The Sunday Mail
Kumbirai Tarusarira
Business Reporter
The spike in prices of goods and services has not only affected workers, but also compromised production in manufacturing and other key sectors of the economy, the Employers’ Confederation of Zimbabwe (Emcoz) has said.
These industrial challenges come as official figures from Zimbabwe National Statistics Agency (ZimStat) last week, indicated that the poverty datum line was now pegged at $1 617.
Government has, however, made efforts to address the economic challenges by providing some safety nets to cushion them, among other things, from rising transport costs, by introducing the public mass transport system administered by Zimbabwe United Passenger Company (Zupco).
Finance and Economic Development Minister Mthuli Ncube has, however, bemoaned the conduct of a number of private sector players, who failed to make sufficient efforts to cushion their workers from the rising cost of living on the bank of ongoing reforms.
However, Government’s mass public transport programme is yet to completely cater for the huge numbers of the commuting public on a daily basis and efforts are being made to bring in more buses.
Adding to the workers’ woes, has been the high cost of prepared food in Central Business Districts (CBD), which most people rely on for break and lunch, as prices are now beyond the reach of many.
Mindful of its workers’ plight, Government has been regularly awarding cost of living adjustments, interventions many firms in the private sector, no matter the super profits many of them make, have failed to emulate.
It is against this backdrop that Emcoz president Dr Israel Murefu in an interview, said the operating environment had become difficult for the companies and their employees too.
“The operating environment is very tough and challenging because the essential ingredients necessary to run business operations namely water, power or electricity and fuel are scarce and in some instances not available,” said Dr Murefu.
“Coupled with high inflation, runaway exchange rate and inadequate foreign currency, we are not aware if there is any business running at full capacity and when capacity utilisation is very low, the unit cost of production goes up because you do not benefit from economies of scale or any other potential synergies,” he said.
A standard meal for lunch at city restaurants is going for $15 upward.
Dr Murefu said many employers have gone out of their way to provide cost of living allowances to cushion employees, but the efforts are following short of desired effect due to inflation.
“The situation is very bad for business and we need to work together with the authorities and labour to ensure the few businesses still operating under difficult circumstances, do not close shop, retrench or go into liquidation arising from lack of viability,” he said.
“Many large companies have corporate governance structures and it is through these structures that they can look at what is sustainable in terms of salary reviews or other financial measures to assist their staff,” said the Emcoz boss.
While the cost of goods and services has increased dramatically, the fact, most companies are not operating at full capacity, becomes problematic because organisations cannot achieve optimal productivity and reasonable profitability.
“As EMCOZ, we encourage employers to look at their industry (external) situation as well as their company situation (internal) and take appropriate measures to assist employees, where they have ability in order to assist their employees financially,” said Dr Murefu.
Last week, the PDL for an average family of five jumped 15,18 percent to RTGS $1 617 in July this year, up from RTGS $1 404 the previous month as the cost of living continues rise on the back of unrestrained price increases.
Latest data from ZimStats shows that an individual required at least $323,50 per month to access minimum provisions.
“The Total Consumption Poverty Line (TCPL) for an average of five persons stood at $1,617.48 in July 2019,” ZimStat said.
“This represents an increase of 15,18percent when compared to the June 2019 figure of $1 404,26.”
According to ZimStat, the TCPL is a combination of food and non-food items that an average family required for it not to be deemed poor.
In terms of food alone, ZimStat said an individual required at least $127,93 per month, up from $112,07 the previous month.
Prices of goods and services maintained an upward trajectory over the past two months, as the local currency continued to devalue against the United States dollar.This means the PDL most likely also went up as of the month of September although official figures are still to be released.
Government, however, has showed it was concerned with consumer welfare and recently Cabinet approved principles of the Consumer Protection Bill, which criminalises conduct by retailers and manufacturers, who increase prices of goods and services without justification.
The Consumer Council of Zimbabwe (CCZ) said the cost of living — as measured by the low income urban earner’s monthly basket for a family of six had gone up.
“As CCZ, we assume that the increase in the total figure of the basket can be attributed to fuel price, which have gone up, cash shortages resulting in low demand of some goods and the availability of most goods leading to high competition,” said CCZ in a statement.
