Mugabe imposes tough new law on prices

HARARE – President Robert Mugabe on Friday imposed a new law on Zimbabwean businesses banning them from raising wages to keep pace with the world’s highest inflation.

Companies that violate the law will be fined or their employees jailed for up to six months. The move is the latest in a government crackdown aimed at taming prices.Analysts say it could backfire, much like the government-imposed June price freeze, and deepen Zimbabwe’s crippling economic crisis.Mugabe invoked the special Presidential Powers Act which gives his government the right to approve all salary and price rises.The rules, published in the official Herald newspaper on Friday, said Mugabe had increased the powers of the National Incomes and Pricing Commission and a taskforce which has been implementing the controversial June price freeze.”No one in private or public sectors can now raise salaries, wages, rents, service charges, prices and school fees on account of increases or anticipated increases in the consumer price index, the official and unofficial exchange rates or value-added tax and duty,” the daily said, quoting the new rules.Mugabe’s new regulations will be applied to private schools, which had adjusted fees to match galloping prices or anticipated inflation trends for a new school term starting next week.The schools, which had authority under the country’s education laws to set their fees based on the consumer price index (CPI), now need government permission for the increases.SCHOOLS “The commission can only approve an increase if this is justified or some other grounds than the application of the CPI, killing the present link between fees and the CPI,” the Herald said.The report added: “The net effect of the changes will be to push inflation down since all increases will be by less than the current inflation rate.”Analysts have their doubts.”This is a confirmation that we have become a command economy, but it’s only going to make things worse,” said John Robertson, a leading economic consultant in Zimbabwe.The government said all members of the prices commission will be appointed by Mugabe, and that the state had scrapped provisions for labour and business to second nominees.The new rules are almost certain to create further problems for the business sector.Mugabe’s government ordered a price rollback to June 18 levels in a bid to stem inflation currently at more than 7 000 per cent.But the move has led manufacturers to cut production out of fear of losses.More than 7 500 business people have been arrested and fined for breaching the price controls, which sparked panic buying across the country.Last week, Mugabe’s government had appeared to be slightly easing the price freeze which has left shop shelves empty and deepened Zimbabwe’s economic crisis, marked by shortages of fuel and foreign currency.Nampa-ReutersThe move is the latest in a government crackdown aimed at taming prices.Analysts say it could backfire, much like the government-imposed June price freeze, and deepen Zimbabwe’s crippling economic crisis.Mugabe invoked the special Presidential Powers Act which gives his government the right to approve all salary and price rises.The rules, published in the official Herald newspaper on Friday, said Mugabe had increased the powers of the National Incomes and Pricing Commission and a taskforce which has been implementing the controversial June price freeze.”No one in private or public sectors can now raise salaries, wages, rents, service charges, prices and school fees on account of increases or anticipated increases in the consumer price index, the official and unofficial exchange rates or value-added tax and duty,” the daily said, quoting the new rules.Mugabe’s new regulations will be applied to private schools, which had adjusted fees to match galloping prices or anticipated inflation trends for a new school term starting next week.The schools, which had authority under the country’s education laws to set their fees based on the consumer price index (CPI), now need government permission for the increases.SCHOOLS “The commission can only approve an increase if this is justified or some other grounds than the application of the CPI, killing the present link between fees and the CPI,” the Herald said.The report added: “The net effect of the changes will be to push inflation down since all increases will be by less than the current inflation rate.”Analysts have their doubts.”This is a confirmation that we have become a command economy, but it’s only going to make things worse,” said John Robertson, a leading economic consultant in Zimbabwe.The government said all members of the prices commission will be appointed by Mugabe, and that the state had scrapped provisions for labour and business to second nominees.The new rules are almost certain to create further problems for the business sector.Mugabe’s government ordered a price rollback to June 18 levels in a bid to stem inflation currently at more than 7 000 per cent.But the move has led manufacturers to cut production out of fear of losses.More than 7 500 business people have been arrested and fined for breaching the price controls, which sparked panic buying across the country.Last week, Mugabe’s government had appeared to be slightly easing the price freeze which has left shop shelves empty and deepened Zimbabwe’s economic crisis, marked by shortages of fuel and foreign currency.Nampa-Reuters