The Sunday Mail
The arguments of Labour against labour market flexibility proposals by Minister Chinamasa are quite interesting.
For starters, labour says that touching the ‘‘sacrosanct’’ Labour Act would be a return to the draconian Master and Servant Act of 1901 which allowed employers to hire, fire and retrench at will. Labour also argues that the move will violate Section 65 of the constitution which says that “every person has the right to fair and safe labour practices and standards and to be paid fair and reasonable wage.”
Labour’s arguments almost caricature business as the ruthless mafias we see in the movies. However, since the proposals are coming from a government voted for by the very persons mentioned in Section 65 one begins to smell a rat in Labour’s argument.
For you to see why labour market flexibility is necessary, let us consider the following scenario. Let’s say an employee earns a salary of $300 per month and he uses it to buy goods worth $300 as well.
Suppose prices of goods have gone up to the extent that the employee now needs $500 to buy the same amount of goods he used to buy for $300. What does he do, faced with such scenario? You will all unanimously agree that he will have to cut down on some of the goods and leave those that he can afford with his salary of $300.
The situation above is exactly what is faced by business right now. It will be selfish for labour to pretend as if it doesn’t understand. If a company is operating at 100 percent capacity utilisation and employing 1 000 employees, should it maintain the same number of employees when capacity utilisation falls down to 10 percent? Can a company survive without the flexibility to customise its resources in accordance with fluctuating business cycles?
If the company above is to remain with 1 000 employees at 10 percent capacity utilisation, eventually it will go bust due to the high production costs which will be dominated by labour costs, and all the employees will be jobless. Labour is certainly not the winner at the end of the day.
We need labour laws that give business the ability to optimise operations. Jobs can only grow if business is allowed to grow their firms. Section 13 of our people-driven constitution actually says that the state “must take measures to foster the development of industrial and commercial enterprises,” while Section 14 directs the state to “ensure that adequate measures are undertaken to create employment for all Zimbabweans.” It will not be wrong to imply that the two clauses above are saying that jobs don’t come from closure of companies but rather from development of industries.
Jobs are not created when there is no flexibility. Making it difficult to rationalise human resources is making it difficult to hire. The government itself is a very good example of the impact of labour law rigidity on jobs creation.
Government’s labour expenses account for more than 70 percent of its total income. Because of that it has been forced to freeze recruitment in the public service. It is now more than half a decade since government has frozen recruitment. So, by opposing labour market flexibility, labour is actually not only threatening the existence of their very own jobs, but also locking the door of jobs creation.
Let’s not deter government when it is fighting to remove barriers that hinder companies from growing so they can be in a position to create more decent jobs for everyone.
The current Labour Act has so many barriers which are preventing people from getting employed, which is against the dictates of our sacred constitution which says, in Section 24, that the State must foster “the removal of restrictions that unnecessarily inhibit or prevent people from working.” It is actually the current Labour Act that is holding job seekers to ransom.
The current labour laws do not give figures for retrenchment, which means employers cannot budget for the exercise but will have to be ambushed eventually and that will bring distress to their cash flows. Since the envisaged retrenchees remain employees of the company until the end of the negotiation process, even if it takes forever, it means the employer will continue paying them every month, which affects viability.
We need to link remuneration to productivity, and remodel the unrealistic arbitral awards. We need to bring flexibility in contracts, working hours, wages and dismissal laws — by aligning them to the performance of industry. That way we can ensure growth with decent jobs.
However, it should be said that labour market flexibility should be accompanied the creation of an Unemployment Insurance Fund, from which someone who might have lost a job can continue to earn his salary until he finds another job.
