HomeLocal NewsZimbabwe workers’ woes set to worsen

Zimbabwe workers’ woes set to worsen

THE spate of job losses in 2014 through retrenchments and company closures could worsen in this year if early indications of the number of companies that have already implemented survival strategies that include paying half monthly salaries and forced unpaid leave for employees this year are anything to go by.

Kudzai Kuwaza

At least 7 000 employees were retrenched last year, with more than 50 companies retrenching their workers as the haemorrhaging of the country’s economy takes a heavy toll amid strong indications the situation will deteriorate before it improves.

Zimbabwe Congress of Trade Unions secretary general, Japhet Moyo, said last year that 52 companies had retrenched workers in 2014. These, he said, include Grain Marketing Board, Zimbabwe Fertiliser Company, Nissan Zimbabwe, PG Industries, First Mutual, Tristar Insurance, Cargill, Beta Bricks, Tetrad Investment Bank, Stewart Bank, CFI Holdings and Metbank.

Other companies and organisations, which have laid off workers, are Meikles Hotel, Rainbow Tourism Group, TelOne, Australian Embassy, Mike Appel, Rufaro Marketing, Pearl Properties, Celsys Ltd, Minerva Risk Advisory, Spar Letombo, Innscor Bread Company, Jacob Bethel and Montana Meats, he said.

But yet more job losses could result from companies undergoing judicial management and liquidation to join the teeming rank of the unemployed, with the unemployment rate estimated at well over 80%.

According to several Government gazettes published between January 30 and February 13 this year, companies undergoing liquidation include Upton Fulton McCann, Fox and Carney, Precision Grinding Engineers, UTC and Pinsoft Management Consultants. Companies under judicial management include Cottzim, Atrax Holdings, Wintex Trading, Village Inn and Perfect Bakery.

This year has already seen nearly 250 workers losing their jobs at Allied Bank after it was closed by the Reserve Bank of Zimbabwe. The spate of joblessness could increase significantly as Border Timbers and Tetrad Investment Bank went under judicial management this year.

On Tuesday Afrasia Bank became the latest local bank to close after struggling to meet its obligations to depositors and regulatory capital and liquidity requirements, throwing its employees onto the streets.

The Reserve Bank of Zimbabwe (RBZ) said it had determined the financial institution was no longer in a sound financial state.

“Members of the public are advised that on 24 February 2015 the Registrar of Banking Institutions cancelled Afrasia Bank Zimbabwe Ltd’s licence in terms of Section 14 (4) of the Banking Act (Chapter 24:20),” the RBZ said in a statement.

Last week this paper reported AfrAsia Bank Zimbabwe Ltd was mulling sending its workers on a two-week unpaid leave every month as it grappled viability problems. Sources at the bank said at a recent works council meeting management and worker representatives, management proposed short working weeks as a means to keep the business afloat, but the proposal met stiff resistance from workers.

Moyo believes the fortunes of the labour market this year are largely dependent on government putting in place policies that promote substantial internal and external investment which continues to elude the country. Investors continue to express reservations over governance issues, while the indigenisation law seen as lacking clarity and consistency has compounded investor fears over the safety of their investment.

“In our view the job losses the country has suffered through the decline of the manufacturing sector have been due to the policies of government,” Moyo said. “The performance of the labour market will be largely informed by whether government will introduce policies that promote both internal and external investment.”

He said if the ruling Zanu PF government continued to be preoccupied with fights that have resulted in the sacking of 17 ministers and Vice-President Joice Mujuru instead of introducing policies to boost investment then there would be more job losses this year than last year.

Zimbabwe’s industry is currently operating at a capacity utilisation of about 37% as the liquidity crunch continues to bite with companies failing to access cheap funds to retool in order to become more competitive.

Moyo’s assessment is already proving prescient. In addition to the closure of Afrasia bank, earlier this month the Zimbabwe United Passenger Company sent nearly 100 of its employees on six months’ unpaid leave, a move described by the company as “Special Measures to Avoid Retrenchment” citing that retrenchment is a costly exercise that will have a negative impact on both management and employees.

Consequently, most Zimbabweans have already dismissed the Zanu PF government’s target of creating 2,2 million jobs by 2018 as fictitious given that the government is also planning to retrench its workforce which is gobbling 92% of its shrinking revenue, leaving little for crucial capital projects.

Late last year, Chinamasa talked of cutting the public service wage bill, announcing government would retrench civil servants as it battled to pay salaries on time.

He pleaded for assistance in implementing the retrenchment exercise, saying then he was not sure how the exercise would be carried out.

Chinamasa, whose coffers have been severely depleted by a shrinking tax base, is under pressure from the International Monetary Fund (IMF) to cut the wage bill as one of the stipulated benchmarks in the Staff Monitoring Programme government has entered into with the Bretton Woods Institution.

The SMP is an informal arrangement between a country’s government and the IMF to monitor the implementation of the government’s economic programmes.

The economy’s desperate state of affairs has given rise to a call by Reserve Bank Governor John Mangudya to implement a salary freeze coupled with the reduction in prices of goods and services.

“Given the lack of competiveness and its negative effects on the economy, we do not see any room for wage and salary increases within the national economy,” Mangudya said in his monetary policy statement. “Instead, the prevailing circumstances call for a downward adjustment in the prices of goods and services in order to promote competitiveness and ultimately for the recovery of the economy. Further wage and salary increases would only serve to choke the economy.”

Zimbabwe Revenue Authority commissioner general Gershem Pasi went even further this week calling for a reduction of salaries to stem the economy’s decline.

The proposals by Mangudya and Pasi demonstrate that it is no longer business as usual, according to the Employers’ Confederation of Zimbabwe executive director John Mufukare.

“I am positive that the coin has dropped at least for some parts of government that now realise it is no longer business as usual,” Mufukare said, adding that the current situation points to the urgent need of a social contract to stem the alarming loss of jobs.

In the meantime the informal sector continues to grow as the struggle to survive becomes even more dire for most Zimbabweans. According to a recently released 2014 FinScope Consumer Survey Zimbabwe 2014, 60% of Zimbabwe’s seven million adult population, aged 18 years and above, earn below US$3,50 a day — less than a fifth of the country poverty datum line which stood at US$511 early 2014 for a family of five. Chances are the next such survey would be even more depressing.

Recent Posts

Stories you will enjoy

Recommended reading