Labour flexibility could worsen poverty levels

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Some depositors now spend nights outside banks as the cash crisis deepens.

CALLS for labour market flexibility in Zimbabwe could worsen the levels of poverty in a country already hard hit by a deepening economic crisis, a report has warned.

Kudzai Kuwaza

According to a report titled Labour Distortion in Zimbabwe, workers will bear the brunt of labour market flexibility.

The report was authored by the Labour and Economic Development Research Institute of Zimbabwe in partnership with the Zimbabwe Economic Policy Analysis and Research unit.
“In a country with already high poverty, income inequalities and no social welfare nets, calls for labour market flexibility may result in the worsening of poverty (especially among the workers) and income inequalities,” the report says.

This comes at a time employers have called for labour market flexibility in light of the numerous challenges that face the economy characterised by a severe liquidity crunch, cash shortages, low investment levels and job losses.
The report also notes the fragmentation of the legal framework within the public sector as inimical to wage negotiations.

“The main challenge is the fragmentation of the legal framework within the public sector. This challenge can be addressed by harmonising these Acts with the main Labour Act to ensure that all workers in Zimbabwe are governed by one Act,” the report states. “This Act should allow the establishment of two negotiating structures, that is, one negotiating structure in the public sector and one in the private sector.”

The report says the significant reduction of Zimbabwe Congress of Trade Unions membership due to de-industrialisation and informalisation. It has dwindled from 250 131 members in 2007 to just 89 818 last year, a massive drop.

Among the recommendations made by the report are that the government should resuscitate the National Productivity Institute (NPI) to come up with national and sectoral scientific benchmarks to guide productivity bargaining.
The NPI is a tripartite organisation with representation from the government, employers’ and employees’ organisations established to promote a productivity culture and consciousness in Zimbabwe.

“The NPI should develop, disseminate knowledge and experiences in productivity, for promoting consciousness and improvement in productivity, with the objective of strengthening the performance and competitiveness of the economy as well as of improving the working conditions and quality of life,” the report recommends.

It also pointed out the need to strengthen the Tripartite Negotiating Forum (TNF).
The TNF is a social dialogue platform that brings together government, business and labour to negotiate key socio-economic matters.
“It is imperative for the country to prioritise and expedite the strengthening of the Tripartite Negotiating Forum (TNF). The TNF would need to be legally instituted as well as supported by an independent secretariat,” the report notes. “The capacity would also need to be strengthened with extension of issues beyond labour market issues but also broad development issues.”

“Participation in the TNF should be broadened to include all the key stakeholders and coverage should extend beyond labour market issues.”

The report also says that taxes have a major distortive impact on labour.

“Personal and corporate income taxes, as well as social security contributions, are the most distortive taxes as they have sizable adverse effects on labour use, productivity and capital accumulation,” the report observes. “Shifting the tax mix away from such taxes and towards recurrent taxes on immovable property (the least distortive to the labour market) and consumption taxes should thus raise living standards and help to lower the labour costs.”

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