The currency volatility in the economy has led to an increasing number of workers who are paid in Zimbabwe dollars to plead incapacitation.

The rapid depreciation of the Zimbabwe dollar which is now trading at nearly ZW$4000 to the United States dollar which is more than double the rate at which it was trading in February when it stood at $1200 to the greenback.

This had led to the continued skyrocketing of prices, which is disproportionate to the Zimbabwe dollar-indexed wages being earned by most workers that have been eroded resulting in many pleading incapacitation.

Among those who have pleaded incapacitation are nurses who recently wrote to the Health Services Commission pointing out that their salaries have been wiped out by inflation and have threatened to go on strike.

Workers at the Zimbabwe Revenue Authority (Zimra) have also pleaded incapacitation last week in a letter to the employer in which they asked to work for three days a week to enable them to “hustle” for money to supplement their meagre income.

The wave of incapacitations has been worsened by the high unemployment rate in the country according to the Association of Designated Agents of Zimbabwe (ADAZ) chairperson and lead trainer and labour consultant for Paran International Employment Services, Itai Bonda.

“The challenge of incapacitation has to do with the labour market itself. When we talk about the labour market, demand for jobs far exceeds supply,” Bonda told ZimSeen.

“The market is awash with unemployed people and this is why employers can pay salaries no matter how low to their workers because they know if they refuse to work under such conditions, they can easily be replaced.”

Bonda said as a result of galloping inflation and exchange rate volatility many workers are living in a state of penury.

“Salaries are being eroded by high inflation and we are now almost back to the period of 2008 in which hyperinflation created a nation of employers who were earning millions of dollars which were worthless,” he said.

Bonda prescribed that employers should either pay in foreign currency to ensure that the wages preserve value or pay in Zimbabwe dollars indexed against the parallel market rate.

In a recent interview with ZimSeen, the Zimbabwe Congress of Trade Unions secretary general Japhet Moyo called for the country to temporarily suspend the use of the Zimbabwe dollar.

“We want to have our own currency as a country but given the current price madness, I think we should temporarily suspend the use of our local currency until the market is ready for it because obviously, the market is not ready for the Zimbabwe dollar,” he said.

“In the meantime, we need to have a stable currency that we can use, be it the United States dollar or the South African Rand. We need a currency with which we can plan. You cannot have a currency that just shoots up from 1 to 2000 overnight.’’

Zim Trade Deficit Widens

Meanwhile, the country’s trade deficit worsened during the first quarter of 2023 as exports declined substantially compared to the previous quarter with imports remaining high, Treasury has revealed.

In its Treasury Bulletin update for the first quarter of 2023, the Ministry of Finance revealed that the trade balance deteriorated by 26, 6%.

“During the first quarter of 2023, exports declined substantially relative to the previous quarter and comparable period last year, whilst imports remained relatively high, resulting in the worsening of the trade deficit,” the ministry said in its bulletin.

“Resultantly, the trade balance worsened by 26,6% to US$621,8 million compared to a deficit of US$491 million recorded in the last quarter of 2022”.

The country exported goods worth US$1,4 billion in the first quarter of 2023, down 23,8% from the previous quarter. This was due to weaker commodity prices and lower gold output. Imports during the period were US$2 billion.

Declining international mineral commodity prices, the ministry revealed, affected the performance of the country’s exports, resulting in a trade deficit of US$621.8 million as imports remained firm against declining exports.

The report said that the country’s economic performance during the quarter was hampered by power outages and currency volatility.

“The economy exhibited positive economic performances during the quarter, characterised by agriculture summer cropping season activities, as well as increasing mining activities,” the report states.

‘’However, intermittent power supply and depreciation of the local currency presented a challenge for industry and households, compromising the attainment of the economic growth potential.’’

It noted that the gap between the interbank and parallel market rate increased from 45% to 72%.

The Zimbabwe dollar has rapidly lost value as it trades at around ZW$3500 to the greenback as it barrels towards the ZW$4000 mark.

This has resulted in the skyrocketing of prices of basic commodities at a time local currency-indexed incomes have been significantly eroded. The government has accused the business sector of market indiscipline to turn the citizens against the government.

“During the first quarter of 2023, the domestic currency was relatively stable on the official foreign exchange market, although depreciating at a faster rate on the parallel market,’’ the Ministry of Finance said.

“As a result, the gap between the interbank and parallel exchange markets widened from 45%in January to 72% in March 2023.’’

It revealed that the Interbank rate moved from an average of US$1: ZWL$733.48 in January to US$1: ZWL$912.4in March, while the parallel rate moved from US$1: ZWL$1076.19 in January to US$1:ZWL$1302.17 in March 2023.

It revealed that tax revenue collections were ZWL$1 trillion which was 12,2% above the quarterly target of ZWL$880,9 billion, largely on account of higher than projected tax on almost all revenue heads except VAT, taxes on specific services and tax on gross revenue.

Treasury reported that non-tax revenue collections at ZWL$68,6 billion which outperformed the quarterly target of ZW$35,9 billion, mostly driven by grain sales by the Grain Marketing Board.

Significant contributors to revenue collections were Value Added Tax at 26,3%, followed by PAYE at 19,6%, excise duty, at 12,3%, tax on companies (corporate tax), at 10,9%, and taxes on financial and capital transactions (IMTT) at 8,0%. ZimSeen