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Companies Make Retrenchment U-turn

STABILISATION of the economy has seen  companies rethink on retrenchment exercises they had embarked on while others have continued arguing that capacity utilisation is still very low.

Many companies started to retrench employees last year as there was very low capacity utilisation, at around 10%, and a general lack of investment.

Companies have been forced to rescind decisions to retrench as packages ordered by the Retrenchment Board were not affordable.

National Tyre Services (NTS) is one company which embarked on a retrenchment exercise last year and is still awaiting judgement from the Labour Court.

However, with the use of multiple currencies and stabilisation of the economy, the company has started reopening its closed branches thus recalling the workers who had been affected.

NTS chief executive, Cleopas Makoni said the company argued before the Labour Court that it could not afford the packages which had been set by the Retrenchment Board.

“The retrenchment exercise was embarked on as a survival strategy during the most difficult time of the company’s history.  There are signs of improvement in the company’s performance in line with the new economic order.

“Our re-lugging plant which had been closed in 2008 was re-opened on September 3. This meant the re-engagement of 12 members of staff who were on the retrenchment list,” Makoni said

“We will constantly look at our manning levels in light of the demand of our products and services in the market,” he said.

While the company has started reopening its branches, Makoni said they were still overmanned compared with the company’s current levels of operations.

Companies in the food processing industry are also faced with a number of challenges and have also started retrenching.

Their problems emanate from low capacity utilisation as well as the extremely low production levels from the agricultural sector which has seen the country importing processed foodstuffs. NTS’s shares have been trading between US1c and US2c in the past two weeks.


Leonard Makombe

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