Mugabe Imposes Tough New Law on Wage, Prices

Mugabe imposed a new law on Zimbabwean businesses banning them from raising wages to keep pace with the world`s highest inflation.

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.

The move is the latest in a government crackdown aimed at taming prices which have soared given inflation running at more than 7,000 percent.

Companies that violate the law will be fined or their employees jailed for up to six months.

Analysts say the new law could backfire, much like the government-imposed June price freeze, and deepen Zimbabwe's crippling economic crisis.

Mugabe invoked the special Presidential Powers Act to give his government the right to approve all salary and price rises.

Zimbabwe's main Congress of Trade Unions (ZCTU) denounced the move as "Satanic" and warned it would mobilise its members to resist the regulations.

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 now need government permission for increases.

INFLATION BATTLE

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.

Mugabe's government ordered a price rollback to June 18 levels in a bid to stem inflation, 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 price controls under a wide crackdown on dissent. That 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 amid shortages of fuel, food and foreign currency.

Mugabe, in power since independence from Britain in 1980, has accused some businesses of raising prices as part of what he calls a Western plot to oust him in retaliation for his seizure of white-owned farms to redistribute to landless blacks.

The ZSTU said it was shocked by the wage freeze.

"The workers are tired of being sacrificial lambs and bearing the brunt of bad governance and bad economic policies," it said in a statement.

"The ZCTU will leave no stone unturned in opposing this ill-thought move. The ZCTU will continue to mobilize workers to resist this satanic move which is not only economically wrong, but also morally suicidal."