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Eric Bloch Column

Management, labour friction set to rise

By Eric Bloch

AN intensifying hindrance to the long-desired but very elusive economic turnaround is a fast-growing divide between management and labour.

As if it does not suffice that produ

ctivity within almost all sectors of the economy has been in free-fall as a consequence of inadequate availability of foreign currency, growing obsolescences, frequent energy load-shedding, fuel shortages, and much else, the pace of the productivity decline is severely exacerbated by the increasing tension that has developed, and continuing friction that exists between management and labour.

Almost entirely, the divide is created by the desperation to which labour has been reduced in trying to provide for the bare essentials of survival for his family and himself, and a perception of the labourers that employers have unlimited resources and can pay whatsoever the workers may demand — or at least may need — for that survival.

The desperation of the workers is readily understandable. Since late 1997, inflation has almost continuously surged upwards, save for a period from February 2004 to January (but even during that period the annual rate of inflation was at three-digit levels).

Inflation peaked in January 2004 at 623,8%, and fell progressively to a relative low of 123,7% in March. However, in contrast to governmental expectations and projections, the rate then rapidly moved upwards once more, reaching 254,8% in July, and is still rising.

As bad as those circumstances are, those of the lower income bracket in society are very markedly worse off. This is so because the magnitude of inflation on essential goods and services has, in the main, been considerably greater than on those of somewhat lesser priority for inclusion in a spending basket.

Year-on-year inflation, as advised by the Central Statistical Office (CSO) in July in respect of rentals was 598,1%, and educational fees reached a horrendous 1 211%, whilst medical services sustained 543,2% inflation, and passenger transport services rose by 497,5%, and pharmaceuticals were subjected to a gargantuan inflation of 680,6%.

In contrast, costs of recreation and culture rose by the relatively “low” extent of 144,8%, household appliances 87,4%, and glassware, tableware and household utensils 77,1%. But low-income earners cannot afford to spend upon any of those items.

According to the Consumer Council of Zimbabwe, a monthly consumer basket for the low-income urban family of six amounted to $5,4 million in July, representing an increase of 27% over the June cost of $4,2 million.

Since then, increases have been agreed between the Ministry of Industry and International Trade and Commerce and Industry, for diverse price increases of basic commodities, including increases of $3 000 for a loaf of bread, from $4 500 to $7 500, $6 200 for a 2kg packet of white sugar, from $8 300 to $14 500, $14 100 for a 375ml bottle of cooking oil from $8 100 to $22 200 and $3 900 for 500 ml of milk, from $4 600 to $8 500.

On average, the increases agreed in respect of basic commodities are 174%.

The never-ending steep rise in the cost of living for the average worker has turned his life into misery. His children cry from the agony of hunger pangs caused by insufficiency of food and dietary imbalance, his wife is resentful of the family’s discomforts, and gives vent to her resentment upon her husband who is exhausted from walking anything up to three hours to work in the morning, and again to go home at the end of the day, in order to save the costs of transport.

The family has had to surrender all semi-luxuries and focus only upon trying to make ends meet. Were this not sufficiently untenable, workers were devastated when the Ministry of Education, Sport and Culture suddenly announced a 1 000-fold increase in school fees, retrospective to January and, at the end of August, were also confronted with a 100% increase in electricity charges.

Moreover, with the already scarce availability of accommodation having been very considerably worsened by the disastrous, inhumane Operation Murambatsvina, rental charges have risen to levels as high as $2 million per month for a single room in Chitungwiza, Highfields, Glen Norah and elsewhere.

With all the adversity confronting them, workers have developed myopia to the fact that the employer enterprises are also catastrophically affected by the abysmal economic circumstances prevailing.

Turnovers, in real terms, have fallen sharply in response to foreign currency shortages, reduced domestic market consumer spending, shrunken exports, surging overheads and massive rises in interest rates, among many other factors — including decreased productivity.

Instead, workers believe that most employers have unlimited resources. After all, management does not have to walk to work (not even in times of fuel shortages!), and instead arrives in executive motor vehicles. Management continues to live in up-market housing in elitist suburbs, and to patronise restaurants, and so forth.

The distinction in lifestyles is so marked that it is almost inevitable that the workers should believe that the employers are possessed of horns of cornucopia.

The facts that those houses and vehicles were acquired in better days, and that the restaurant patronage is invariably linked to entertaining customers in order to obtain orders, are disregarded. So too are the facts that most enterprises are under-capitalised, as the effects of inflation upon the extent of required funding for stock-in-trade, extension of credit, and so forth, have been gargantuan.

In consequence, almost all businesses are now reliant upon bank overdrafts and loan facilities, attracting interest charges of about 300% per annum.

In such circumstances, the employers are confronted with very conflicting emotions and business decisions. On the one hand, and despite any beliefs of labour to the contrary, most employers are very sympathetically disposed towards their employers, wishing to accord them the maximum possible wages to enable them to survive the very trying economic difficulties that constitute their lives today.

On the other hand, they must strive to ensure that their businesses survive for the benefit of all stakeholders, including owners and the workers.

Regrettably, all too often, within the lead-up to collective bargaining negotiations, and in the course of those negotiations, labour does not recognise the employer circumstances. Instead, the labour negotiators become embittered. More often than not, there is little or no willingness to compromise and militancy becomes pronounced among not only the worker representatives at the negotiations, but among all the affected workers.

One of the key contributants to the divide between management and labour is that workers contend that their minimum wage should be no less than the poverty datum line (PDL).

But the PDL pertains to a family unit, and not just the worker and, as a general rule , in economic environments such as Zimbabwe’s, most families have at least two income generators — albeit at inadequate levels. This inadequacy is especially so as, very often, the second income earner has to operate within the informal sector. Nevertheless, there would be more credibility to worker demands if the minimum wage sought would be, say, 60% of the PDL.

Another key contributant is the low level of productivity that characterises most operations within the Zimbabwean economy.

Many of the causes are beyond involvement of workers, being extraneous circumstances relating to availability of inputs, customer demand levels, and the like. But the stresses and the demoralisation of labour, compounded by the militancy flowing from wage disputes, lower worker motivation to maximise productivity and ensure highest possible quality levels, with a minimum of quality deficiencies and product rejects.

Labour needs to work as team players with management, for the higher the productivity and the operational efficiencies, the greater is the enterprise’s ability to pay higher wages (preferably on formulae linked to productivity). Enhanced productivity also maximises the prospects of enterprise survival.

In particular, when labour negotiates wages, it needs to be borne in mind, but very often is not, that an inadequate wage is better than no wage, and if demands are such that the businesses fail and cease to exist, then the workers lose employment, receive no wages, and often cannot even receive retrenchment packages due to the total insolvency of the employers’ businesses.

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