At least 81 companies shut down in the first quarter of 2016, while many others downsized and retrenched resulting in hundreds of workers being thrown onto the streets as the current economic implosion continues to take its toll on the nation.
This comes at time the economy is facing several challenges, including a debilitating liquidity crunch, low capacity utilisation and lack of cheap funding, among many others
Just this week the International Monetary Fund warned in its latest report Zimbabwe’s economic crisis is deepening and urgent measures are need to stem decline.
In an interview this week, the Zimbabwe Congress of Trade Unions secretary-general Japhet Moyo said at least 81 companies from three sectors closed shop since January due to viability constraints. The closures, Moyo said, were from the hotel and catering sector, which was the hardest hit with 69 companies shutting down, mining sector (seven) and engineering sector (five), bringing the total to 81.
“The numbers we have received so far is that 69 companies in the hotel and catering sector closed down in the first quarter alone,” Moyo said.
“Clearly, while the food sector was picking up over the years it has been affected by low aggregate demand and this shows that people do not even have money to buy food.”
Moyo said closures in the mining and engineering sectors in the first quarter were less than last year because of the reduced number of companies operating in these sectors. Labour minister Prisca Mupfumira yesterday said she was not aware of the company closures referred to by the ZCTU findings. But Moyo said there has been a significant increase in company closures and retrenchments, which he said were “happening on a daily basis”.
This adds to thousands of workers who were laid off using last year’s July 17 Supreme Court ruling that allowed employers to retrench workers on three months’ notice without paying a retrenchment package.
Moyo said the Labour Act, which stipulates that workers must receive at least two weeks’ salary for every year served as part of their retrenchment package, further allowed the employer to dismiss workers with impunity.
“This retrenchment trend clearly indicates to us that the Labour Act has empowered the employer to do as they wish,” Moyo said. “Previously when a company wanted to retrench, they would agree on a package with the affected workers and the criteria on who is supposed to go but now the employer just calls a worker to the office and tells them to go home immediately. They now just tell them they will get their package from home. It is now very easy for employers to remove workers.
“What we have witnessed so far is that no employer is using the provision to avoid retrenchment as the first option. They just retrench people as if there is no provision to avoid retrenchment so we have to test that in the court of law.”