Reuters International

HARARE (Reuters) - Zimbabwe authorities offered residential land to government employees in lieu of annual bonuses, unions said on Thursday, rejecting a proposal that suggests the cash squeeze gripping the country is unlikely to ease this year.

The southern African nation's economy stagnated last year, fanning anti-government protests and compounding President Robert Mugabe's problems ahead of national elections due in 2018.

Public sector workers are paid an annual bonus equivalent to a month's salary every November and December, but the government - which spends more than $250 million monthly on salaries - has not said when it will make the 2016 payment.

Owning residential land is sees as unattractive as most plots lack basic amenities such as roads, electricity and sewerage, making them difficult to settle on or sell.

Raymond Majongwe, secretary general of the Progressive Teachers Union of Zimbabwe, described the government's offer as

"madness" and said unions rejected it at a meeting on Wednesday.

Unions also turned down a second offer to pay half the bonus in cash and the rest in "non-monetary" benefits that the government did not spell out.

"The government should just pay what is due to the workers and not cry about financial problems," Majongwe said.

He said the government last month signed another deal with unions allowing more than 500,000 state workers to buy residential land from councils at below market prices.

"Let us say they give us the land today, what happens at the end of the year when the 2017 bonuses are due?"

Labour and Social Welfare Minister Prisca Mupfumira, who attended the meeting alongside the finance minister and central bank governor, said they would meet the unions again on Feb 20.

Cecilia Alexander, who chairs the Apex Council that groups all state sector unions, said the council would give its final position on the proposals in February.

Without balance of payments support from international financial institutions, Mugabe's government spends more than 80 percent of its budget on salaries.

Facing unprecedented protests over cash shortages and falling living standards, it dropped plans last September to cut public sector jobs and bonuses.

(Reporting by MacDonald Dzirutwe; Editing by James Macharia; and John Stonestreet)

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