Eric Bloch: Suicidal Demands of Labour

INCREASINGLY, collective bargaining agreement negotiations of wages in different industrial, commercial and other economic sectors are breaking down, with a total deadlock between employer and labour representatives.

The divide between the minimum wages demanded by labour, and those offered by employers is continuously widening, invariably to unbridgeable extents.

More and more  frequently the deadlock cannot be resolved by negotiation and, therefore, proceeds  to arbitration, either voluntarily  to an arbitrator whose appointment  is agreed by employer  and labour  representatives, or where voluntary arbitration cannot be agreed upon, then  compulsory  arbitration  by an arbitrator  appointed by the Ministry  of Labour.

Although,  of course, there  are many exceptions, all too often the arbitrators strive to please all parties, by  pursuing the King Solomon  approach of “cut  the baby in half”, by determining  an award fairly closely  approximating the mid-point  between the labour demands  and the employer offers.

This occurs with total oblivion to both labour and employers thereafter being dissatisfied with the determination, labour contending the arbitral awards to be inhumanely below minimal survival needs, whilst employers are confronted with businesses downsizing or closure due to the unsustainability of the wage awards in relation to the business cash inflows.

As a result, very often one or other of the parties proceeds to the High Court to challenge the arbitral award, or many employers apply to their National Employment Council (NEC) for exemption from such award.

The stance of labour in its wage demands appears, at first glance, to be very reasonable. According to the Consumer Council of Zimbabwe (CCZ), the Poverty Datum Line (PDL) for a family of six was, in April, US$427,11,  the PDL being the minimum amount required to  meet the costs of the basic essentials necessary for life without endangering health.

It can be readily understood that labour aspirations are to earn at least such an amount, if not more.
However, in repeatedly founding its stance in wage negotiations, labour invariably overlooks two key factors.

First of all, usually in a family of six there are at least two income earners, albeit not to an equal extent.

Therefore, at best, labour should seek a minimum wage of two-thirds of PDL (in April that would have been approximately US$280 per month).

However, this is always disregarded by labour’s negotiators who almost without exception focus upon PDL as the minimum acceptable wage.

The second and very greatly more significant factor which is consistently ignored by labour negotiators, whether the employer has the capacity to pay the wages demanded.

If the demands exceed the ability to pay, the inevitable consequence is either the total collapse of the employer’s business or, occasionally, a very marked reduction in the size of the business operations. In either event, one of the results is a mass termination of employment for many.

Whilst  earning wages below the PDL means  considerable  hardship and suffering  for the  employees, their families and other dependents, loss of employment and consequential  cessation of all wage income results  in grossly  greater hardships  and suffering.

This is particularly  so as, in the prevailing  Zimbabwean  circumstance, prospects  of obtaining  alternative  employment  are minimal  and, if there is miraculously some opportunity of such alternative  employment,  it too would undoubtedly  be with wages below  the PDL.

Concurrently the demands for wages are almost always at levels which preclude attaining the economic upturn and recovery so desperately needed for the wellbeing of all Zimbabweans.

The magnitude of most wage demands is gargantuanally greater than wages paid for like services in neighbouring territories in general, and in South Africa in particular.

As a result, not only would payment of the demanded wages destroy Zimbabwean export market competitiveness, but in addition Zimbabwean products would become increasingly price uncompetitive in the domestic market.

Already, Zimbabwean manufacturers  are faced with  very great difficulties  in competing  with those elsewhere in the region, and further afield,  by virtue of far  lower production  volumes,  according the non-Zimbabwean  manufacturing  competitors  the immense  advantages and benefits of economies  of scale.

The obstacles to Zimbabwean price competitiveness is exacerbated  by the very markedly  higher  charges in Zimbabwe for utilities  such as electricity, water, telecommunications, and the like, and for local authority owner’s rates and like charges.

Employers must have sympathy and understanding for the overwhelming stresses and tribulations that are the lot of almost all employees and, to that end, must be willing to pay substantive remuneration as their businesses can reasonably sustain.

However, concurrently, it is very long overdue for trade unions, workers’ committees, and other labour representative bodies, to recognise that the employers do not have unlimited resources.

They need to recognise  that the Zimbabwean economy has been so greatly decimated over a period of more than 11 years that almost all who still have employment are extraordinarily fortunate, notwithstanding the distressing  gap between cost of living and their incomes, for by now approximately 90%  of the employable Zimbabwean  population is  without formal  sector employment. Surely it is not the wish of the remaining 10% to join that unemployment majority!

It would be greatly in the interests of employers and employees alike that remuneration  for workers should comprise a combination of an agreed basic  wage (at levels which are realistically within the means of the employees whilst addressing,  insofar as reasonably  possible,  the critical  needs of the workers ),  and of incremental  remuneration based upon productivity  (provided that such productivity  is attained without  prejudice  to quality). 

The greater the worker productivity, within prescribed standards, the greater is the business viability. The enhanced viability facilitates enhanced worker remuneration, and maximizes the security of continuance of employment.

In contrast, dogmatic rigidity in worker demands, with myopic disregard for employer circumstance and prevailing economic conditions, is naught but actions of suicide, for such demands not only trigger business collapses and recurrent and intensifying economic decline, but also intensified unemployment.

Not only do workers need to be conscious of this fundamental factor in wage negotiations, but so too should arbitrators, the Labour Court and the High Court, when wage deadlocks are referred to them, and also so should the National Employment Councils, when wage level exemption applications are put to them.

Trying to be the “good guy” to all, under currently prevailing conditions, actually does a disservice to all. And this is very particularly so  when arbitrators or the Courts give wage awards with retrospectively effective wage increases, for the employers cannot retrospectively  adjust selling prices in order to fund the retrospective wage increments.

This too is of suicidal consequence, for labour, for employers, and for the economy as a whole.

BY ERIC BLOCH

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