Trends in USD salary payments

WE surveyed 45 organisations to assess the general practices concerning the payment of employees' salaries in United States dollars. Below I list the key findings.

e organisations in the Non-Governmental Organisations (NGOs), mining, construction and telecommunications sectors pay salaries largely in USD. A majority of the respondents (70%) pay a certain percentage of their employee salaries in USD.

Participants are unsure of the impact of paying employees in USD on the company revenue and productivity. A significant number of organisations are receiving USD local sales enabling them to pay staff in US dollars.

•ratio e highest staff cost to income/revenue is in the following sectors: NGO, professional services and quasi-government.

Challenges of USD salary?

Inconsistent availability of the USD to pay salaries.

Employees have their salaries in Zimbabwean

dollars (ZWL), but we pay USD using the prevailing Auction rate every month. e auction-rate is going up every week, eroding the USD component. Transfer challenges between banks. Funding challenges. e donor community considers Zimbabwe zero inflationary because we are using the dollar, but the dollar in Zimbabwe is subject to inflation. So we have not had any funding for salary increments for many years now. •to e allowances are not significant for staff open Nostro accounts.

Challenges of not paying in USD

High labour turnover.

Low staff morale.

Regular reviews based on black market rates.

Medical aid shortfalls.

Reduced employee engagement.

eft and abuse of property.

Comments on remuneration

•goods

It is a mixed bag now, and unfortunately,

and services pegged in USD are increasing in price, which will push employees to demand USD increases that will not be sustainable.

It will be difficult to pay employees adequately without addressing the parallel market resurgence.

Organisations should strive to pay at least some USD.

Hard to comment because there is no steady market for comparison purposes. You also cannot compare with the regional competitors.

e biggest problem is the need to pay salaries to cushion workers against the cost of living. e cost of living is driven by increases in school fees, medical costs, rentals, food, etc. However, employers are not responsible for the cost of living. Employers must pay for the worth/value of a particular Job to the employer and not the cost of living. e fact that an employee has a high cost of living is a personal circumstance. e fact that they have 10 children is no reason for them to demand a high salary.

e environment has huge uncertainty resulting in a constrained remuneration strategy.

ere is a need total cost and productivity.

e economic environment is shifting more and more towards dollarisation. Companies should shift towards paying a greater portion of the salary in USD and a lower portion in ZWL. Ideally, pegging the whole package in USD is more realistic. It is inescapable that most local organisations have started paying their staff a portion of their salaries in USD.

e change has been largely necessitated by the rising cost of living and the need to retain and attract staff. It is also evident that those organisations that largely depend on USD local sales to pay salaries in USD may face sustainability and even viability challenges. For the organisations that earn their income largely in exports, it is understandable that they also pay salaries in USD. Even for this group, sustaining such salaries is key when adjusting salaries. e euphoria around the rush to pay salaries in USD is likely to be short-lived for those that may have decided to take this route without a full proof strategy to sustain revenue inflows in USD.

In addition, we hope that those without sustainable USD income will not rush to make USD salaries contractual. It would be too risky to do so, given how the local economic environment can affect USD sales.

e best approach for this group is to peg salaries in USD but pay using the local currency at the prevailing rate. While paying in USD may ease some employer turnover worries, it is not enough to sustain low turnover. It would help if you worked on other factors that make people stay within an organisation, especially organisational culture. to move towards align performance the to