‘Zim should ad­dress high wage lev­els’

Chronicle (Zimbabwe) - - Business - Enacy Ma­pakame Harare Bureau

ZIMBABWE should ad­dress high wage lev­els, which are in some cases 10 times more than those pre­vail­ing in the re­gion, as this is con­tribut­ing to the ero­sion of com­pet­i­tive­ness for lo­cal prod­ucts, the Min­is­ter of Pol­icy Co­or­di­na­tion and Pro­mo­tion of So­cioE­co­nomic Ven­tures in the Pres­i­dent’s Of­fice Si­mon Khaya Moyo has said.

Since wages are fac­tored in the cost of pro­duc­tion, the higher the wages the greater the cost, and this makes prices of goods and ser­vices higher.

In a speech read on his be­half by In­dus­try and Com­merce Deputy Min­is­ter Chi­ratidzo Mabuwa at a com­pet­i­tive­ness con­fer­ence last week, Am­bas­sador Moyo in­di­cated that in­vestors, who use min­i­mum wage as an in­di­ca­tor, could look else­where.

A re­gional com­par­i­son puts Zimbabwe at a dis­ad­van­taged po­si­tion as its wages are sig­nif­i­cantly higher.

“One eru­dite econ­o­mist made a com­par­a­tive anal­y­sis of the re­gional wages. He in­di­cated that Zimbabwe of­fers min­i­mum wages of $275 to $300, Malawi of­fers $30, Mozam­bique $120, Botswana $93 and Zam­bia $100.

“It is ob­vi­ous that us­ing this cri­te­rion of min­i­mum wages, in­vestors will not in­vest in Zimbabwe,” he said.

Com­pet­i­tive­ness is a key driver for growth and de­vel­op­ment. Zimbabwe is poorly ranked on com­pet­i­tive­ness by global or­gan­i­sa­tions.

Ac­cord­ing to the global com­pet­i­tive­ness re­port, Zimbabwe is ranked num­ber 125 out of 144 economies.

Ad­di­tion­ally, the World Bank’s 2016 Ease of Do­ing Busi­ness ranks Zimbabwe 155 out of 189 economies.

In­vestors world over, take cog­ni­sance of such rank­ings be­fore mak­ing any in­vest­ment into a coun­try, thus af­fect­ing for­eign di­rect in­vest­ment flows.

“Com­pet­i­tive­ness can be en­hanced through the at­trac­tion of FDI into the econ­omy. Coun­tries which have man­aged to com­pete on the global mar­ket have done so pre­dom­i­nantly on the back of at­tract­ing huge FDI in­flow.

“How­ever, at­trac­tion of huge FDI in­flows pre­sup­poses that our coun­try has investor friendly poli­cies,” said Am­bas­sador Moyo.

Coun­tries like China, Brazil, Malaysia, Sin­ga­pore, In­dia, Rwanda and Uganda have man­aged to be com­pet­i­tive on the global mar­ket pre­dom­i­nantly on the back of at­tract­ing huge FDI in­flows.

Ac­cord­ing to the 2016 Zimbabwe Na­tional Com­pet­i­tive­ness Re­port, lo­cal in­dus­try com­pet­i­tive­ness is af­fected by three key fac­tors, that is costs and fees re­lat­ing to Gov­ern­ment, util­ity charges and pri­vate sec­tor in­ef­fi­cien­cies and struc­tural rigidi­ties.

Min­is­ter Si­mon Khaya Moyo

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