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Harare - In another sign of Zimbabwe's battered economy, the central bank on Wednesday called for a general wage freeze, setting the stage for a bitter conflict with trade unions.
Central bank chief John Mangudya's announcement dealt another blow to elusive hopes of a solid economic recovery in the nation that had to abandon its own currency at the peak of a severe recession and switch to the US dollar instead.
Mangudya said the economy remains too depressed to allow for any salary hikes.
"Given the lack of competitiveness and its negative effects on the economy, we do not see any room for wage and salary increases," Mangudya said.
Private firms expected to follow suit
The wage freeze will apply to civil servants and parastatal companies, but to the dismay of unions, private companies were expected to follow suit.
"What workers currently earn is far below the poverty line," said Raymond Majongwe, secretary general of the Progressive Teachers' Union of Zimbabwe.
"We are dealing with a government that does not want to respect its workers, so we are not ruling out protests," he added.
The World Bank says 72% of Zimbabweans live below the poverty line, while many economists put the real unemployment rate at 80%, up from an official 11%.
Zimbabwe is slowly recovering from nearly a decade-long crisis, sparked partly by the confiscation of white-owned farms that saw economic output cumulatively decline by nearly a half between 1999 and 2008, according to the World Bank.
Mangudya predicted a growth of 3.2% this year driven by services, mining and manufacturing.
