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(THE HERALD) Zimbabwe - Social contract signed

Social contract signed
By Victoria Ruzvidzo and Peter Matambanadzo

GOVERNMENT, business and labour yesterday signed three protocols including the Incomes and Pricing Stabilisation Protocol, in a landmark demonstration of unity of purpose in stabilising the economy. The Protocol on Restoration of Production Viability and one on Mobilisation, Pricing and Management of Foreign Currency were also signed as being key to the economic turnaround process. Government, business and labour make up the Tripartite Negotiating Forum.

Among other key deliverables under the protocols, inflation is expected to be reduced to 25 percent by the end of this year. Presently it is above 3 700 percent. Furthermore, the Government budget deficit is expected to come down to 10 percent of the Gross Domestic Product.

Efforts will be made by all the three partners to ensure that foreign currency is transacted through formal channels while the livelihood of the majority is Zimbabweans is expected to improve significantly within the next few months.

Government was represented by the Minister of Economic Development, Cde Sylvester Nguni, while Employers’ Confederation of Zimbabwe president Mr Johnson Manyakara signed on behalf of business.

Zimbabwe Congress of Trade Unions first vice-president Ms Lucia Matibenga, Zimbabwe Federation of Trade Union president Mr Alfred Makwarimba and Apex Council chairperson Ms Tendai Chikowore signed on behalf of labour. The Apex Council groups bodies representing civil servants. However, ZCTU only signed the Incomes and Pricing Stabilisation Protocol saying they had not discussed with their constituency on the other two. The other labour bodies signed all three.

The signing of these protocols is a culmination of 120 days of intense deliberations as three social partners sought to come up with a sustainable social contract as a solid foundation on which economic revival will take off.

The Incomes and Pricing Stabilisation Protocol’s main objectives are to provide an environment conducive to the restoration of macro-economic stability, promotion of economic recovery and sustainable socio-economic development.

The protocol also seeks to ensure that any agreed formula of restraining price movement takes into account legitimate cost increases in a transparent and accountable manner while also managing the movement of incomes and pricing in the context of an unstable macroeconomic environment.

With effect from yesterday each of the three social partners will be expected to undertake their respective obligations.

Among other things, Government, under the Incomes and Pricing Stabilisation Protocol, will be expected to continually review tax incentives that boost disposable incomes while taking cognisance of the Poverty Datum Line.

The Reserve Bank of Zimbabwe is required to continue to put in place measures that ensure a full account of all foreign currency in the economy.

Business will be expected to supply goods and services at affordable and competitive prices while promoting corporate responsibility towards payment of tax and remittance of foreign currency to the Reserve Bank.

Labour is mandated to, among other things, promote and advocate that workers receive decent wages linked to the Poverty Datum Line while also promoting productivity enhancement measures.

The Salary and Wages Advisory Board will monitor incomes while the National Incomes and Prices Commission will monitor the prices.

The key objectives of the Restoration of Production Viability Protocol will be the improvement in productivity levels and production capacity utilisation.

It will also foster macro-economic stability, economic turnaround and shared growth.

Under this protocol, Government will remove all price distortions and provide targeted social safety nets and restore Zimbabwe’s breadbasket status through a number of initiatives.

It will be expected to respond swiftly to requests for tariff and other countervailing measures to promote business viability.

Government will also be required to review its budget and come up with a primary budget position that is consistent with the restoration of macro-economic stability.

Business will have to supply goods and services at affordable and competitive prices while promoting entrepreneurship, fair business and transparent pricing practices, among other obligations.

Labour, in this instance, will be required to fully promote and support worker empowerment initiatives and the indigenisation of the economy. It will also be mandated to promote industrial peace and harmony.

This protocol will run for 12 months with effect from yesterday.

The objectives of the Protocol on Mobilisation, Pricing and Management of Foreign Currency are to ensure that foreign currency is available in the official system for all legitimate transactions thereby ensuring that most transactions take place in the official market.

It will also be required to capture the majority of foreign currency inflows from the Diaspora while ensuring viability of exporters at all times.

The protocol also seeks to reduce the exchange rate price distortion and reduce smuggling and leakages of foreign currency.

Government is expected to implement agreed foreign currency management framework as specified in the protocol within seven days from the signing of the protocol while developing an implementation matrix for longer term mobilisation measures.

Recipients will be encouraged to use formal channels to transact funds from the Diaspora.

Business, which has in many instances been found wanting in terms of foreign currency remittances, will be expected to promote corporate responsibility towards payment of tax and timeous remittance of foreign exchange through formal channels in line with Exchange Control Regulations.

Furthermore, it will be expected to seek commercial foreign lines of credit while also encouraging foreign companies and other trading partners to invest in Zimbabwe.

Labour has been strongly urged to encourage recipients of foreign currency to use formal channels to transact funds from relatives in the Diaspora.

The protocol will run for the next 12 months.

Speaking after the signing ceremony, the Minister of Public Service, Labour and Social Welfare and TNF chairman, Cde Nicholas Goche, said the historic signing of the protocols would augur well for the country.

"There is still a lot of work to be done so that we achieve the objectives that we set for ourselves. I must say we should continue to tolerate and respect each other’s views so that we progress," he said, stressing that the signing of the protocols was a demonstration of the "Zimbabwe First" concept adopted at the Vumba social retreat in March.

RBZ Governor Dr Gideon Gono, who acts as advisor to the social dialogue process, described the signing as a major step towards economic regeneration.

He is credited for having resuscitated the social dialogue process as a strategy to help eliminate the challenges besetting the economy.

"The real journey has just started. In strategy they say the devil is in the details of implementation.

"Let us all now rally together on the actual implementation of the various tangible commitments that are spelt out in the protocols.

"Let us commit to arrest any further deterioration in our economic environment over the next 120 days and set the scene for rapid recovery.

"I want to also commend Government, labour and business for coming to realise that through mutual dialogue and a shared vision, common interests can be achieved in a cohesive way, one that is an indispensable prerequisite for any economic turnaround," he said.

The Governor also commended the United Nations Development Programme and the International Labour Organisation for their support.

Cde Nguni said Government was ready to play its role effectively.

"We have taken the first step to address the economic ills and hard policy decisions will need to be made," he said.

Speaking on behalf of business, Mr Manyakara described the signing as a major milestone in the history of the country.

"We have managed to build trust and subordinate sectoral interests for national interests."

Labour representatives from ZCTU, ZFTU and the Apex Council roundly welcomed the signing of the protocols, undertaking to meet their end of the bargain.

Labels: INFLATION, LABOUR, SOCIAL CONTRACT, THE HERALD, ZIMBABWE

posted by MrK @ 10:01 PM