Brain Drain and Bread Gain


Piggy believes there is a new narrative playing out in Zimbabwe given the fact that the country is beginning to experience a loss of skills to other countries on the back of the harsh economic environment. A recent article in the Economist cites an interesting new paper in the Journal of Epidemiology & Community Health that asserts that increasing minimum wages has a direct impact of improving workers’ mental health.  The study was carried out using data from 50 American states and the District of Columbia from 1990 to 2015. The conclusion drawn was that a USD1 increase in the minimum wage is associated with a 3.5% decline in the suicide rate among adults aged 18 to 64 with a high-school education or less. The researchers reckon that a USD1 increase would have prevented 27,550 suicides in the 25 years covered by the study while a USD2 increase would have prevented 57,000 suicides as illustrated below; 

Piggy concurs that increasing minimum wages could help reduce suicide rates, particularly in developed countries. In a country like Zimbabwe where the unemployment rate has reached stratospheric levels, a new problem has emerged; the risk of a massive brain-drain. According to International Organization for Migration (IOM), the major reason for emigration in Zimbabwe has to do with the lack of work opportunities. Migration has essentially been a household strategy to address current and future risk. Dwindling opportunities for productive employment and career advancement as well as unequal employer–employee relations in the local labour market tend to influence decisions to emigrate.  The 2018 estimate for the net migration rate in Zimbabwe was -7.3 migrant/1,000 persons. The net migration rate is the difference between the number of persons entering and leaving a country during the year per 1,000 persons. A negative rate indicates an excess of persons leaving the country.

Zimbabwe has lost skilled professionals such as Lecturers, Engineers, Medical Practitioners (Doctors and Nurses) and Accountants to the USA, UK, Australia and south Africa amongst many other countries. A good case study relates to Zimbabwean medical doctors that are leaving the country in search of greener pastures as the government has failed to break an impasse over poor wages. Meanwhile, the United Kingdom’s National Health Service recently relaxed its requirements for recruiting doctors and nurses from Zimbabwe and other parts of the world.

While Zimbabwe cannot do much to bring back these professionals, the benefit of having a large diaspora community has become evident. Most of these professionals living in more developed nations are being paid sufficiently well to make family remittances.  According to the Reserve Bank of Zimbabwe (RBZ), foreign exchange receipts as at 30 June 2019 amounted to USD2.6bn, of which USD504.7m (19%) were international money transfers. This represents a significant number given that it is more than forex receipts from the agricultural sector (USD318.2m). International remittances have a direct impact on household incomes hence consumer demand.  Piggy thinks that such as trend should help sustain some decent demand for fast moving consumer goods (FMCG).  On the ZSE, the 8 consumer names that are set to benefit from this new narrative are Delta, BAT Zimbabwe, Econet, Innscor, Simbisa Brands, OK Zimbabwe, Meikles (TM Pick n Pay) and Dairibord. 

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