12% PAY RISE FOR CIVIL SERVANTS
By Alexander Nkosi
Civil servants have received a 12% pay rise and their transport allowance has increased from 10% to 15%. The background to this is that as of 2021, domestic revenue is not enough to pay debt and salaries, implying that government has to borrow to cover part of the salaries. With external debt of $12.9 billion, domestic debt of K189.7 billion and domestic arrears stand of K49.6 billion, borrowing more to cover a huge pay rise in a depressed economy is not sustainable. It should be done incrementally. Government should actually be commended for the 12% pay rise and planned recruitment of over 40,000 civil servants.
It is true that civil servants have not gotten the K1500 promised during campaigns but look at it this way: Zambia is an import dependent country. When kwacha depreciates, imports become more expensive and less goods and services can be bought from the same pay, the opposite happens when kwacha appreciates. For a civil servant getting K6000 when the exchange rate is K22.5/$, the dollar value of salary is $267. On the other hand, when kwacha appreciates to K16/$, the dollar value of the K6000 increases to $375. In short maintaining the exchange rate at K16/$ increases the true value of your money in dollar terms and since we are import dependent, this eventually results in reduction in prices of goods and services. Note that there is always a time lag between kwacha appreciation and reduction in prices of goods and services but eventually this happens.
In conclusion, a 12% pay rise, an adjustment in tax exempt threshold and maintaining exchange rate around K16/$ will translate into a better financial gain than even the K1500 promised at K22.5/$. I totally agree that civil servants need better pay but given the bad state of the economy, salary improvements should be done incrementally and should be part of a holistic approach that includes lowering the cost of living as well.