Flexible labour laws can assist Zim’s growth

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Labour market flexibility will allow firms to become more competitive

Taurayi Tawengwa
“I must study politics and war that my sons may have liberty to study mathematics and philosophy,” wrote America’s second president, John Adams, who was arguably of the view that the blood and toil of older generations should result in the freedom and actualisation of the younger.

However, Zimbabwe has seen better days. While the older generation fought a protracted war against colonialism that resulted in the country’s independence, the younger (born free) generation has not significantly experienced economic actualisation and, as it stands, for various reasons, the Zimbabwean economy is struggling and about 80% of the country’s adult population is not formally employed.

While various analysts and commentators have pointed to the perceived reasons for the country’s economic quandary and the possible solutions thereof, of interest at this juncture is the proposition to make the country’s labour laws more flexible in order to accentuate economic growth.

Finance Minister Patrick Chinamasa stated that Government would review the country’s labour laws in an attempt to create a flexible labour market, which should see an increase in productivity.

Put plainly, labour market flexibility makes it easier for companies to hire and fire employees and to alter work hours and wage rates.

A labour market with low flexibility is characterised by rules and regulations such as minimum wage restrictions and requirements from trade unions as is the case in South Africa.

Now, it has emerged that Cabinet recently agreed to amend the Labour Act in an attempt to loosen constraints in terms of retrenchments, terminal benefits, working hours and the arbitral awards system.

This has apparently incensed the Zimbabwe Congress of Trade Unions (ZCTU) which is threatening to “go back to the streets” if this position is not reconsidered.

However, given the prevailing economic environment, one wonders whether militancy will in any way assist the workers.

After all, whether or not the Government relaxes labour laws, retrenchments are ongoing.
In this light, it is important for the ZCTU to consider the following factors:

Firstly, labour market flexibility will allow firms to become more competitive. It should be acknowledged that Zimbabwe does not exist in a vacuum, but is part of a globalised world.

As it stands, the country has become a market for international products particularly from China, India and South Africa, and this has contributed to company closures because local products are too expensive and consequently uncompetitive.

In fact, research reveals that China has experienced massive manufacturing growth over the years because of (among other factors) labour market flexibility.

The fact is that frigid labour laws do not allow for large-scale employment in sectors that are labour intensive.
Interestingly, a Chinese labour bulletin commenting on the Indian economy recently reported that “manufacturing is necessary to give the large groups of people well-paying jobs in the formal sector, as opposed to the informal sector, in which most Indians work today,” and that “Indian trade unions need to learn from China on labour law flexibility.”

Zimbabwean Trade unions can learn something as well.

Secondly, the ZCTU needs to understand that its threat to “go back to the streets” is laughable, given that, at best, it represents 20 percent of the economically active population. Unions are potent in highly productive economies like South Africa.  Currently in Zimbabwe, those who are working are outnumbered four-to-one by those who are not formally employed, meaning that threatening militancy will only put the jobs of those who are formally employed in jeopardy.

Finally, while calls for a minimum wage to be aligned to the Poverty Datum Line (PDL) of US$540 per month are noble, they are also impractical.

You cannot force employers to pay amounts that they cannot afford — this will only lead to more retrenchments.
A 2013 Reuters report on the global minimum wage pegged China’s minimum wage at an average of US$264 per month while Brazil had an average of US$287 per month.

The fact is that we cannot afford to pay our labour almost double the amount that our competitors pay theirs.
Ultimately, while labour market flexibility is favourable, it should be accompanied by efficient service delivery and good economic governance.

If the workers agree to sideline their immediate demands in favour of increased productivity, global competitiveness and possible economic growth, then it becomes the state’s responsibility to ensure that the workers do not fall victim to predatory capitalism.

After all, the worker’s children will still need to go to school, and they will still need access to affordable housing and hospitals.

Tau Tawengwa is a researcher. He holds a Master’s degree in Industrial Sociology and Labour Studies. Feedback [email protected]

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  • Pamela Pamhai

    We have no formal labour to talk about since 90% of the adult population is on the “streets” already. It becomes an employers’ world because almost everyone is desperate for a decent job. Since jobs are scarce, it is easy to exploit the workforce hence there is no need to “relax” the current labour laws. The way the Chinese are ill-treating locals is a good case in point.

  • Pamela Pamhai

    What?