Saturday, May 21, 2022

‘No work, no pay’ will bring chaos– analysts

Analysts warned of a big dark cloud of chaos directed towards the economy of the country if government was to enforce the “no work, no pay” principle, as it has repeatedly warned during the ongoing public service strike.

“If government was to enforce a ‘no work no pay’ principle, there would be a big problem because families that have been living on two salaries would most probably be left with one cheque, 30 percent of which going to servicing of loans and mortgages.

“The situation would be chaotic because they would be a rush on the banks as people withdraw everything before stop orders’ due dates,” head of Stockbrokers Botswana, Geoffrey Bakwena, told Sunday Standard on Friday.

Government has warned that it is likely to resort to the enforcement of Section 41 (3) of the Trade and Dispute Act that gives the employer the power not to pay employees for undone job.
Government and civil servants have been engaged in a salary increase dispute as employees were demanding a 16 percent salary increase while government has been shifting its positions from nothing to five percent.

Government, which is the largest employer in the country, has seen close to half of its staff compliment engaged in an industrial action that spanned a month this week.

The civil service, due to its job security, has been the darling of the big commercial banks and micro-lending outfits. If government goes ahead with the enforcement of the Trade and Dispute Act, hundreds of millions will be wiped off the Botswana Stock Exchange, while default rates would spike bringing the credibility of Botswana financial sector into question.

Banks would adopt a very conservative attitude in terms of lending out and at the same time inter banks borrowing would be under threat because no one knows the others exposure while, on the other hand, they embark on debt rescheduling for their clients.

His view of a chaotic situation was backed by other analysts who pointed out that the impact of ‘no work no pay’ will hit hard on the general economy as the national purchasing power weakens due to the effects of the enforcement of the rule.

The retail sector is thought to be one of the sectors that would feel the negative impact of the ‘no work no pay’ from the onset because of the weakening of the national purchasing power.
The move could have serious implications to the private sector that would respond with massive retrenchments in a bid to contain costs.

“Investors who might be concerned would be the retail shops because people would cut back on what they normally spend on. And that would have a negative impact because they would, in turn, resort to retrenchment of their employees because money would not be circulating,” one analyst said.

The public sector employees have not had salary increase in the last three years despite huge spikes in food, fuel, housing and utilities lead to a compound erosion of 20 to 30 percent of their salaries.

“Although one has been getting a cheque written out one thousand pula over the last three years in terms of purchasing power he is getting about P800. What we need to do is to acknowledge the civil service patriotism it has shown over the years and cut back on projects that are not adding money to the economy and give them something.

“The thing is that the whole thing was poorly handled by government at the beginning and it is going to be difficult to convince the unions,” he added.

Spokesperson of the unions, Andrew Motsamai, said on Friday that the strike has hit hard on all government departments, including, schools, and health. Magistrates Courts were closed, accountant generalÔÇöresponsible for paying civil servants and other departments.

About 120 Batswana medical doctors were engaged in the strike and are said to be among close to 2000 people in the essential services who have been written letters of dismissal, according to sources at the Government Enclave.

“I think going forward the financial sector is going to feel the impact of the strike,” he added.
However, the most brutal impact would be felt if government was to dismiss all striking employees leading to deep draw down of pension funds and at the same time affecting Botswana’s foreign reserves that stand at P 53 billion. Civil Service pensions stand at P 32 billionÔÇömeaning that the bulk of Botswana money invested outside the country belongs to the civil service.

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