The Sunday Mail
The wave of retrenchments that have hit the country since July 17 following a Supreme Court ruling that the law provided employers a right to dismiss employees on three months’ notice has raised a spectre of economic and social pressures.
Zimbabwean workers are calling for reforms to labour laws
Analysts say the ruling had activated liquidity challenges and an upsurge in the number of people seeking divine intervention to their challenges.
Labour unions estimate close to 20 000 employees have been plunged onto the streets since the Supreme Court verdict.
Economists say the challenge for the country was now anchored on softening demand for consumer goods, which is currently having a cruel impact on companies’ sales volumes and profitability.
Giant beverages manufacturer, Delta Corporation, recently announced a 10 percent revenue decline in the quarter ended June 30, 2015 compared to the same period last year driven by a drop in volumes.
Delta chief executive officer Mr Pearson Gowero said: “We are seeing a lot of evidence of stress to our consumers and we note that fewer and fewer of our consumers have regular incomes now.”
On the other hand, Dairibord Holdings chairman Dr Leonard Tsumba indicated last week that the jobs bloodbath will negatively impact on the company’s volumes in the second half of the year.
“Company closures and retrenchments will negatively impact disposable incomes and aggregate demand,” said Dr Tsumba in a statement accompanying the group’s results for the half year ended June 30 2015.
Economist Dr Gift Mugano told The Sunday Mail last week that the wholesale sackings of employee had worsened the liquidity situation and national indebtedness “because one way or the other these people are debtors, maybe owing banks and retail shops”.
“As more people go onto the streets, we are again worsening the national capacity to consume, which will continue to put the country into depression. Zimbabwe’s number one enemy now is constrained demand.
“Companies are struggling to get buyers. Further sacking of people exacerbates this situation,” said Dr Mugano.
He also suggested that while companies might get short-term satisfaction from a reduced wage bill, the long-term impact could come in the form of low production as the remaining workers will lose “the usual loyalty which may lead to sabotage”.
From a going concern perspective, a company firing employees also tends to discourage potential investors, which are badly wanted at this point to inject liquidity.
Zimbabwe National Chamber of Commerce (ZNCC) chief executive officer and economist Mr Takunda Mugaga said the ongoing job losses were a major cause for concern to Government, business and labour.
He said from the Government perspective, retrenchments and job losses mean a decline in the revenue base through an erosion of pay as you earn (PAYE) as a tax head.
“Secondly, it is Government’s macroeconomic objective to create jobs and once there are job losses, it can only compromise on sustainable development since there won’t be savings and skills development within the country.
“To the businesses, it continues to pose threat (to productivity) driven by labour inefficiency as the degree of labour uncertainty would be rising leading to a poor investment environment.
“In addition, it can also raise the cost of doing business given that a number of investors have already registered their concerns with the rigidity of labour laws within the country; they actually think the unfriendly labour laws in the country are a major threat than even the lndigenisation policy,” said Mr Mugaga.
Zimbabwe’s labour laws, which are now being amended, have been criticised for favouring employees.
Terminating an employee’s contract was a long and winding process, resulting in some investors opting to commit their resources in other countries.
At the same time, retrenchment packages that were due to employees gobbled companies’ capital resulting in some firms shutting down.
But economists said retrenchments have had the positive effect of forcing Government to act expeditiously on the labour laws.
The Labour Act amendments will see a quick turnaround in resolving labour matters
Companies can also review their salaries downwards in tandem with productivity.
Meanwhile, social commentators also believe that the job carnage has dire consequences on society.
University of Zimbabwe sociology lecturer Professor Claude Mararike said when employees lose their job, they lose their means of survival as they fail to acquire the “various things” they need in life.
“There is a social problem in that people will not be able to continue with the lifestyle they enjoyed while employed hence they may end up doing activities that are not socially acceptable.
“The immediate social impact is that all those people who lose their jobs are likely to find other ways of living. In other words, we are likely to see an increase in deviant ways of living as people try to earn a living.
“So they will engage in anti-social activities and their nature (the activities) will depend on who you are.
“Young people are more likely going to resort to crime and prostitution.
“The worst case will be when people get into violence of various forms just to vent their frustration, especially if there are no prospects of getting another job soon,” said Professor Mararike.
“In terms of marriage, when there is nothing to eat in the house some females of loose morals may want to earn money by engaging in prostitution while some males may actually leave the family.
“You will also notice an increase in the number of people seeking divine intervention from those churches that promise miracles,” he said.
A clinical psychologist and former University of Zimbabwe lecturer, Mr Arnold Mutemeri also suggested that losing one’s job and livelihood can be a source of depression.
