LABOUR-ZAMBIA: Workers Protest Against High Taxes and Salary Freezes

By IPS Correspondents Reprint | | Print |

Zarina Geloo

LUSAKA, Feb 16 2004 (IPS) - Zambia’s labour movement has declared Feb. 18 a day of national protest against government’s decision to increase taxes and freeze salaries of the over 120,000 public service workers.

Presenting his K8.3 trillion (about 17 billion dollars) national budget on Feb. 6, Finance minister Ng’andu Magande said government had decided to increase pay-as-you earn tax to up to 40 percent and impose a wage freeze to “help the economy recover”.

This has come as a shock to workers. Just a week earlier, in a pre-budget interview on national television, Magande had assured he would not increase taxes.

However, when he presented the budget in parliament Magande went back on his word. He said government had no option but to get back on track with the Poverty Reduction Growth Facility by June. This, he said, would enable the World Bank and the International monetary Fund (IMF) to loan Zambia K2.8 trillion (about 6 billion dollars).

Government failed to reach the Highly Indebted Poor Countries (HIPC) initiative last December, losing the opportunity for the IMF and the World Bank to scrap half of Zambia’s 6.5-billion-dollar foreign debt.

Magande says Zambia failed to reach the required mark due to a budget overrun of about K6 billion (one million dollars) caused by salary increments allotted to civil servants last year. The budget overrun resulted in donors withholding further disbursement of relief funds.

President of the Zambia Congress of Trade Unions, the umbrella of labour unions, Leonard Hikaumba said in an interview with IPS that they would hold a mass demonstration outside parliament to pressure members of parliament (MPS) not to pass the budget without amendments. Workers would be transported from others towns to beef up the number of their colleagues in the capital Lusaka.

“This is a countrywide protest, not just for us in Lusaka. We will be at parliament in the same manner (President Levy) Mwanawasa allowed the mob to force MPs to lift (former President Frederick) Chiluba’s immunity last year. We are not giving MPs a chance. They are going to do as we tell them,” he said.

Hikaumba was referring to protests by trade unions and civil society which forced parliament to have Chiluba tried in court for allegedly embezzling public funds while he was in office between 1991 and 2002. Chiluba has denied the allegations.

Joyce Nonde, president of the Federation for Free Trade Unions in Zambia (FFTUZ), ruled out attempts by government to have the 400,000 workers subsidise Zambia’s 10 million people. “Create more jobs and widen the tax base. Do not penalise the worker for being in employment,” Nonde warned.

She called upon the government to publish all the HIPC conditionalities so that Zambians could take stock of what it had fulfilled.

“We don’t know how far we have gone with HIPC. We don’t even know what the conditions are. We just pay for government’s excesses and they tell us it is because of HIPC. It is always the workers that must make sacrifices, never the administration. We have rejected the wage freeze and tax measures. The government should not be surprised when it experiences increased labour protests and strikes this year,” Nonde warned.

She said the 2004 budget breached a number of international instruments on labour which Zambia had ratified under the International Labour Organisation. It also has violated its own labour legislation provided for in the Industrial and Labour Relations Act.

According to World Bank statistics, 80 percent of Zambians live on less than a dollar a day. The Central Statistics Office of Zambia says over 70 percent of government workers earn less than 100 dollars a month.

For the first time, opposition and members of the ruling Movement for Multi Party Democracy (MMD) have united in support of the labour union.

Former labour minister and MMD legislator, Peter Machungwa, who joined opposition leaders in parliament, said workers would be “hit in all directions” by the new tax regime as wage freezes have reduced the circulation of money, affecting all the sectors of the economy. The freeze would have far reaching consequences because the private sector would ride on the government decision not to offer their employees salary increments, he said.

“We are heading for a showdown with workers. This time it will be catastrophic because even people not affected by the wage freeze are in solidarity with the already lowly paid civil servant,” Machungwa said.

Sakwiba Sikota, acting president of the opposition United Party for National Development (UPND), accused the government of “outright suffocation” of Zambians.

Fackson Banda, the head of the PANOS Institute, one of the most influential media and communication organisations in Zambia, says he will join the protesters because this was no longer a labour issue, but one of governance.

“It is immoral that a government can present a budget which does not curtail any spending of itself, but hammers the workers again and again,” he said.

“Even if donors are telling you to curb spending, you do not kill the goose that lays your eggs,” he said, referring to the IMF and World Bank’s conditionalities.

Both the IMF and World Bank representatives in Zambia have denied they have dictated the controversial wage freezes and tax increases. They said Zambian government had been attempting to reach the HIPC completion point for months.

“All we want is for government to employ fiscal discipline so that it reaches the HIPC completion point which is crucial for Zambia’s development. It will improve the country’s credit ratings and additional bilateral and multi lateral support,” said Ohene Nyanin, the World Bank representative in Zambia.

Zambians expected to see a reduction in the size of government, 18 cabinet portfolio’s from 47, scrapping of some cabinet positions (like deputy ministers) and a reduction in presidential foreign travels.

But finance minister Magande argued that reducing the size of cabinet would not improve Zambia’s financial situation as only K2 billion (500,000 dollars) was spent on allowances and salaries each year.

Government spokesperson Mutale Nalumango challenged the unions to offer alternative sources of money instead of embarking on strike. She rejected assertions that government spends excessively. “Let them (unions) tell us where to get the money from to pay them. This year’s budget reflects the reality of the nation. Government just does not have the money,” she said.

State workers went on strike twice last year, paralysing government operations for weeks. The unions have taken government to court for abrogation of a collective agreement in which they were supposed to have been awarded housing allowances. The government has promised to pay out the allowances in instalments.