ZIMBABWE WAGE FREEZE SHOWS ECONOMIC MALAISE
Zimbabwe's temporary freeze on salaries,
wages and prices will give the economy a breather, but radical
economic reforms are needed to resuscitate business and attract
foreign investment, economists said.
    They said the June 24 freeze on government, state company
and private sector wages until January 1988 has postponed,
rather than provided, solutions to Zimbabwe's economic
problems.
    They urged a review of the tax system, the introduction of
investment incentives, a review of foreign exchange and price
controls and a check on government expenditure.
    These measures would aim to stimulate investment and create
employment for the 100,000 school leavers annually seeking
jobs.
    The freeze, which Finance Minister Bernard Chidzero said
would check production costs and reduce the budget deficit, has
been partly welcomed by business but criticised by workers
whose real purchasing power has been severely eroded since
1980.
    The government announced the freeze amid a worsening
economic crisis caused by serious drought, a budget deficit of
more than one billion Zimbabwean dlrs and an acute balance of
payments problem owing to debt service costs, now 357 mln U.S.
Dlrs on an external debt of two billion U.S. Dlrs.
    The crisis has forced the country to make companies halve
dividend remittances to overseas shareholders.
    The Zimbabwe National Chamber of Commerce supported the
freeze on wages and salaries but criticised the promised
stricter control of prices of goods and services.
    "If those companies whose costs of production increase are
not allowed a price increase, profit margins will again be
severely squeezed, and this would negate current government
efforts to revitalise the economy," the chamber said.
    The Zimbabwe Congress of Trade Unions said the freeze would
worsen the plight of the lowest paid workers.
    The union body has been campaigning for a minimum monthly
wage of 277 Zimbabwean dlrs (165 U.S. Dlrs). The lowest paid
now earn about 100 dollars (60 U.S. Dlrs).
    "Inflation is hitting hardest those in the low income
bracket which demands that any economic recovery programme
should be biased in their favour," the union body said.
    It added that the promised price freeze was "bolting the
stable door when in fact the horse is gone" because prices of
most basic commodities had already risen phenomenally.
    Both unions and business hope that the freeze heralds a
return to wage bargaining between workers and employers, rather
than government-regulated pay awards.
    Zimbabwe has, since 1980, set annual minimum wages for
different sectors of the economy and awarded wage and salary
increments on a sliding scale which gave higher increases to
the lowest paid.
 REUTER
