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Measures needed to prevent collapse

By John Robertson

ZIMBABWE is now desperately in need of urgent help. For the sake of all our jobs, measures that will prevent further failures in the distressed productive sectors are now vitally important

and more brave steps are needed to help the country start on a recovery process.

Right now a broad range of productive and service sector businesses are facing the prospect of further dramatic shrinkages of business as a result of government’s past policy choices.

Manufacturers, mining companies, farmers and companies in the tourism industry are all struggling with the consequences of government’s policy choices.

Commercial, banking and financial services and employment levels in all areas of the economy will be even more drastically affected if no changes to the policies are made.

We have a government that claims to be left wing or socialist. Normally a left-wing government will claim that its policies are designed to side vigorously with labour in any conflict that labour has with employers.

To put the usual pattern into just a few words, socialist or left wing governments say that workers need to be helped in their never-ending conflict with employers.

Workers’ unions therefore automatically team up with government to put employers in their place.

Right wing or conservative governments’ policies are usually directed more towards the interests of employers.

For them, the basic belief is that if employers are well placed and successful but have to compete for their markets as well as for good employees, they will do a better job of looking after workers than the government can.

No doubt, politicians from every point across the spectrum from hard left to hard right would claim that they are trying to ensure employees get a fair deal.

However, few people have pointed out that this objective appears to have been forgotten by Zimbabwe’s ruling party politicians in the last few years.

This amounts to a significant change in this relationship. This belief that government is on the side of labour is so deeply seated that very few people have openly discussed the natural alliance that has emerged between workers and employers.

Both groups have come to see themselves – and each other – as equal victims of very rough treatment from government. The policies that have emerged are equally hostile to the interests of both groups.

This is one aspect of the deconstruction of labour relations that has taken place. Government has been careful not to make a public issue of this fact but was very disturbed by the development.

It reacted to it by withdrawing its recognition of the Zimbabwe Congress of Trade Unions (ZCTU) and trying to impose in its place a new national labour movement.

Perhaps we should have anticipated that government would support an alternative labour movement when the ZCTU was seen to be helping to form an alternative political party.

But whatever all of us could or should have foreseen, we need to accept that government now wants labour to feel it has become a political football so that it will turn to government for protection.

By attacking businesses government has caused the most serious losses of jobs ever experienced in this country. Job security and steady growth in employment opportunities featured strongly in this government’s party manifesto but just about everything government has done in recent years is in conflict with that objective.

Immediately after the land policy was announced, confidence in the economy slumped and that drastically reduced productive investment.

Employment growth depends on significant investment so employment growth came to a stop and then went into reverse.

The Zimbabwe dollar was also an immediate casualty. When your currency falls import costs rise and local prices rise. Demand for some goods goes down and jobs are lost from among the workers who used to make those goods or used to supply the materials to make those goods.

As the official pronouncements always claim that the blame lies outside the administration, all policy proposals and decisions are still being directed away from dealing with – or even identifying – the root causes.

With few exceptions, the economic measures proposed have been designed to put the blame on others.

This means that the ruling party is determined to suppress or otherwise prevent the dissemination of the politically painful truth at all costs. The latest casualty has been the Daily News and the Daily News on Sunday.

The basic truth being suppressed is simply that every one of the country’s economic difficulties has its origins in the political choices made and that every employee in the country is a victim.

Consequently, all the economic problems now require a sequence of political steps to repair the damage done.

However, considerable financial assistance will be needed to place Zimbabwe onto a recovery path, not least because the bulk of the country’s savings, which might have funded a large part of the recovery, have been dissipated through government’s recurrent expenditure.

The international help needed will not be offered to the current administration, so Zimbabwe’s recovery is conditional upon our first making far-reaching political changes that allow the country to requalify for that help.

Alternatively, Zimbabwe could continue on its present course, which has already brought about the destruction of a substantial proportion of what was a complex and functioning economy.

The consequences of remaining on this course will be increasingly profound economic devastation.

Having already achi-eved a cut in manufacturing output of about 35%, the policies will further de-industrialise the economy.

The economy’s isolation from all investment flows will reduce the effectiveness of any businesses that survive

Agricultural output, particularly in respect of export commodities and food, has suffered a much sharper decline.

Further shrinkages are in progress as, without the effective backing from support manufacturers and services, the viability of much of commercial agriculture has fallen away

Through the destruction of property rights and the cancellation of the collateral value of farmland, the prospects of a recovery under the new agrarian policies are remote in the extreme.

The dismantling of the linkages between farmers and the financial services sector is certain to marginalise even the best of the resettled farmers.

Already more than a million economically active people have migrated to improve their earnings prospects. The loss of skills is one of the causes of falling productivity and is threatening the viability of many companies.

On its current course, Zimbabwe’s population will prove to be too big to be provided for by an economy that has been drastically reduced in size.

Whether planned or not, the combination of further emigration, a rising infant mortality rate, a shorter life expectancy and government’s continued hostility to descendants of non-Zimbabweans might lead to the population falling sufficiently to fit this dull subsistence economic model.

In such an outcome, government might be expected to more decisively work at reducing the power of the trade unions and to bring the business sector under more comprehensive controls.

These possibilities describe the evolution of circumstances so unpleasant that it might be assumed the population will strenuously oppose them. The very poor business climate might thus be made more uncomfortable by frequent periods of civil unrest.

Government’s response is likely to be further repression, as it will be unable to solve problems.

Zimbabwe’s trauma has already slowed the economic growth of the entire southern African region and might soon cause a severe decline in investor interest in neighbouring countries.

If these possibilities are considered unacceptable, a few basic facts can be presented to outline the options before us.

Zimbabwe cannot hope to achieve a recovery within a reasonable time without considering foreign assistance.

Under current self-imposed political con-ditions, Zimbabwe does not qualify

for any form of assistance, other than the grudging recognition that humanitarian aid is essential if innocent lives are to be saved.

The current political leadership constitutes the major barrier preventing the country from obtaining help from support bodies and potential donors.

The current leadership therefore needs to stand down to permit new elections and the appointment of new administrators who can earn the respect of the international community.

To earn this respect, the new leadership and administrators must fully accept the need to quickly restore all the civil and property rights that have been compromised or destroyed.

Help from abroad will be severely discouraged if conflict develops between employers and employees.

Workers’ best interests are likely to be served by persuading them that they should help sustain conditions within which their employers can survive.

Those living a precarious existence in the informal economy and those who are unemployed are experiencing an increased need for welfare.

The informal sector, now almost as important as the formal sector, needs urgent help to restructure its operations as formal businesses that do not depend upon black market activities.

Advance warning and careful planning will be needed to prevent the adoption of appropriate economic policies from having excessively harsh consequences for heavily indebted businesses.

From the employers’ point of view, the experience of falling turnover, narrower profit margins and steep increases in the costs of all inputs has left most of them with few options. Any improvements in the business environment will have to be supported by investment-led growth and the development or new export markets.

If the country is to experience better rates of economic growth in the coming years, investment spending will have to lead the way.

This immediately highlights the need for lower inflation, moderate interest rates and conditions that will help stabilise the exchange rate. The exacting standards of good fiscal management and good economic planning will have to take over completely from the slap-dash policies of government-sanctioned looting and pillaging that we have seen in the last five or six years.

Perhaps employers and workers should now be consolidating their alliance to better permit them to defend themselves against government and to reach working arrangements that they could now agree will not be altered by government intervention.

A vigorous exercise in forward-looking policy formulation is now essential, partly because the world’s investors have never been more difficult to impress and partly because Zimbabwe has recently burdened itself with a serious credibility problem.

If we do manage a political turnaround the country will be coming into the investment scene from a very long way behind.

We will be rejected as an investment option unless our policies and attitudes can be shown to be outstanding.

Good labour relations are there essential.

* John Robertson is an economic consultant. He made these comments at the recent IPMZ briefing on labour relations.

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