The Sunday Mail
Business Editor
The 2015 Annual Bonus Survey Research Report by HR firm Industrial Psychology Consultants indicates that 44,9 percent of companies surveyed – less than the 49,5 percent recorded last year – will give employees a 13th cheque.
Further, 34,8 percent of companies polled will simply pay because the bonuses are guaranteed obligations. An estimated 31,9 percent of the firms said bonuses were performance-related.
Experts say continued payout of annual bonuses that are not performance-related is “a historical anomaly resulting from contractual obligations that give employees a right to a guaranteed 13th cheque regardless of the performance of the company”.
IPC’s survey results were collated from responses by 69 companies that operate in some 20 sectors of the economy that include manufacturing, mining, public service and local government, education, financial services, non-governmental organisations, agriculture and agro-processing, retail, engineering, transport and logistics, IT and telecommunications, medicine and pharmaceuticals, and media, marketing and advertising.
IPC says that though there is an undertaking by companies to meet employees’ expectations, most will struggle to pay in view of present economic challenges.
“A number of companies are still paying bonuses that are not performance-related. Those that are paying a guaranteed 13th cheque attributed this to either their sector collective bargaining agreements or contractual obligations. This is not sustainable. We are likely to see companies struggle to pay these bonuses due to the current performance of the economy.
“The performance bonus scheme should also take into consideration other performance measures besides profitability for the following reason:
“Profitability does not always reflect the status of the company. To avoid burning yourself, the bottom line criterion should always be the ‘money in the bank’. Profits can be manipulated by vigorous cost cutting that increase returns in the short term but at the expense of the company’s viability in the long term.”
While bonus payments for private sector players remain uncertain, the civil service is guaranteed to enjoy the festive season cheer after Government announced a fortnight ago that bonuses would be paid.
2016 Salary Adjustments
Although bonuses might provide succour to workers, the outlook for next year is ominous as 61 percent of companies IPC interviewed indicated they would not increase salaries.
This may portend difficult collective bargaining between employers and employees come 2016.
Those that have planned for upward adjustments have only budgeted for increases that range from as little as one percent to 12,5 percent.
Researchers say this trend is consistent with the pattern on the 2015 local job market.
Of the few workers that received salary increments, non-managerial employees benefited most with increases of between one percent and three percent, but the majority – particularly executive, senior management and middle management – did not get any salary review.
Though the “salary freeze” might be displeasing to most workers, the Reserve Bank of Zimbabwe maintains that local costs of doing business, including labour costs, have to come down as part of an internal devaluation to improve competitiveness.
Prices of goods and services in Zimbabwe continue to be higher than those in Southern Africa.
With the multiple currency system, Zimbabwe cannot effect nominal exchange rate adjustments to promote export competitiveness; thus monetary authorities believe containing labour costs will be helpful going forward.
Statistics from the January 2015 Monetary Policy Statement show that Zimbabwe’s commercial and industrial minimum wage at US$246 is still considerably higher than in Zambia (US$157), Mozambique (US$132), Botswana (US$90),
Malawi (US$34) and Ethiopia (US$36).
More Retrenchments
Far from the notion that there was an orgy of retrenchments during the course of the year, 78,5 percent of companies polled – representing a five percent decline on last year’s figure – indicated they did not cull their stuff.
Only 21,5 percent of companies said they had actually retrenched.
Interestingly, the survey also showed that 75,4 percent of the respondents did not use the July 17 Supreme Court ruling to terminate employment contracts, while 21,5 percent of employers used the judgement to conveniently shed their workforce.
It is estimated that a total of 437 workers did lose their jobs due to the court ruling, which is far less than the jobs claimed through the normal retrenchment procedure at 573 workers.
However, 29 percent of the firms did embark on normal retrenchment procedures and proceeded to terminate employees’ contracts on notice.
IPC forecasts that 2016 will be an equally tough year for workers.
“We are likely to see more staff rationalisation exercises in 2016 as employers struggle to contain costs. In the process of rationalising staff, employees need to be aware that rationalising staff without implementing strategies to increase revenue will not be sustainable.
“There are also likely to be very few upward adjustments in basic salaries. If anything, more employers are negotiating salary cuts with their employees – this trend is likely to continue into 2016,” said the human resources consultants.
Economist and chief executive officer of Mtilikwe Financial Services Mr Kingstone Khanyille said last week that though companies had undergone various staff restructuring exercises to adjust to the economic environment, such interventions had been overtaken by global economic developments.
“It must be appreciated that Zimbabwe is part of the global economy and the currently the slowdown that is being experienced, particularly the slowdown in commodity prices, which have dropped by more than 40 percent, is likely to affect the local economy since commodities contribute between 20 percent and 30 percent to local gross domestic product.
“So, the contagion effect is likely to affect downstream industries. Companies will therefore continue to re-adjust their belts. Their revenues will not be able to catch up with developments on the global market such as the fall of the South African rand and slowing economic growth in China,” said Mr Kanyile.
He said there was need for companies to reconfigure markets, particularly by targeting regional markets that have been made possible by the Tripartite Free Trade Area. An overreliance on the local market, which is presently plagued by falling disposable incomes, he said, would adversely affect local companies.
Though the conditions on the local job market are considered difficult, Government bets that the various infrastructure and capital projects being pursued will have a stimulus effect on the economy and jobs.
