Social contract doomed – experts-(22-02-07)

HARARE - Government's proposed social contract initiative, which comes into force next week and would see a price and wage freeze for four months, will not work say experts.
This is because government has no control over prices of black market goods, which form the bulk of industry and commerce's

key inputs.
Government has unilaterally decreed that no employer be allowed to increase the salary of their employee and no retailer to increase the price of goods and commodities from March 1 to June 30.
The architect of the social contract, Reserve Bank governor Gideon Gono, calls the pact a “gentlemen’s agreement” between labour, business and government.
By imposing a freeze on all prices, wages, salaries, fees, interest and municipal rates as well as on every tariff, government believes it can contain Zimbabwe’s skyrocketing hyperinflation, which surged to a record 1,593.6 percent in January.
But the labour movement insists employers must align the minimum wage with the Poverty Datum Line, currently pegged at $458,986, before the wage freeze comes into force. Employers cannot do this because they of severe viability problems.
An RBZ survey revealed last week that prices shot up 500 percent since the delivery of Gono’s monetary policy review last month.
Economists say this is the result of his staunch refusal to devalue the currency and a strategy by business to hedge itself during the four-month price freeze period.
Government has threatened to jail any one who breaches the contract, and has already arrested some senior business executives on allegations of increasing prices without permission.
Prices of cooking oil and bread, which were scheduled to go up at the beginning of this month, did not. The result has been shortages in the formal market, although the commodities are readily available on a thriving black market, where they are priced beyond the reach of most workers.
Meanwhile, tension between the government and the labour movement has intensified lately, with President Mugabe now calling the ZCTU an opposition party.
The ZCTU has held meetings with its members throughout the country recently in an effort to map out a new strategy of confronting the government. It has also pulled out of the Tripartite Negotiating Forum, accusing the government of not taking seriously contributions by the unions.
Secretary general, Wellington Chibebe, said attending the meetings was a complete waste of time and has threatened more job action. The state has responded by making it extremely difficult for the trade union to operate. It has also sponsored a splinter union federation to undermine the ZCTU. – Gift Phiri

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