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Employer Responses to Erosion of Employee Earnings

Memory Nguwi
20/06/2023 1:15 PM


This report outlines our investigation into how employers have responded to the decline in employee earnings resulting from currency depreciation.


We used the following methodology in undertaking this assignment:

  1. Market survey (using the online survey platform www.surveymonkey.com) to ascertain employer responses with regards to the current currency depreciation;
  2. Analysed the responses and prepared a report. 

Participants Profile

One hundred six Human Resources professionals representing different organizations participated in the survey.

The distribution of participants by economic sector is shown in the table below:


69% of the participants pay salaries using the US dollar and Zimbabwean dollar. 

 57% of the participants used the interbank, and 33% used a hybrid rate when paying salaries denominated in USD but payable in ZWL.

Based on the graph above, it can be observed that companies that pay in both currencies offer a range of percentage options for their USD component. The majority of participants fall into three categories: 32% pay between 40% and 59% of their total salaries in USD, 25% pay between 60% and 79% of their total salaries in USD, and another 32% pay between 80% and 100% of their total salaries in USD. It is worth noting that only a small proportion of participants pay less than 39% of their total salaries in USD.

Strategies employers are using to address the loss of value on salaries due to exchange depreciation:

One common approach is conducting monthly salary reviews and adjusting them based on the prevailing exchange rate. This allows employers to keep pace with changes in the market and ensure that their employees' salaries remain competitive.

Some employers pay their employees in USD, eliminating the risk of exchange depreciation. However, this approach may not be feasible for all companies, depending on their financial resources and other factors.

Another option is to provide employees with a cushioning allowance a week after salary payment. This can help to offset any losses due to exchange depreciation and provide employees with some financial stability.

Some employers increase the USD component of the salaries and pay off transport and meal allowances in USD. This can help to ensure that employees have access to stable sources of USD income, which can be particularly important for those who rely on these allowances to cover their daily expenses.

Some companies use a USD base and convert to ZWL at the prevailing rate of the day. This approach allows employers to provide their employees with some stability while still accounting for changes in the market.

Other strategies include providing grocery allowances, paying once-off USD-pegged hardship allowances, paying at 32% more than the interbank rate, using a hybrid rate and giving employees USD in cash instead of depositing it into their bank accounts. 

Others Challenges faced by participants:

One challenge that companies face is constrained revenue inflows, which has made it difficult for them to pay market-related remuneration. In addition, the timing of salary processing is way too early, given the changes in the exchange rate. This has made it difficult for organizations to fund medical aid and pensions. 

About the Authors 

Memory Nguwi (Registered Psychologist) is the Managing Consultant of Industrial Psychology Consultants (IPC). You may contact him by email at mnguwi@ipcconsultants.com

Benjamin Sombi is the Business Analytics Manager at Industrial Psychology Consultants (IPC). You may contact him by email at benjamin@ipcconsultants.com

Nolwazi Mlala is the Business Analytics Consultant at Industrial Psychology Consultants (IPC). You may contact him by email at nolwazi@ipcconsultants.com 

If you would like to discuss this report, please contact one of the authors.

Memory Nguwi

Super User

This article was written by one of the consultants at IPC

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