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‘Job cuts aid struggling companies’

A Supreme Court ruling that gives employers the greenlight to terminate workers’ contracts on notice has come as a boon for companies which have taken the opportunity to shed excess labour.


Over 18 000 workers have been sent packing from 48 firms countrywide in the period of two weeks since the ruling. The numbers could however be higher as some workers have not reported their termination to labour unions.

The carnage also continues to be felt in several state owned enterprises, an indication that government may have blessed the job terminations.

The common hymn being sung by companies is that job cuts will free them of excess labour, some of which was unproductive, and would lay the foundation for the revival of productivity in the harsh economic environment.
Confederation of Zimbabwe Industries (CZI) president Busisa Moyo said the termination of contracts would give companies room for expansion.

Moyo said a company like the National Railways of Zimbabwe (NRZ) owed employees huge amounts of money through salary backlogs and needed to restructure.

“There is no way that NRZ could come out of this without restructuring. The termination is a national programme. Already some companies have decided to expand and they are going to turn around,” he said.
Moyo said labour was one of business’ major costs, adding that utility costs also needed to be looked at to restore company viability.

But a local economist said companies will not be able to expand even after laying off workers because the real problem is the country’s politics.

“Pushing volumes in this economy is difficult, hence companies are in survival mode and are putting in place tactics to break even. I don’t think after the job terminations there will be any improvements,” the economist said.

He said while companies were complaining about the cost of labour, the bulk of their income was being chewed by a few executives.

“The Salarygate scandal is a good example of how executives’ salaries are bleeding companies. Another problem weighing down companies is wrong business models and the job cuts have been used to mask the incompetence of some executives,” he said.

Zimbabwe Congress of Trade Unions president George Nkiwane said the country was focusing on wrong things and termination of jobs would not change the performance of companies.

“Terminations will not help in re-capacitating the companies. As a country we must focus on issues that matter. One is the liquidity crunch. No one can borrow internally or offshore and the interest rates are very high and therefore not viable for the repayments of debt,” he said.

Nkiwane said during the Kadoma Declaration talks, country risk was pointed as the major problem due to government policy inconsistencies.

“There is no one who wants to invest in a country that has policy inconsistencies and where policy pronouncements are made at rallies. To me, it does not make sense that one says he is fixing the economy through retrenchments. When an economy is performing you will see by the indicator,” he said.

At a meeting in August 2001, the Tripartite Negotiating Forum (TNF) noted that it was desirable to address the totality of the macro-economic problems including the country risk factor. The TNF tasked the social partners to draft position papers on country risk factors and the points raised in these papers were distilled in the development of the Kadoma Declaration.

Labour economist Godfrey Kanyenze said the problem was to do with the environment and focus on anything else would be wrong.

“Parastatals are not paying salaries and if it was just a case of wages then they should have been performing. They don’t want to address structural issues,” he said.

According to the CZI 2014 Manufacturing Survey, minimum wages, restrictive labour regulations, corruption, power cuts, access to finance and utilities charges were listed as factors adversely affecting business in Zimbabwe.
The use of the multicurrency regime in 2009 brought hope for companies as they could now access hard currency which had been elusive in the Zimbabwe dollar era. A number of companies went on an expansion blitz without building a solid foundation.

Many were stuck with obsolete machinery which needed to be replaced but banks were giving short-term loans at high costs.

The retooling that was necessary to bring down the cost of production was not undertaken. The stuttering of the economy caught companies unaware.

Economist John Robertson said job cuts would help companies and in the long term create jobs for the general populace. He said companies were failing to rationalise their operations because the labour laws were not flexible.

“After streamlining operations some companies will make profit and increase productivity and employment. The move might not increase employment immediately but if the labour market is flexible, more jobs will be created,” Robertson said.

In his mid-term monetary policy review, central bank governor John Mangudya said there was need to reduce the major cost drivers to stimulate export competitiveness.

“In this regard, it is important to reduce major cost centres, as well as improve the availability and access to key utilities. It is envisaged that streamlining of charges by the relevant regulatory authorities will significantly impact on the costs of production, leading to a downward review of all prices in the economy, and hence improvement in competitiveness,” Mangudya said.

Companies that have sent away workers include Econet Wireless, Sino Zimbabwe, Moonlight Funeral, Air Zimbabwe, Choppies Zimbabwe, Sakunda Holdings, Zuva Petroleum, Zimasco, Zimsteel Zimbabwe, Pioneer Freight, Crest Poultry Group, Steward Bank, General Engineering Private Limited, Nyadire Teachers’ College, Goal Zimbabwe, TN Harlequin and Regency group of hotels.

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