The Sunday Mail
Workers Day is important and, amid all the efforts of setting up and growing businesses and boosting both local and inward investment, it reminds us that this is built on the efforts that are made and will be made by the people who fill the jobs that exist and are being created, the employees.
It was established as a growing international holiday in 1889 as part of major efforts around the world to get an eight-hour day, and since then there have been major changes, recognising that employees had rights. Even the hard-bitten employers found that a moderately contented workforce living above poverty was a lot more productive, and economic theory started working towards the optimum percentage of costs that had to be allocated to staff costs, rather than assuming these had to be as low as possible.
In the Colony of Southern Rhodesia there were peculiarities and gross distortions built on race. But white workers managed to get a good deal, with an accepted and crucial assumption that a certain standard of living was required, and in the 1930s a system was put in place that saw the creation of industrial councils where employer organisations and unions could hammer out industry-wide deals.
In the later 1950s, this was extended to cut in blacks, although official job reservation in the civil service and unofficial job reservation in the private sector hampered progress and the Rhodesian Front, with its white working class support backing the farmers who ran the show, seriously delaying progress, although economic necessity meant it was not stopped.
Independence saw that system of industrial councils embraced, but all colour bars eliminated at a stroke and the council system extended. More importantly the councils, and the system of testing for skills, were redesigned so that there was smooth progression from learner unskilled levels to the top levels of experienced highly skilled workers. The unofficial race-bar across the middle of the grades was abolished.
The post-independence Government also introduced the idea of a minimum wage, which reset the bottom salary in each industrial agreement.
The bursts of inflation and hyperinflation ended that experiment, and for the last two decades wage negotiations have largely been damage control rather than building for the future.
But the idea that the person on the bottom of the ladder needs to earn enough to sustain life is something that we need to keep firmly in mind.
This is important when we look at salary differentials and inequality in any organisation. The gap between the bottom level in Zimbabwe and the top layers of management is huge in most of the private sector, although a lot less dramatic in the public sector.
In Zimbabwe, as in many countries, almost all pay awards are built on a percentage increase across the board, which in one sense is fair, but also, when the bottom level is very low means that those on the first rung can remain very poor.
The other option is to grant a pay increase of the same number of dollars to everyone. A more sophisticated approach, used already when those fixed allowances are now granted along with percentages for salary, is to combine both.
Of course pay has to be related to ability to pay. But as revenues rise so should pay. The Government itself has taken this on board. The Second Republic stopped printing money, physically or electronically, to create temporary rises in standards of living followed by an inevitable crash and total poverty.
Civil Service pay is set as a percentage of taxes, but as tax revenues rise so pay automatically rises with the Government pushing through prompt pay rises even before negotiations with staff associations have reached any conclusions. The private sector should note that approach, along with the new Government policies of looking at housing and transport, which admittedly take more time to implement.
But that dual Government approach, of fiscal discipline and a determination that employees get their slice, shows that pay in real terms has to be tied to an expanding economy, rather than trying to fake a higher standard of living today that is paid for down the line when collapse comes.
The other area where employees are complaining, with quite a lot of justification but with modest understanding, is the tendency for prices to rise even when, as Zimbabwe now enjoys, cost inflation is low and there is a great deal of economic stability, and that stability built on fundamentals, rather than attempts to reverse market forces.
Generally retailers are at the mercy of the producers. Retailers generally apply a fixed percentage mark-up on the price they pay producers, and the intense competition in the retail sector means that if someone decides to profiteer consumers move to another retailer who does not.
Some trade unions have noticed this, hence the stress this year on monopolies and cartels. And here they have a stronger case. Across much of manufacturing in Zimbabwe we have something close to a monopoly, or a tiny group of companies, that dominate production.
For some products there can be quite wide price differences between different brands suggesting that market forces are working and that price competition is seen as a major factor.
But for other products, and regrettably the most essential, there are very small gaps and in some cases the major producers, who in theory should be in competition, are quite openly fixing an identical price, with suspicion that they agree in other cases unofficially. And they do not detail reasons for rises. Trying to persuade people that a 10 percent rise in fuel prices triggers a 10 percent rise in retail prices, when fuel forms say five percent of costs, is dishonest. In that example half a percent is the right figure.
The Ministry of Industry and Commerce has already asked the Competition and Tariffs Commission to look into these cosy deals, and the new Consumer Council, that still needs to build its staff, must take this on board promptly. Price fixing through formal or informal cartels is a criminal offence in many countries.
The Government has embraced the market, and it would be a good idea if those in the market embraced it as well.
Workers Day: Celebrating employees
The Sunday Mail
Workers Day is important and, amid all the efforts of setting up and growing businesses and boosting both local and inward investment, it reminds us that this is built on the efforts that are made and will be made by the people who fill the jobs that exist and are being created, the employees.
It was established as a growing international holiday in 1889 as part of major efforts around the world to get an eight-hour day, and since then there have been major changes, recognising that employees had rights. Even the hard-bitten employers found that a moderately contented workforce living above poverty was a lot more productive, and economic theory started working towards the optimum percentage of costs that had to be allocated to staff costs, rather than assuming these had to be as low as possible.
In the Colony of Southern Rhodesia there were peculiarities and gross distortions built on race. But white workers managed to get a good deal, with an accepted and crucial assumption that a certain standard of living was required, and in the 1930s a system was put in place that saw the creation of industrial councils where employer organisations and unions could hammer out industry-wide deals.
In the later 1950s, this was extended to cut in blacks, although official job reservation in the civil service and unofficial job reservation in the private sector hampered progress and the Rhodesian Front, with its white working class support backing the farmers who ran the show, seriously delaying progress, although economic necessity meant it was not stopped.
Independence saw that system of industrial councils embraced, but all colour bars eliminated at a stroke and the council system extended. More importantly the councils, and the system of testing for skills, were redesigned so that there was smooth progression from learner unskilled levels to the top levels of experienced highly skilled workers. The unofficial race-bar across the middle of the grades was abolished.
The post-independence Government also introduced the idea of a minimum wage, which reset the bottom salary in each industrial agreement.
The bursts of inflation and hyperinflation ended that experiment, and for the last two decades wage negotiations have largely been damage control rather than building for the future.
But the idea that the person on the bottom of the ladder needs to earn enough to sustain life is something that we need to keep firmly in mind.
This is important when we look at salary differentials and inequality in any organisation. The gap between the bottom level in Zimbabwe and the top layers of management is huge in most of the private sector, although a lot less dramatic in the public sector.
In Zimbabwe, as in many countries, almost all pay awards are built on a percentage increase across the board, which in one sense is fair, but also, when the bottom level is very low means that those on the first rung can remain very poor.
The other option is to grant a pay increase of the same number of dollars to everyone. A more sophisticated approach, used already when those fixed allowances are now granted along with percentages for salary, is to combine both.
Of course pay has to be related to ability to pay. But as revenues rise so should pay. The Government itself has taken this on board. The Second Republic stopped printing money, physically or electronically, to create temporary rises in standards of living followed by an inevitable crash and total poverty.
Civil Service pay is set as a percentage of taxes, but as tax revenues rise so pay automatically rises with the Government pushing through prompt pay rises even before negotiations with staff associations have reached any conclusions. The private sector should note that approach, along with the new Government policies of looking at housing and transport, which admittedly take more time to implement.
But that dual Government approach, of fiscal discipline and a determination that employees get their slice, shows that pay in real terms has to be tied to an expanding economy, rather than trying to fake a higher standard of living today that is paid for down the line when collapse comes.
The other area where employees are complaining, with quite a lot of justification but with modest understanding, is the tendency for prices to rise even when, as Zimbabwe now enjoys, cost inflation is low and there is a great deal of economic stability, and that stability built on fundamentals, rather than attempts to reverse market forces.
Generally retailers are at the mercy of the producers. Retailers generally apply a fixed percentage mark-up on the price they pay producers, and the intense competition in the retail sector means that if someone decides to profiteer consumers move to another retailer who does not.
Some trade unions have noticed this, hence the stress this year on monopolies and cartels. And here they have a stronger case. Across much of manufacturing in Zimbabwe we have something close to a monopoly, or a tiny group of companies, that dominate production.
For some products there can be quite wide price differences between different brands suggesting that market forces are working and that price competition is seen as a major factor.
But for other products, and regrettably the most essential, there are very small gaps and in some cases the major producers, who in theory should be in competition, are quite openly fixing an identical price, with suspicion that they agree in other cases unofficially. And they do not detail reasons for rises. Trying to persuade people that a 10 percent rise in fuel prices triggers a 10 percent rise in retail prices, when fuel forms say five percent of costs, is dishonest. In that example half a percent is the right figure.
The Ministry of Industry and Commerce has already asked the Competition and Tariffs Commission to look into these cosy deals, and the new Consumer Council, that still needs to build its staff, must take this on board promptly. Price fixing through formal or informal cartels is a criminal offence in many countries.
The Government has embraced the market, and it would be a good idea if those in the market embraced it as well.
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