The Herald (Harare)

17 April 2014

Zimbabwe: Salary Cap Welcome, Now to the Framework

editorial

THE scandal over salaries paid to some senior staff at some state enterprises has now led to an instruction from the Government that remuneration of the CEOs of state-linked firms and local authorities is to be capped at US$6 000 until permanent remuneration structures are in place.The need for direct action was obvious. But the solution, that one size fits all, is probably over simplistic and needs urgent redress in the permanent remuneration structure.

There was clear abuse in around half a dozen enterprises, and some doubt over another half dozen or so. The rest of the salary scales did not, in our opinion, show signs of abuse. They might be the wrong salaries, too high or too low, but were not unreasonable in the circumstances and could probably be defended rather easily on several grounds, including the revenue of that enterprise, the range of salaries paid similarly qualified people with similar responsibilities in the pure private sector, and the gap between the CEO and the lowest-paid person in the organisation.

To take one example, zimra, our tax authority. It would seem that the top professionals in this authority would need to be as smart and as well-qualified as the sort of people the richest companies and individuals hire to minimise their taxes.

This was one reason for zimra being detached from the public service; smart and qualified officers were resigning and joining the other team, using their knowledge of the tax systems to cut tax liability. Good staff had to be retained. It would also seem reasonable the CEO of zimra should be good enough to earn the sort of money that the head of a decent accountancy and audit firm earns.

zimra have also made it clear in their annual reports that total collection costs, which include all pay, must be a tiny percentage of what is paid. The authority has a rule and has stuck to it.

It would also seem reasonable to us that the Town Clerk of Harare should be the sort of person who can run the services of a large city or any other large organisation.

One problem we have faced is that we have been unable to attract the right sort of person at times; they can earn more with less hassle somewhere else. But that needs to be the ideal.

Of course, on the other side, we have seen the head of PSMAS earning several times the salary of the head of CIMAS, a roughly comparable private insurer; and in that case the staff below about number eight in the organisation were earning far below the private rates, so there was a double hit against the salary scale of the CEO. And the head of ZBC was earning far more than the CEOs of private and semi-private media organisations, while his ordinary workers were earning less. Again a skewed structure with the highest pay way over the top.

So we suggest a more subtle approach. The outrageous salaries are slashed. No one argues about that.

Secondly a very quick interim report is sourced from a respected human resources consultancy to state whether other salaries over US$6 000 are rational; this need only take a few days. If they are rational these would be adjusted after the final remuneration study. But the present holder could be given the benefit of the doubt.

And finally we need one extra step. If the post of CEO of a particular organisation seems to demand someone worth say US$12 000 a month, then we need to see if the actual holder of that post is worth that sort of money, and if not then find someone who is.

The Government has the right idea. Looting of public funds cannot be tolerated.

We only fear that some honest and first class people might be punished for the sins of others, with the final study likely to confirm that what their posts pay is roughly correct.

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