Structural Adjustment in Zimbabwe

Topics: Zimbabwe, Economy of Zimbabwe, Health care Pages: 8 (2538 words) Published: March 30, 2008
After gaining independence in 1980, Zimbabwe’s new leader, Robert Mugabe and his ZANU-PF government are said to have inherited nearly 700 million dollars in debt from the former Rhodesian Regime. This set the stage for what can be referred to as the “uneven development,“ as it is argued that Robert Mugabe did not have any other option, than to adopt the neoliberal policies of the World Bank and International Monetary Fund in an attempt to free the Zimbabwean economy (Bond 93). In 1991, Zimbabwe introduced what is known as the Economic Structural Adjustment (ESAP), to stimulate economic growth and reduce poverty. The government would “de-emphasise its expenditure on social services and emphasise investment in the material production sectors such as agriculture, mining and manufacturing”(Gibbons 10). To begin economic restructuring, the Zimbabwean government received financial assistance from the World Bank (WB) and the International Monetary Fund (IMF). To qualify for assistance, the government had to meet certain requirements in the areas of “budget deficit reduction, fiscal and monetary policy reforms, trade liberalization, public enterprise reforms, deregulation of investment, and labour and price controls”(Bond 90). The people of Zimbabwe were promised that their deteriorating economy would be transformed into a strong self-sustaining one. The majority of the people were poor anyway, and did not realize to what extent they would have to sacrifice with the implementation of Structural Adjustment Programs, said to benefit their economy and increase their standard of living (Riphenburg 1). In Zimbabwe, the Economic Structural Adjustment Program(ESAP) has been detrimental to human development and the welfare of the Zimbabwean people, especially on the areas of employment and wages, health services, education, and food security.

Employment and wages has been severely impacted by the implementation of the ESAP and has been a leading factor in the hindering of Zimbabwe’s human development. The main objective of Zimbabwe's ESAP, was to stimulate economic growth, attract foreign investment expand employment and reduce government expenditure. The achievement of this goal was to be brought about by “trade liberalization, devaluation, privatization, huge cuts in government spending and social services like education and health and the deregulation of working conditions“(Marquette 1141). Trade liberalization policies are the ESAP measures that have had an immediate and direct impact on employment and labour relations. It entails the reduction of trade barriers such as taxes, and tariffs on goods and services traded between or within countries (Carmody 41). Because of this trade liberalisation under the Economic Structural Adjustment Program implemented in 1991, interest rates in early 1992 increased by 35 to 40 percent, and also resulted in the devaluation of the Zimbabwe dollar by over 40 per cent (Gibbon 44).

Wage “flexibility” was also introduced, and because of the continued relaxation of government regulation of labour marketed under ESAP, control was placed into the hands of the employers. Up until the late 1980s government regulation included strict control of hiring and firing, and minimum and maximum wage determination. Beginning in the late 1980s and into the 1990s with ESAP the power was left in the hands of the employer to control wages, laying off workers, extending working hours, and “moving workers into lower paying jobs to cut costs”(Marquette 1145). Some restrictions on worker lay-offs were abolished, and competition in the area of labour was promoted. Furthermore, with the reduction or elimination of subsidies under structural adjustment, private companies have been forced to reduce costs in order to remain competitive. “Deregulation has allowed them to make increased use of temporary, part-time contract workers who do not receive benefits and have no job security”(Bond 106). These changes...
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