Zimbabwe’s economic crisis has hit the labour market as incomes are eroded by rising inflation leaving the bulk of the workforce as the working poor.
Labour, analysts say, is the only resource that the majority of the Zimbabwe population, relatively own, meaning the productive use of this abundant resource is a key transmission mechanism to overcome poverty and inequality.
About 8.1m persons in Zimbabwe from an estimated population of 14m are in the working age population, which translates to about 57% of the country’s total population, according to official data obtained from the Zimbabwe National Statistics Agency (ZIMSTATS).
According to the latest ZIMSTATS survey, about 51% of the potential labour force in Zimbabwe or 1.2m persons is now discouraged job seekers, who are no longer looking for work.
The Zimbabwe Congress of Trade Union, which has been fighting for a reasonable living minimum wage, has set US$250 as a minimum wage, which is the lowest price paid for man hours during a specific period of time in most cases a month.
“It’s clear that the ill-advised de-dollarisation project has failed dismally, resulting in employers putting salaries last (on their obligations list),” president of the country’s main labour body, the ZCTU, Peter Mutasa told a Business Times in collaboration with Econometer Global Capital virtual salaries meeting last week.
“We are in a vicious circle. We need a national minimum wage to deal with vulnerabilities. Currency is not forced on people.
The economic agency has rejected (the Zimbabwe dollar).
Workers are being shortchanged because everything is now indexed on the US dollar except salaries.”
“We can’t negotiate for Zimbabwe dollars. We cannot sustain it because of the environment we are in. We want salaries in a currency that is stable.
“Zimbabwe cannot continue on this pathetic route. Our current situation is a failed State. We cannot allow businesses to transact in US dollars and prioritise other obligations in US dollars, leaving out salaries.
“We are proposing that we look at the 2018 agreement where workers were getting US$500 on average. Now, workers are earning less than US$40 (in real terms). We go for 50% of the 2018 average figure which amounts to US$250.
But business is not comfortable with that. And we are saying we can’t be stupid to negotiate for Zimbabwe dollars.”
Mutasa also claimed the government does not want dialogue but was using the police, the military and the Statutory Instruments.
“So, it’s not possible to dialogue at the moment because social partners are regarded as terrorists. How then do you dialogue?”
The Tripartite Negotiation Forum (TNF) is expected to resume next month. Mutasa said workers should not expect anything from TNF as government has no culture of negotiation.
“How do you sit down with government terrorists?
It’s not possible.
Our leaders (ZCTU) cannot visit government offices, so it’s not possible unless government declassify us, we will not be able to go for the TNF meeting.”
Employers’ Confederation of Zimbabwe (EMCOZ) said their failure to meet the proposed minimum wage was attributable to the ailing economy, coupled with depreciation of the exchange rate.
Economic shocks, EMCOZ added, have also become the binding contracts for productivity. Ailing Zimbabwe firms have bowed down to economic pressures and are downsizing labour to remain operational or just to break even.
This is happening amid low capacity utilisation which remains depressed at less than 40%. High cost of production attributable to expensive and unreliable utilities has dampened companies to remain afloat.
To worsen the situation, limited access to lines of credit continues to hamper viability as the industries struggle to access working capital to sustain operations and new money to retool.
Limited stock of cash has also worsened operations. Companies have scaled down operations leading to staff redundancy.
It is clear that more retrenchment is brewing, employers said. “It (payment of salaries in US dollars) is not sustainable,” EMCOZ president, Israel Murefu said.
“Officially, we are dedollarising as an economy but the situation on the ground is that we have re-dollarised.
But, the (US dollars) amount generated by companies is too little and cannot sustain salaries in US dollars.”
Murefu said indexing salaries to US dollars is an individual company decision, not a collective decision.
“The US$250 (the ZCTU is talking about) is not sustainable and must be debated at sector level where a minimum wage can be determined there. Industries are different and therefore cannot use a one size fit method to determine the minimum wage.
A reasonable salary is the PDL based but, cannot be sustained by many industries,” Murefu suggested adding, “Yes, the employers are under pressure to pay salaries in US dollars. But, what is key is to sustain jobs.”
Stella Ilieva, World Bank senior economist said: “It’s not sustainable (to pay salaries in US dollars). Yes, workers are experiencing a decline in real wages. Government needs to balance up things.” “There is no fiscal space to increase salaries. There is a huge social protection need. Salaries are a huge item in the budget. If increased, it will not be sustainable at all. Increasing wages beyond means increase inflation.”
Economist, Tony Hawkins said: “There is a call for a reasonable living wage. There was complete failure to mention that in the budget. So, the budget is an understatement on salaries. Government thinks everything is solved by an (forex) auction that is nonsense. Redollarisation has happened but, there is need for social, political accommodation.”