Emmerson Njanjamangezi, Group Features Editor 
FUND managers Imara Asset Management (Imara) say the government must not cave in to demands to restore USD wages to September 2018 RTGS$ levels as this will fuel inflationary headwinds.
In an investment note published recently, Imara chief executive John Legat said the rising prices are resulting in higher wage demands not just from the public sector unions but also within the private sector.
“It will be critically important though that real wages are contained. Demands that USD wages should return to October 2018 levels make little sense since wages at that time were not actually being paid in USD but in RTGS$.
“RTGS$ were worth 50 percent of a USD at that time; RTGS$500 was really only US$250 in September 2018. After the announcement of the introduction of USD Nostro accounts in the central bank Monetary Policy Statement of October 2018 when the government first broke the illusion that an RTGS$ was a USD, the rate collapsed from two to one to eight to one.
“Government should therefore not cave in to demands to restore USD wages back to September 2018 RTGS$ levels. The big mistake the public and private sectors made post-dollarisation in 2009, was to increase USD wages steadily and at high annual percentages to the extent that Zimbabwe had become uncompetitive by 2013 and was burdened by an expensive workforce.”
Legat said as a result of hikes in USD wages, almost all government revenues were consumed by public sector wages.
“This has to be avoided this time around. Our fear, however, is that with elections looming in 2023 and with some IMF loose change in the kitty, public sector wages will steadily rise in 2022 with the danger that Zimbabwe will find itself right back where it started in 2017, with a bloated and expensive civil service,” he added.
Last year, inflation closed at over 60 percent and market watchers expect it to rise further in 2022 as the Reserve Bank of Zimbabwe foreign currency auction system and parallel rates devalue.
Of late, there have been increases in electricity, fuel, transport, and toll fees as well as an uptick in food prices.
The Zimbabwe Energy Regulatory Authority, in terms of Section 53 of the Electricity Act and effective on January 1, 2022, increased electricity tariffs by 12,3 percent.
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