Dismissals slow down company closures

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THE number of companies that were closed this year fell significantly compared to previous years owing to the July 17 Supreme Court ruling, which allowed employers to dismiss workers on three months’ notice without paying a retrenchment package, businessdigest has learnt.

Kudzai Kuwaza

Companies burdened with a debilitating liquidity crunch, low capacity utilisation of 34,3% and increasing power shortages have been forced to drastically reduce its workforce to cut costs. Presenting the 2015 budget last year, Finance minister Patrick Chinamasa said that 4 610 companies closed down between 2011 and 2014 resulting in the loss of 55 443 jobs.

Zimbabwe Congress of Trade Unions secretary general Japhet Moyo told businessdigest this week that the number of companies that closed shop this year was much lower than last year.

“The number of companies that have closed down is much lower because of the three months dismissals and also because there are very few companies left after many of them closed,” Moyo said. “To give you an example, according to the statistics we have, 47 companies in the catering sector closed down in 2014 but this year only four have closed down.”

He said the few remaining companies were struggling to keep their heads above water adding the reduced number of closed companies this year was not a reflection of an improving economy.

Employers Confederation of Zimbabwe executive director John Mufukare concurred that the July 17 Supreme Court ruling has given companies breathing space to continue operations.

“Companies were able to rationalise their workforce,” Mufukare said. “They are now able to sustain themselves for the time being.”

The Supreme Court ruling has resulted in the loss of more than 25 000 jobs across all sectors of the economy, according to trade unions. However, the figures have been strongly disputed by employers who argue that the number of workers dismissed is around 5 000.

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