Zimbabwe’s poverty levels are expected to escalate in the coming months amid a volatile exchange rate, which has eroded the purchasing power of the local currency at a time salaries have been stagnant.
Restive citizens are living on margins, failing to cope with the rolling price increases.
Sharp price increases are following exchange rate movements, especially on the parallel market.
Last week the parallel market rate was ZWL$4500 per US$1 and this week it rose to ZWL$6000 per US$1while the official rate rose to ZWL$4.868.5152 for the interbank and ZWL$3600 per US$1 from ZWL$2500 last week on the foreign currency auction system.
Workers said the exchange rate volatility has left them poorer on the already weakened purchasing power.
Zimbabwe Congress of Public Sector Trade Unions (ZCPSTU) secretary-general David Dzatsunga told Business Times that civil servants are failing to meet human beings’ requirements as the situation has turned south in the past months.
“We only count that we have US$250 per month with the RTGS component eroded into nothing and with that some of our members are failing to buy food, have basic shelter and decent clothing due to huge deductions which leave workers on the minus.
“With some who have loans, the situation is worse as that leaves one on the edge. At the moment, we can’t afford to carry food at work so that the children can have something to eat at home later alone buy lunch.
“The situation is terrible and it’s worsening. We don’t know how it will end,” Dzatsunga said.
The family basket of six now costs over ZWL$1m constituting 62.2% as the cost of living continues to rise, the Consumer Council of Zimbabwe director Rosemary Mpofu has said.
“The Consumer Council of Zimbabwe low-income urban earner monthly basket for a family of six stands currently at ZW$1. 015 961. 61. This is a sharp increase because the basket has moved from the basket of April where it was ZW$ 611 275.00.
“When we look at the basket as a measure, you find that the low-income earner is earning in ZW$ but the cost of living has increased from the April figure to the May figure and has constituted 62.2%,” Mpofu said.
She said the survey also revealed that prices were lower in United States dollars much to the burden of ordinary people as they earn in local currency.
“The new analysis that we also use has shown that prices have reduced significantly in USD while going up in local currency. In USD prices have gone down by 31.4%. This is a problem for ordinary people to earn local currency,” Mpofu added.
The Zimbabwe Congress of Trade Unions (ZCTU) recently said salaries are below the basket.
“As ZCTU we have always been very clear about what workers in Zimbabwe want. Workers in Zimbabwe are demanding salaries above the Poverty Datum Line. That can only be understood in the context of dollarised salaries.
“The economy has dollarised, prices of goods and commodities are now charged in US$. It is therefore imperative that workers must likewise be paid in the currency that is being recognised in the country.
“The Poverty Datum Line is a moving target in this kind of an economy. It is our considered view that dollarisation can restore the wages and salaries of workers to that which prevailed in October 2018,” ZCTU said.
“The position of ZCTU is clear and has been indicated officially at the Tripartite Negotiation Forum. As ZCTU we are aware of the high levels of suffering and agitation of the workers and general populace with the prevailing situation.
“We have given our government and employers the chance to resolve the current impasses at TNF and various respective National Employment Councils,” reads part of the statement.
“We trust that social partners of TNF will understand that as long as the issues of salaries remain unresolved, we are sitting on a time bomb whose time is fast approaching.”
In its report, the Confederation of Zimbabwe (CZI) said the vulnerable community spends most of their incomes on food; hence an increase in food inflation would have a higher impact on them than on the rich.
“A group of basic needs, including housing, water, electricity, gas, and other fuels also had blended annual inflation rate of within triple digits.
“Given that the blended inflation has an effect of diluting the actual impact, protecting the vulnerable groups is of paramount importance through keeping inflation under check,” CZI said.
Economist Daniel Ndlela said there is a general agreement on the need to have a capacity of the exchange rate to absorb shocks from both domestic and external factors.
“But for this to happen smoothly, there is a need to have a supportive macroeconomic environment for exchange rate management, that sets the macroeconomic fundamentals right, in particular the presence of complementary monetary policies and fiscal discipline which are the prerequisites in the success of any exchange rate regime,” he said.