Workers feel the heat

MASERU – LESOTHO’s economic instability has negatively affected consumers, financial institutions and industry in general, a situation that could result in retrenchments amid already high unemployment.
The failure by the government to award salary increments to its workers has worsened the situation, especially as inflation rises and incomes remain stagnant or are eroded.
In his Budget Speech for 2019/20 delivered earlier this year, Finance Minister Dr Moeketsi Majoro did not provide for a salary increase for civil servants.

This attracted a barrage of criticism from civil servants who were expecting a salary bump.
The public relations officer of the Lesotho Public Service Staff Association in Maseru district, Seakhi Rankalele, said they were disappointed by the minister’s decision. He said failure to award an increment to civil servants was a first, at least for the time he has been in the public service.
To compound matters, the government did not even proffer reasons for the decision.
The Central Bank of Lesotho (CBL) Monetary Policy committee announced that inflation, as measured by Consumer Price Index, had increased to 5.6 percent in April compared to 5.2 percent in March.
Meanwhile, consumers, many whose salaries have not been adjusted to meet the rising inflation, are suffering.
Economic experts say wages and salaries should be increased to ensure that consumers retain their spending power.

The Managing Director of Lesotho Post Bank, Molefi Leqhaoe, said as a result of the current situation, savings had drastically gone down.
Leqhaoe said civil servants account for more than 45 000 people in the country and this has created a huge impact in the financial sector and also affected economic growth.
This is unlike previous years when savings increased as workers’ salaries were adjusted.
“When inflation rises, this makes it even difficult for people to save,” he said.
He said the situation has affected all banks in the country, adding that people were also becoming reluctant to take loans from banks.

“Our loan book this year is showing a huge deterioration,’’ he said.
Those who had already taken out loans were struggling to repay, he said.
Profitability of banks is likely to be affected and banks may be forced to retrench. The government, on the other hand, will collect fewer taxes as people spend less, he said.
He said they are raising awareness for consumers to reduce their spending.
“They should spend less than what they should spend before inflation so that they could be able to save,” Leqhaoe said.

Refiloe Mpobole