Home » General » Salaries Debate Should Be Honest [editorial]

THE call for a cut in workers monthly take-home incomes is increasingly becoming nauseating, not just because it is coming from executives who believe they have the moral high ground to decide what is best for everyone, but because of the duplicitous behaviour of Zimbabwean executives.

Last week, Herbert Nkala, the board chairman of banking group, FBC Holdings, as well as Turnall Holdings, an outfit recently disposed off by the banking group, suggested salary cuts as a panacea to the increasing woes besetting companies in the country.

Nkala said that management salaries and those of staff down to the clerical level were temporarily cut by up to 50 percent until the banking group turns around and recovers from a loss-making position.

He suggested that the model used to resolve the FBC situation should be replicated in other companies facing profitability problems.

This sounds like noble aice coming from a marketing guru with an impeccable record in commerce and industry. But the truth of the matter is that the suggestion by Nkala is a very simplistic way of looking at the situation that has precipitated a deepening crisis among Zimbabwean companies which are haemorrhaging from greed and mismanagement.

Most managers are using the economic situation and the salary bill as scapegoats to explain circumstances that otherwise have nothing to do with the exogenous environment or low-level workers’ salaries, but everything to do with management failure.

Executives like Nkala should be frank in their counsel — the majority of banking institutions that have collapsed, for example, did so not necessarily on account of the economy, but massive plunder of depositors’ funds by executives and at times even shareholders.

The record is there to see.

Last year, Deputy Minister of Industry and Commerce, Chiratidzo Mabuwa, revealed that industry captains looted a US$40 million fund meant to rescue failing industries instead of committing the funds, made available through the Distressed Industries and Marginalised Areas Fund (DIMAF), jointly funded by Old Mutual and government, towards reviving their businesses, the executives diverted the money towards luxury vehicles and exclusive lifestyles.

This, apparently, appears never to be an issue among industry and commerce executives who continue to blame shop floor workers’ salaries for poor fortunes.

If the truth is to be told, most low to middle-level workers’ incomes account for a fraction of companies’ payrolls the bulk goes towards executive salaries, including packages. We have had a glimpse of this from reports on several parastatals and local authorities to be sufficiently informed.

The Zimbabwean culture has been that of awarding chief executive officers exorbitant amounts of money unrelated to their performances, while low-level workers are paid salaries hardly enough to sustain them and their families.

When approaching the issue of productivity in relation to salaries, it is important to pitch this debate against executive performance at the highest level in companies and not just look at low-level workers’ incomes which may be immaterial to the prospects of a turnaround.

In any case, salary cuts should follow a well-thought-out turnaround strategy with buy-in from all workers.

Source : Financial Gazette