POLICY BRIEF – NOVEMBER 2014 T he Public Sector and the Parastatal Earnings Structure in Zimbabwe Submitted by The Labour and Economic Development Research Institute of Zimbabwe(LEDRIZ) 1 INTRODUCTION In Zimbabwe, executive compensation in the public sector and parastatals is now a matter of public concern. This is due to the growing wage bill, ordinary workers’ poverty-level wages and poor service delivery by state-controlled enterprises. As a result, the Labour and Economic Development Research Institute of Zimbabwe(LEDRIZ) conducted a survey of the country’s salary structures in both these sectors. LEDRIZ also assessed the compression/ decompression of the earnings structures to provide evidence-based policy proposals. Achieving an equitable and competitive earnings structure is a prerequisite for economic recovery and turnaround. The structure must also be sustainable, internally equitable and externally competitive. Furthermore, the public sector wage bill must be reduced by defining a wage ceiling, compressing salaries, monetizing allowances, imposing a hiring freeze and reducing/controlling employment levels. However, it is important that all reductions be carried out gradually to ensure fiscal sustainability. 2 BACKGROUND In July 2013, the Government of Zimbabwean agreed to implement the International Monetary Fund-Staff Monitored Programme(IMF-SMP), which, among other issues, aimed at- restoring fiscal sustainability and strengthening fiscal management. One of the major thrusts of this programme was to set the wage bill on a downward path relative to GDP and government revenue, after several years of increases in these ratios. By continuing the hiring freeze that started in July 2012(but allowing limited flexibility in filling vacancies that opened up as a result of natural attrition in the education and health sectors, as well as for critical positions) the IMF-SMP would result in the civil service wage bill being gradually reduced from 75 per cent to 30 per cent of total government expenditure. While acknowledging that it accounted for a disproportionate share of overall budget expenditure (75 per cent), the Minister of Finance, Cde Patrick Chinamasa, pointed out in his 2014 National Budget that at individual level, public service remuneration 1