Thursday, March 28, 2024

Reaction on the Decision by President Lungu to cut the Salaries of Senior Public Employees

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UPND Parliamentary whip and Liuwa Member of Parliament Situmbeko Musokotwane
UPND Parliamentary whip and Liuwa Member of Parliament Situmbeko Musokotwane

By: Dr Situmbeko Musokotwane – Economics and Finance Chairman – UPND

28th December 2019

Two days after the 2019 Christmas, President Lungu announced that he is voluntarily cutting his salary. Along side this, he has directed the Secretary to Cabinet to cut salaries of non-unionized civil servants as well as some parastatal heads. The President’s intention is to use the money so saved to assist Zambians who are stressed by the prevailing harsh economic environment.

The response from the United Party for National Development (UPND) follows below.

As a preliminary point, the President cannot unilaterally cut salaries for individuals. The law does not permit him to do so. However, some money for the same purpose may be gathered by compelling those ministers who remained in office illegally after the dissolution of Parliament in 2016 to pay back the benefits that they derived over the period. The legal judgements for these payments to be made have been in place for years and it just requires political will to be implemented.

Getting back to the main issue driving the President’s desire to cut salaries, its good to know that he is aware that people are undergoing unprecedented suffering under his leadership. In looking for solutions to the sufferings however, we must understand the nature of the suffering and what has caused it. Unless you have answers to these two questions you are at risk of prescribing wrong solutions to the wrong problems, as the President has done.

Mr. President people are indeed suffering. The most critical type the suffering is that the cost of living has escalated beyond anyone’s imagination. Let’s give examples from the bare basics. Maize meal, our staple food is above K170 per 25kg bag in many places of the country. PF found the price of the commodity at less than K40 in 2011.

Petroleum fuel which has major influence on the transportation costs of goods was around K5.50 per liter in 2011. Now it is above K16 depending on the exact type. The US dollar Kwacha exchange rate, another key determinant of virtual all imported goods and services was around K5. Last week it escalated to nearly K16 before it gained back; even though the fundamentals still suggest more depreciation.

We can go on and on itemizing goods and services that have escalated in prices but that is not necessary. Just know that the cost of living has escalated. Over this same period, employees have had minimal increases in salaries and wages. For civil servants this ending year they have had less than 10 percent of salary increments. In 2020, they will not have any increments at all because there is no such provision in the tight budget.

Employees in the private sector are also suffering from stagnant salaries and wages amidst the ever-rising cost of living. Most of their employers are struggling to keep afloat. When they try to increase the cost of the goods and services that they sell to reflect increased costs like electricity tariffs, weak Kwacha exchange rates etc. they find themselves failing to sell because their customers don’t have the money to pay higher prices. So, employee salaries remain stagnant because the employers are unable to increase them. In many cases, employees are even losing jobs because employers are forced to lay them off just to survive.

The suffering of the people is country wide. Rural and urban provinces are equally affected. This suffering is in great contrast to what the Zambians expected to live under PF because your party promised them more money in their pockets. In contrast, never before have Zambians experienced so much money escaping from their pockets.

Given this situation, Mr. President, how does your solution improve the lives of the people of Zambia? When you cut your salary and those of your senior managers, how will such an act lower the price of mealie meal country wide? Or, are you convinced that the relatively little money thus saved can be distributed to the millions who are starving so that they are enabled to afford maize meal?

Will it be enough to feed the millions that are near starvation in the Western, Southern, Central, Lusaka and parts of Eastern Provinces where there is unprecedented drought induced famine this past season? Will your solution stabilize the exchange rate or lower the electricity tariffs or make electricity available? The answer is no.

We know the government uses the excuse of drought all the time to explain the current suffering. But this is not the first time Zambia is experiencing drought and it will certainly not be the last. Nor is Zambia the only southern African country that suffered drought. The problems manifesting now stem from poor governance in our country, especially in the economic arena.

The biggest cause of the suffering is the debt crisis that has befallen our country. Nearly all of the government budget is just for paying salaries and debt service. Here are a few illustrative points on debt service and the suffering.

When there was drought and poor harvest in past years the government used to import maize to augment the local stocks. This kept the price of food within affordable range. This time government can’t import maize because there is no money. It has gone to debt service.

In the past government used to import electricity and pay for it through ZESCO. This time round both government and ZESCO have huge debts to pay so they can’t import even if it was available.

Debt service has caused the exchange rate of the Kwacha to depreciate and will continue to do so. This is causing misery and it will continue to do so
Debt service has drained away money from the economy, making it hard for business to survive
Clearly the cuts in salaries of government officials will not address these debt servicing induced problems.

Finally, there are a few things the government can do to moderate the suffering of the people even as the debt servicing problems remain. Once again here are a few examples:
The government should immediately stop enticing councilors from opposition strong holders to resign from their positions thereby causing bye elections. Since 2016, on average there have been bye elections after every two months. A few have been caused by deaths. The majority however have been caused by opposition councilors resigning after being induced to do so by the government. Elections are very expensive. They take away resources from more deserving areas like feeding the hungry, providing money for Constituency Development Fund and many other causes.

Reduce government travel especially the Presidential trips which are very expensive
Re-consider the need of existing facilities such as the Presidential jet which demands expensive debt service arrangements
Put on hold some planned loans for unjustifiably expensive projects such as the Lusaka Ndola dual highway.

In conclusion, UPND takes the position that the salary cuts from senior public employees do not address the real source of the economic misery that Zambians are going through. The real source of the problems are the debt crisis and very bad utilization of the little resources that remain after debt servicing.

UPND will elaborate on these more fundamental solutions very soon. As of now, it is pointless to inflict pain on a few people for no real gain at all. At the individual levels, the senior public employees may have running financial commitments based on what they believed were their income streams for the next few years. They may have loans to service or school fees to pay. Why punish them for no social gains?

28 COMMENTS

  1. African dictators can be some of the richest people in the world and leading a country filled with the poorest. They can kill and starve their people with impunity while lining their own pockets. They treat the land and lives of millions as their own personal playgrounds, making people work to increase the fortune of their leaders while they face brutal reprisals if they don’t work.

    • Those who want to continue working on ways to steal public money should go home and let the new crop of professionals develop the country.

    • The campaign gimmick of cutting 20% of salary was disaster by PF.
      20%?? Is it replacing a 20% short of cash to pay civil servants?
      Even Lusambo will not accept to write back a cheque of 20%.
      This is bad for PF, mess after mess.
      20% is what PF will receive in 2021 elections.

    • I sure don’t know what I would do if I learnt that my salary was gonna be messed with.
      A salary is one thing that get used and in many cases gets smaller 3 months down the line after it has been increased.
      Voices stating that it is unlawful for ECL to dictate salary reductions do not only sound true, the narrative is also disheartening.
      POTROZ ECL should have just messed with his package kwasila.
      Let his colleagues part away with their usually salaries they are used to get.
      Salaries people get usually have issues to solve back home. They pay gardenboys, maids, babysitters, farm workers, builders, shopkeepers etc. ECL must rescind his decision.

    • Someone is balancing the accounts through cutting spending at the payroll level. the solution should be looking for money making schemes or projects. Agriculture is there to be tapped into government please.

  2. Continue suffering zambian. You voted in criminals now live with it. Greeting from London United kingdom where life is good .

  3. Kalulete, you must be my bululu boyi. Name and brains are of my heritage. Lungu alungusha. What is there to say? Foote is laughing with his legs in the air. Persona non grata in a land governed by questionable lawyers..!!!

  4. I totally I agree that the solution being implemented is not suitable to the problem; it’s like using a spoon to dig a ditch and indeed we are in a ditch as a country. Unfortunately this advice was previously ignored by those in power under the bracket of “the opposition is just bitter”. Well now, the chickens have come to roost and indeed it still will have to get worse since the Eur1.2bn bond is only maturing in 2022 and we will have to pay both interest and principle of the borrowed amount. If the government doesn’t have money, just wait until it’s required to settle payments without defaulting in 2022. Then we shall be really F#kd and in deep s*it!!

  5. WHO IN THEIR RIGHT MIND WOULD WANT TO CUT THEIR SALARIES WHEN THE ECONOMIC CONDITIONS WILL BECOME MORE HARDER. YOU GET K30,000 NET THEN BECAUSE OF THE CURRENT INCREMENT YOUR MONTHLY COSTS RISE TO FROM K20,000 TO K25,000 THEN YOU CUT 20% WHICH IS K6,000 MEANING YOUR BUDGET BECOMES SHORT BY K1,000 BECAUSE YOUR NET SALARY WILL DROP TO K24,000? AIKONA MAN. I’D RATHER KEEP MY SALARY INTACT SO THAT EVEN IF MY SAVINGS ARE REDUCED DUE TO RISING COSTS I STILL REMAIN WITH ENOUGH CASH RESERVE PLUS PUT A BIT OF AUSTERITY MEASURES ON MYSELF TO SAVE A BIT MORE.

  6. Small as it may its a positvie signal for the austerity measures that can send the need for cost saving amongst executives,IDCs,individuals and households so that we reserve something for the economy that will perform better than average 2018 and 2020

    We expect the Presdo to send more signals on savings and autherity 1500 by 1000000 million Zambians and others can reserve something

  7. It not only on gross earnings but all incomes that can reserve and put into useful economic use or corporate and individuals

    Small as it can be like other cost increments and reduces signals positive trend or indeed negative

    For this one its the way others should go

  8. Please note that the biggest problem that is afflicting misery to our Country is not necessarily the Governors! The problem is the poor national governance system that has irreparably been damaged by successive Administrators, starting Kenneth Kaunda, through to incumbent Edgar Lungu! Zambia needs to:

    1. Gain Political independence of the People ( currently the Country is only Colonially
    Independent)
    2. A New Governance System
    3. New Governance Structure
    4. Good and Compatible Laws

    Thereafter, economic, social, and cultural Independence shall follow! The rest of our worries are only but symptoms of the collapsed State, after having been handed a well function state machinery by our colonial masters! We are failing to govern ourselves properly – in the short-term we might…

    • The biggest problem Zambia has is poor or bad leaders or governors. Surely with all the resources Zambia is blessed with wayafibongosolafye nokufipasaula especially that Edgar obtained leadership on a silver spoon.

  9. This is the kind of fair and constructive opposition UPND should be providing. Better still, a Shadow Cabinet system should be allowed to exist along side government for timely exchange of ideas. In such a system, the State Shadow Minister of Finance would indeed have a guaranteed statutory right of audience with government.

    Apart from this, it’s clear Musokotwane’s expertise is being wasted to the hilt. UPND should put the interests of business aside and elect Musokotwane as President of UPND.

    • Coming from a very senior former Govt official, I expected better from Dr. Musokotwane. Notwithstanding, I remember a few years ago when Dr. Musokotwane, as Finance Minister, failed to articulate the various taxes that the Govt had on the mining sector during a question in South Africa. Nevertheless, Dr. Musokotwane needed to begin by appreciating the Presidential Decree. In fact, among the things that the former Minister would have done well was to enlighten us on the Presidential Decree unlike belaboring on the illegality of the Presidential directive not being supported by Law. This is a Decree also known as an Executive Order in other democracies. The proposals put forward by Dr. Musokotwane are okay (despite taking a political tone instead an intellectual economic approach) and…

  10. DUNUNA Reverse indeed. Salaries are being reversed though illegally. Illegal after illegal after illegal pronouncements by the dead pf. Our Kind GOD IS WATCHING AND HE WILL SAVE HIS CHILDREN FROM THIS PF INFERNO SOON.
    President Lungu HAS accepted that he has failed by taking the decisions he has announced

  11. What kind of deperation is this? Has the Government come up with the whole range of households requiring intervention using the savings to be generated through these salary cuts? What sort of intervention is planned? How sustainable is the intervention?

    With the current economic malaise, very few, if any, public service workers make ends meet. As Dr. Musokotwane has said, most public servants are heavily burdened with loans obtained from numerous financial institutions. Cutting their salaries further will just add to their already miserable financial situations.

  12. Yes the salary cuts are not fair nor are they a solution to govt budgeting for the coming financial crisis.

    The reason being that inflation, and the rise in cost of living is a form of salary cut anyway! You have less buying power from your money, so a cut is a double blow. His Excellency should need advice and refrain from alianting his ministers. It’s not the time for those types of dynamics with elections around the corner.

    His Excellency should not feel the need for grandstanding not hand wringing before his citizens. Every good citizen knows to dig in and help their govt over tough times.

    • That’s Alienation! …..

      However, the criticisms of mal-managing the economy is wrong and an attempt to misinform.

      Global economy is affected by many factors currently. Trade Wars, USA vs China, World Bank Debt internationally is very high. World recession. Brexit.

    • That’s treasury/(Central bank debt) not world Bank…

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