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Employment Costs Gobble Half Of Mthuli Ncube’s 2023 Budget


Government wage bill is set to gobble ZW$ 2.2 trillion, constituting more than half of the 2023 National Budget as authorities continue to walk a tight rope in addressing demands of its employees versus development projects.

Yesterday, the Finance and Economic Development Minister, Professor Mthuli Ncube presented a ZW$ 4.5 trillion budget for the upcoming year which translated to the US$ 7 billion using the ZW$ 647/USD interbank rate.

Having managed to chop the 92 percent public wage bill by half the 2016 proportion of total budget in his first two years as Treasury boss, Prof. Ncube has struggled to keep salaries in check due to the devaluation of the local currency and hyper-inflation in the last two years.

The share of employment costs is projected at 52.4 percent in 2023, an increase from 42.3 percent in 2022.

“The increase in the employment cost level is on account of the need to cushion civil servants against the impact of global economic challenges and domestic price increase,” said Prof. Ncube.

“The 2023 National Budget has a provision of ZWL$2.2 trillion for employment costs, inclusive of grant aided institutions and pensioners, medical aid and pension contribution. This amount includes ZWL$659.4 billion and ZWL$336.5 billion for the salaries and allowances for education and health sectors, respectively,” he added.

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However, market watchers say the money set aside for wages for the up-coming year remains substantially inadequate to meet the needs of civil servants at a time inflation is still lurking.

The exchange rate market remains volatile and despite gains in achieving some form of stability, confidence in the local currency remains minimal hence the call by government workers for USD salaries.

The budget has come under immense criticism for its failure to prioritize social protection.

In the build-up to the Budget presentation, economic analysts were anticipating the budget to be presented in USD currency in order to preserve its value and avoid a supplementary budget in the mid-term given that inflationary pressures are still looming.

Meanwhile, economist Professor Gift Mugano has dismissed the 2023 national disaster saying it is likely to cause inflation

“The 2023 budget is a total disaster! Just looking at numbers, a $4.5 trillion budget up from the original 2022 budget and supplementary budget by 385% and 137%, respectively. These figures tells us that in 2023 inflation spiral will continue,” said Mugano.

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