Labour relations continue to deteriorate

Among the very many negotiations that are ongoing in the Zimbabwean economy, there is a continuing deterioration in relations and collaboration between employers and their employees.

Column by Eric Bloch

That decline continues to threaten the survival of many enterprises, over and above the great number which have already ceased to exist and the numerous others that have had to resort to substantial downsizing.

Although the ills afflicting most manufacturing industries and many other businesses are not solely due to the confrontational interactions between management and labour, the confrontations and tensions that exist between them are major contributors to enterprise survival, and hence to the economy as a whole.

Almost without exception, Zimbabwe’s labour force believes itself to be exploited by employers, the workers being convinced that they are grievously under-remunerated for the services they provide.

To a major extent, that conviction is devoid of foundation, save that their earnings do not suffice to meet their absolutely essential expenditures.

The inadequacy of their incomes is largely attributable to the hyperinflation that prevailed until late 2008. That was the highest inflation ever experienced anywhere in the world, at many septillion percent.

Since 2009 inflation has markedly declined to levels among the world’s lowest but not to the extent of deflation, and hence the 2008 high cost of living has continued to prevail. An average family of six needs approximately US$580 per month, being the income necessary to fund minimum essentials, or Poverty Datum Line (PDL).

Moreover, as a consequence of widespread unemployment, extensive numbers of HIV-Aids widows and orphans, and the inability of many to fund essential healthcare, most Zimbabweans who are income earners now wholly, or partially support more than their immediate families, some having as many as 14 dependants.

As a result of the intense financial stresses that confront labour, almost all workers are unable to recognise that, with very rare exceptions, employers do not have the resources which would enable them to pay that which the workers perceive as their rightful dues.

The employers’ enterprises were as hard hit by the hyperinflation as were the employees, with their operational capital resources having been eroded.

Employers suffered marked decreases in their sales and consequent revenue flows due to the massively diminished spending power of consumers.

The businesses also suffered immense losses due to non-receipt of payments from other businesses, many of which were closed down and liquidated. While in a viable economy it is generally possible for undercapitalised businesses to access new investment or loan funding from within the money market, that has only been marginally possible in recent years.

For not only have diverse political and economic circumstances deterred most from seeking investment, but in addition, the money market has been exceptionally illiquid. Such little funding as was available could only be accessed at high cost.

Also, many businesses that had been substantially dependent on exports of their goods and services were no longer competitive and therefore lost further the opportunity to generate revenue.

The consequences of Zimbabwe’s hyperinflation resulted in a surge in production costs and operational overheads. On the other hand, competitor exporting countries had lower inflation and in most instances their costs of labour and utilities were considerably less than those to which Zimbabwean enterprises were exposed.

In addition, many countries (especially those situate in the Far East) accorded their exporters massive incentives and subsidies in order to assure their competitiveness.

Had Zimbabwean businesses sought to pay their employees what they were demanding, the export of Zimbabwean goods would have declined even more, further diminishing opportunities of survival and intensifying and accelerating business closures, and attendant unemployment.

Another factor which has greatly contributed to ongoing labour dissatisfaction has been that many of the trade unions have irrationally disregarded factual realities, and done all they could to motivate their members to intensify their wage demands. The unions have threatened action against employers who did not succumb to those demands.

In fact, the unions have been motivated to do so in order to enhance their standing in the eyes of their members, thereby retaining member support and their continued existence. Increased member earnings would enable the unions to exact higher membership contributions, thereby swelling the unions’ coffers.

What the unions and most workers fail to recognise is that while many employers are highly sympathetic to the financial pressures, stresses and near poverty of their employees, they are just unable to yield to the employee demands.

They cannot pay what they do not have. In addition, as beleaguered as the workers are by their trying financial circumstances, they fail to recognise that earning too little is better than earning nothing at all, and if their demands are such as inevitably collapse the employer’s business, then all workers become unemployed, with very little prospect of alternative employment (other than by recourse to illegal unlawful practices).

The workers also need to recognise that their very understandable demoralisation results in massive demotivation, with the result that their work productivity decreases, and also the quality of their work.

This further worsens employers’ circumstances, which in turn results in further unavoidable barriers to wage increases, and often, to the total collapse of the employers’ enterprises, causing more unemployment.

Employers are often also at fault, failing to communicate sufficiently to their employees the factual circumstances of the economy in general, and of their businesses in particular.

Some of them fail to be compassionate to the trying circumstances of those that they employ, and to interact with them to find ways of restoring operational viability. Most employers also fail to incentivise employees with performance-related rewards.

Workers and employers desperately need to develop mutual understanding and collaboration to aid the economy regain viability and strength, and a better livelihood for all.

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