RETIREMENT BENEFITS, JOB CREATION AND ECONOMIC REVIVAL IN A PANDEMIC

EARLY

this year, a letter went viral, purportedly written by the Teaching Service Commission of Zambia in which teachers were told that their retirement should be in line with the provisions of the Law at the time of their employment!

In this regard, all teachers employed before 2015 when the Law on retirement age was ammended from 50 years for early retirement and 55 years for normal retirement to 55 years for early retirement, 60 years for normal retirement and 65 years for late retirement, would have to leave the teaching service!

It is commonly argued that the law does not work in retrospect! This meant that those supporting the removal of the affected teachers from the teaching service had a point. Yet, others contended that the changed law had been thrust on the affected teachers! The Attorney General assured that there was nothing to worry about.

One of the challenges that the change of retirement age from 55 to 60 years entailed was holding back retirement for five years for workers who should otherwise have retired and been paid off and replaced by new workers.

This matter has brought a window of opportunity for Zambia to resolve a long standing dilemma of how to pay off retired public servants, create jobs for so many of our youths and in turn revive the economy.

A key factor that motivated the state to increase the retirement age was to open a moratorium window during which to mobilise resources to pay off the huge backlog of retirees inherited from the previous administration in 2011. Unfortunately this has not materialised. Instead a mountain of unpaid retirement benefits has accumulated. Remember, a double-edged sword was created by popular acclaim among workers, labour unions and others when the Zambian Parliament, riding on the popularity among workers and labour unions, had accepted a clause in the 2016 Constitution, of retaining retirees on the payroll until their benefits had been paid.

This retention on the payroll of unpaid retirees created a resource drain problem. The state and other employers have to pay two salaries for one job for as long as retirees’ benefits remain unpaid; that is one salary for the retiree and another salary for the job holder! This, coupled with the nation’s mounting external debt obligations, has put the state in a dilemma.

The onset of Covid-19 in Zambia in mid-March has left Zambia’s labour landscape in a helpless situation of sorts. Therefore, it is imperative to pose the inevitable questions; what is the way forward? How does Zambia get out of this entanglement?

Firstly, it is important to note that the situation is not irredeemable; it can be salvaged. Several permutations can be looked at to create a win-win situation for all – retirees, the government, unemployed youths and the nation at large! How can this be achieved?

First and foremost, the government should see paying off retirees from the perspective of killing several birds with a stone, and as a major stimulus package for the retirees to turn their benefits into investible capital to play a pivotal role in reviving the Covid-19-ravaged economy quickly. There are three possible sources to finance the retirement packages:

From within the national budget by sacrificing some capital projects;

The government can approach some local pension houses for a loan to finance this; or The government can approach some international cooperating partners for a grant or a soft loan specifically to sort out this problem.

Several years ago, Tanzania owed its workers in public institutions colossal sums of money. The Tanzanian government of President Josiah Kikwete borrowed US$100 million from the World Bank and paid off all its workers in public learning institutions. Zambia can do the same. There are several benefits that Zambia can accrue from clearing retirees on the public service payroll:

It will save resources – from paying two people for one job to paying only one person for that job;

The freed resources can be used to employ fresh graduates from colleges and universities without injecting fresh funds into the payroll; thus reducing the current high unemployment among Zambian youths currently roaming the streets;

Thousands of jobs will also be created as many retirees will invest their retirement benefits in start-ups, some will boost their existing businesses while others will invest in stocks on the Lusaka Stock Exchange (LuSE). This will increase the buying power, expand the national tax base and boost national economic performance.

Inevitably, these benefits will translate into a feel-good factor and a win-win situation for the whole nation.

As Indian author, activist, motivational speaker and founder of Country First Foundation, Shiv Khera, writes: “Winners see the gain; losers see the pain” and “winners don’t do different things, they do things differently,” we can derive good mileage out of an otherwise hopeless situation!