Plan calls for price and wage freezes

A draft protocol between the Zimbabwean government, labour and business has allegedly agreed a six-month price and wage freeze in a bid to curb inflation, the Financial Gazette reported on Thursday. The newspaper said the agreement, the Prices and Incomes Stabilisation Protocol, was a product of the Tripartite Negotiating Forum involving the Ministry of Finance, the Confederation of Zimbabwe Industries (CZI) and the Employers' Confederation of Zimbabwe, as well as the Zimbabwe Congress of Trade Unions. The Financial Gazette reported that a copy of the protocol, which was made available to the newspaper, showed that the three partners agreed in principle to "restraint" on prices for all goods and services produced wholly or substantially in Zimbabwe. Some of the products and services cited in the document included maize-meal, cooking oil, milk, sugar, bread, flour, beef, paraffin, rentals, rates, water charges and transport fares. Price controls have been used by the government since 2001 in an attempt to hold down the cost of basic goods. However, they have led to shortages and a rampant black market where listed products are sold at exorbitant prices. Drought and the government's policy failures has also resulted in more than seven million people in need of food aid through March. The alleged protocol follows media reports last week that the CZI had presented a recovery plan to President Robert Mugabe designed to save Zimbabwe's crumbling economy. It called for realistic price controls and prudent management, and for a boost in energy production and supply to help companies threatened by rising input costs, Reuters reported. Unemployment in Zimbabwe's formal sector has doubled to 70 percent in the last 10 years, inflation is at a record 175 percent, the country has no foreign currency reserves and has been gripped by fuel shortages. The CZI says that over 600 companies have been forced to close in the last three years due to unrealistic price controls, and high import costs on industries forced to buy expensive foreign currency on the black market due to shortages, Reuters said. The rescue plan recommended interest rate and tax incentives for farmers and exporters, as well as changes to foreign currency and fuel price regulations. But economist Tony Hawkins told IRIN: "These plans are tackling the symptoms but not the disease, which are socio-political and economic. Price controls cannot work in these conditions ... It's really fiddling around at the edges of the problem, the situation will continue to deteriorate until there is political change."