Chenga
Africa has remained an economist’s nightmare due to its lack of credible data and metrics to be used for compiling evidence based analyses of economic occurrences. This is unfortunate circumstance as economists are often supposed to be a reference point to resolve contentious issues between diverse stakeholders interacting within an economy; say for instance, labour unions and employers, whether the latter be public or private.

This is the reason frustrations are prolonged when Zimbabwean stakeholders struggle to resolve matters. There is a vacuum of evidence-based data on which to create context for dialogue that leads to any equitable resolution that is sustainable.

The lack of data and metrics as compiled by credible economists is in itself due a number of factors that range from structural difficulty to gather data, to the more cynical politicisation of economic by compromised institutional professionals who are meant to provide such information.

Regardless of cause, ultimately, the engagement of stakeholders in our economy remains much more emotive and politicised than factual due to the marginalisation of the economists’ input into issues of contention.

Consider over the past few months in Zimbabwe, we have seen uneasy interaction between Government and a number of public sector professionals as represented by their occupational organisations.

These public sector professionals are hoping for higher wages and through industrial action have made their concerns audible. While the aesthetics of a slow growth economy resemble deprived professionals, as per the social stature of healthcare and education professionals, the lack of economic data and metrics of the Zimbabwean labour market shields how difficult it is to balance these demands at present economic outlook.

Indeed this is not to say that professionals should not demand what they believe to deserve, but the notion here is to proffer context that labour demands must be cognisant of realities as dictated by the economies of which they function.

Just as much, it should not be misinterpreted as “siding” with Government, but rather to point out that Government itself lacks a genuine pathway to resolution and satisfying professional demands by failing to compile credible data and metrics to work towards such an outcome.

A sincere Government would ask itself; what will stimulate wage growth? Government should think on this subject beyond there mere proposition that “economic growth” will do so, as Government ineptly has a propensity to presume.

Indeed by mapping out real strategies — based on facts as per credible data and metrics — Government can approach discontent professionals and lay out pragmatic resolutions that appease all parties in the long term.

Also, facts as per credible data and metrics can taper professional expectations into realism, acknowledging the economic environment that determines the possibility of wage growth.

Take for instance matters such as market determined wages as dictated by demand and supply of different professions, the influence of technology on the value proposition of professions, the competitiveness of wages across competing jurisdictions, amongst many other real effecting occurrences on wages.

These are facts that cannot be discounted, let alone avoided, on an assumption that Government can meet with professional organisations and resolve on arbitrary wages that are mutually deemed as fair; fair in what context without the variables that determine wages?

Granted all these factors need not be explained in economic jargon or technically pounding dialogue.

Presently, the situation on wages in Zimbabwe is dire. While professional wages are normatively low, a more academic analysis would likely show that they cannot be raised in the short term, particularly salaries in the public sector.

There are fiscal constraints on government’s wage bill which requires an initial resolution with its creditors. Secondly, Government has to readjust its budgeting and fiscal responsibilities in terms of effective allocation and use of expenditures.

In the private sector, for wages to rise in the labour market, there should be more competitive opportunities for jobs. The logic is that lower unemployment will raise wages as it raises the demand for labour by employers.

Employers are not incentivised to raise an employee’s wages when there are many other willing job seekers on the job market willing to work for current or even lower wages.

With better technology in businesses, labour marginally loses its ability to push for higher wages. Zimbabwe’s industries are yet to reach capital intensity where jobs are completely substituted by automated processes, however, we are at a point where the ability to propose increases in wages is marginally contested, for instance cashiers versus ATMs in the banking sector.

The emphasis of considering these variables is that the current emotive and politicised perceptions on employment, and the inequitable wages as they seem today, do not bring about any resolution for stakeholders involved.

Economies that do not abide by these variables have industrial action every few months, street protests, industrial disturbances, and all sorts of interruptive incidents. But, the underlying concerns are never resolved. That is certainly not what the Zimbabwean economy needs at this point. We need to improve job creation policy-making at a governmental level. At professional level we need to introduce honest professional appraisal where labour unions sincerely communicate trends in job market variables that affect the wages that professionals earn. (Indeed many labour unions and professional agents are vulnerable to personal political aspirants less concerned with real matters than they are with visible action that gains political capital).

At the educational level, career guidance should comprehend variables that will impact the desirability and competitiveness of professions over time. It must inform students and vocational candidates on which jobs will actually create or retain value over time, as opposed to potentially diminishing professions that will see lowering wage competitiveness.

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