3 minutes read
The cost of living is the amount of money needed to sustain a certain standard of living by affording basic expenses such as housing, food and healthcare. Cost of living is often used to compare how expensive it is to live in one city versus another. For both Trade Unions and Employers, the cost of living changes are important as they have an impact on how employees are remunerated.
Using Zimstat 2017 Poverty, Income, Consumption and Expenditure Survey Report, it is observed that 26.6% of the adults 18 years and above in Zimbabwe depend on salaries and wages as their main source of income. In urban areas the main source of income are salaries and wages (63.9%). It was also observed that the persons with the highest primary income in Zimbabwe are Managers earning an average annual gross income of US$14,881, followed by Professionals earning an average annual gross primary income of US$6,929. Most employed persons (34.1%) earn monthly gross primary income of between US$451 and US$600. Given the changes that have taken place on the fiscal and monetary policies, the key question is how much of the 2017 incomes have been eroded by inflation and devaluation of the local currency?
The cost of living in Zimbabwe has significantly increased compared to last year. Inflation is on an upward trend. Employee remuneration has been eroded by a factor of 10 which is the average exchange rate now. It is safe to say at this stage most employees are struggling to make ends meet given the devaluation of their salaries and rising inflation. The subsequent business challenges emanating from the policy changes have brought in new challenges related to how people are remunerated.
The changes in fiscal and monetary policies has impacted on how employers structure their remuneration. While other sectors have the leeway to remunerate in forex, others do not have that luxury. In sectors where they can remunerate in forex, they have a better chance of attracting skills.
To tackle cost of living pressures and achieve maintain sustainability of remuneration it may be necessary to look at the following options.
Memory Nguwi is an Occupational Psychologist, Data Scientist, Speaker, & Managing Consultant- Industrial Psychology Consultants (Pvt) Ltd a management and human resources consulting firm. https://www.linkedin.com/in/memorynguwi/ Phone +263 4 481946-48/481950/2900276/2900966 or email: mnguwi@ipcconsultants.com or visit our website at www.ipcconsultants.com
This article was written by one of the consultants at IPC
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