Price blitz gives birth to job cuts

Shakeman Mugari



SOMETIME in July four officers from the President’s Office arrived at OK Zimbabwe Machipisa branch in Highfield.


Th

ey were armed with a special government directive to reduce prices to pre-June 18 levels. They proceeded to cut prices of all commodities.


As a huge crowd of customers formed outside the supermarket, the officers became so overwhelmed that in certain cases they would just guess prices of some commodities. It was as if OK Zimbabwe was having a fire sale. It was chaotic.


An old lady came to the till with a packet of dried kapenta and asked how much she should pay. The till operator referred the old lady to the four officers who were now fully in charge of the proceedings.


One of the officers flipped through a document she had but failed to find the price for the product. On realising that the price had not been specified the officer responded: “I can’t find the price for that but how much do you have grandmother?” The old lady said she only had $33 000 on her.


The officer then looked at the puzzled operator (she has to be surprised because the actual price was $220 000) and directed that she sells the kapenta at $33 000.


“Just give her at that price,” said the officer playing “Father Christmas” at the expense of the listed firm.That decision cost OK Zimbabwe $187 000 in loss on a single product. More products were treated in the same manner by the officers.


That off the cuff decision seemed to have opened the floodgates. As the word spread among the customers that there were other goods whose prices had not been specified, more customers came with queries. Under pressure the officers started pulling prices randomly from their heads. That is how chaotic the operation was.


Christina Maruta who was a merchandiser at the shop watched in horror as people looted the shop.


“Within three hours the shop was almost empty,” Maruta recalls.


“The only products that remained on the shelves were left because people did not really need them.” After a government induced shopping spree the supermarket was left with a few packets of pet food in one corner and a few toiletries in another.


Maruta also bought a few things with the little money she had. It however didn’t cross her mind that she was indirectly aiding her own demise. In fact her demise did not come until the third week when she realised that the shop would not be able to restock.


“That is when I started worrying”, she now says.


With nothing to sell some workers had to be sent home and Maruta was one of the merchandisers who lost their jobs.


“The manager said we were no longer needed because the shop was empty.” About 15 workers were laid off at that branch. More workers were affected in other OK branches.


Maruta is now surviving on selling basic commodities on the black market. Using the connections that she had made during her stint as a merchandiser, Maruta is able to get commodities like sugar, cooking oil and flour at controlled prices to resell on the black market.


She is one of the thousands of workers who have lost their jobs because of government actions. Her plight measures the real effect of the government’s crackdown on the common man. While government’s propagandists desperately try to pitch the move as a victory against price hikes, thousands of workers are now battling to pick up the pieces of their lives shattered by the crackdown.


They are jobless because of government policies — victims of bad economic decisions.


“Selling products on the parallel market is not easy. I am always running away from the police,” Maruta said.


Three weeks ago, she was caught up in a police raid and spent two nights in the cells at a police station. Police confiscated her goods and fined her. She then watched helplessly as the officers shared the merchandise among themselves.


She went back home to find her maid gone leaving her three young children alone.


This week she was back again at her usual spot still trying to dodge the police and trying to win a customer at the same time. This is now her “new job”.


“The government calls us criminals (black market traders) but they forget that some of us would not be doing this if they had not implemented the price freeze. We are here because of their actions.”


As government continues to keep the lid on prices, supposedly to protect consumers,more companies have resorted to cutting jobs to reduce overheads.


TM Supermarket recently laid off about 300 workers to reduce crippling costs.


“Manufacturers are no longer making any goods because of low prices imposed by government,” said David Mills who is TM group retail director. “There is nothing from the supply side”


The few workers that remain at most retail shops have had to do with no salary increases because the companies are already bleeding.


Their future too looks bleak unless something is done urgently. With profit margins as low as 20% and limited stock, it seems the end in near for most retail companies.


The major victims of the job cuts have been contract workers who are mostly employed in the bakery and butchery departments of supermarkets. Supermarkets have also reduced the number of sales representatives, till operators and those in the delicatessen areas.


“It’s only a matter of time before the chop reaches managerial workers,” said a senior manager at Gustai Supermarkets.


There will certainly be a further effect on related sectors. Security guards and till slip checkers will certainly have to go. For those managers that were convicted for allegedly refusing to reduce prices, these might be their last jobs because they now carry a criminal record.


About 3000 managers were arrested during the blitz. A few are still facing trial but the bulk have been convicted. The problem is that some companies are strict about criminal records. Norbert Kazunza (not his real name) is one of the managers who were arrested convicted for refusing to reduce prices.


“It has just dawned on me that I am now officially classified as a criminal. What job will I get with that kind of record?” said Kazunza who was arrested together with five other managers in August.


“How will I explain ten years from now that this was a conviction done under a politically motivated crackdown on businesses? How will I explain that at that time the law was extremely vague and was being applied selectively?”


The blitz has also affected government’s revenues in Valued Added Tax and corporate tax. It is highly unlikely that most companies will not be able to pay their corporate taxes. `