28 November 2017

Mozambique: Employers Backtrack On Wage Freeze

Maputo — The Mozambican Confederation of Economic Associations (CTA), the body that represents the country's employers, has lamented the “error in perception” of the recent proposal by CTA chairperson Agostinho Vuma, who had called for a wage freeze next year.

Among a series of measures proposed by Vuma on 18 November, at a meeting of the Business Environment Monitoring Council, were a wage freeze and a freeze on promotions in the public sector. In addition, he wanted to abolish the traditional New Year bonus, known as “the thirteenth month”, since it is equivalent to an extra month's payment of the basic wage. These were among a series of measures that Vuma claimed were essential to avoid “economic collapse”.

The proposal caused outrage among the country's trade unions who threatened street demonstrations if the government caved in to the CTA demands.

At a Maputo press conference on Turesday, the CTA backed down. Its director, Eduardo Sengo, denied that the employers are trying to impose anything on the government.

“The CTA doesn't decide anything about what the government will or should do”, he said. “It merely puts forward its opinions”. The idea of a wage freeze was one of a series of measures which were “not obligatory” but just among the options that could be taken.

Among the other possibilities, Sengo added, was a government freeze on the purchase of high value goods or services in order to restrict the growth in public expenditure.

He also asked why nobody was questioning the tax exemptions supposedly granted by the government for 30 years to the oil and gas companies ENI and Anadarko, which head the two consortia operating the natural gas fields discovered in the Rovuma Basin, off the coast of the northern province of Cabo Delgado.

However, the law on petroleum industry taxes passed earlier this month by the country's parliament, the Assembly of the Republic, limits the period of “fiscal stability” enjoyed by companies in the extractive industry to ten, not 30, years.

Sengo announced that the CTA is dispensing with the assistance from the state budget to which it is entitled under the contract-programme signed between the government and the CTA in 2014.

Under that arrangement, the CTA received 7.5 million meticais (about 123,000 US dollars) a year from the state. The money was intended to publicise the fiscal calendar among Mozambican businesses, and persuade them to pay their taxes on time.

The deputy chairperson of the CTA's Steering Council, Castigo Nhamane, said the CTA would no longer claim this money because of the country's “unfavourable macro-economic situation”. However, it would continue to make efforts to persuade all business people that they should pay their taxes.

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