The offer, which was confirmed by both Information secretary Ndavaningi Mangwana and Labour minister Paul Mavima, was approved by Cabinet yesterday.
"Starting immediately, the government will pay an equivalent of US$500 in funeral assistance for any civil servant who passes away," Mangwana tweeted.
"This is regardless of any funeral policy the member may have. The money is paid to a surviving spouse, adult children or agreed dependant."
Civil servants have been battling to secure a living wage from their employer with not much success, forcing teachers, nurses and
doctors to down tools.
Teachers, who are demanding at least US$520 per month, are currently earning an equivalent of US$40.
Asked to clarify Mangwana's claims, Mavima said: "If it was talking about people who have died in the line of duty, maybe due to COVID-19 being compensated through the surviving family, it is a completely different framework from the continuous improvement on the working conditions of the rest of the civil servants.
"If we are talking about how many people have died due to COVID-19, we are talking of just a few people, we are talking about once-off payments, we are talking about in addition to what they normally get, which is pensions of those people."
He added: "Someone who has died in the line of duty, and we are just increasing the benefits because in this particular case there is a pandemic and people need to be compensated. We have even compensated people who have just contracted COVID-19 and I think it's proper."
However, civil servants said though the gesture was noble, the employer should focus on paying at least a US$520 salary to the living.
The Apex Council, an umbrella body for all civil servants unions, said the US$500 funeral assistance offer was an open admission by government that its workers deserved to be paid in a more stable currency.
"No one can fault that, it is a good thing especially in times of bereavement, it is really welcome," Apex Council spokesperson David Dzatsunga said."The fact that they are doing that makes them realise we need US dollars to get a decent burial, maybe they should also know that a US dollar salary, therefore, is important to get a decent living and they should start paying in US dollars."
Progressive Teachers Union of Zimbabwe president Takavafira Zhou said the move was "madness".
"That is madness at its worst. We do not want people who praise us when we are dead. We want to be recognised in our existence. We have families, we are family people, we need to find decent accommodation and not coming when you are dead to say he was our worker," Zhou said.
"We don't want people who speechify over our bodies. We want assistance from the government right now. It is unfair labour practice that an employer has a paternalistic aspect to think that they give us donations. We want a product of collective bargaining and discussion."
Government also approved plans to increase fees and sitting allowances for non-executive directors at State enterprises and parastatals most of which are bleeding the economy.
Addressing a post-Cabinet media briefing, Information minister Monica Mutsvangwa said the allowances were last reviewed last year.
"Cabinet considered and approved a proposal to review upwards the board fees and sitting allowances of non-executive directors of State enterprises and parastatals. Fees and allowances were last reviewed in October 2019," she said.
The review of the board fees come at a time government is struggling to keep most of the loss-making parastatals afloat.
The parastatals are also struggling to pay salaries and some have approached government for bailout.
Finance minister Mthuli Ncube, while acknowledging that some of the parastatals were limping, said the review would take that into account.
"I don't have the exact figures of how much increases will be effected, but I can share the modalities, which are those managing loss-making entities will get less increases, while those managing profit-making entities will get more," Ncube said.
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