- Published on 11 January 2015
- Written by Weekendpost
AFTER years of an industrial outcry over the country's Labour Act, government has committed to speeding up the review process, as an imminent massive civil servant retrenchment lurks.
The review of the Labour Act, which favours employees, has for the past decade been a constant chorus at business forums between government and industry, yet the act has not been reviewed.
However, faced with a massive retrenchment exercise, government plans to speed up the review process, as it may bleed Treasury this year.
Finance minister Patrick Chinamasa told parliamentary portfolio committees presenting post-budget reports that civil servant retrenchments were this year going to cut on government expenditure.
The move by Chinamasa is meant to appease the International Monetary Fund (IMF), which through its Staff Monitored Programme (SMP), a supervised economic reform programme, has been advocating for Zimbabwe to cut its wage bill.
David Chapfika, Budget and Finance parliamentary portfolio committee chairperson, recently told a National Assembly 2015 National Budget debate that the current labour laws were unsustainable.
"The act needs to be looked at to ensure it also benefits the employer as well so that we can attract investment. The current situation is discouraging to employers thus not investor-friendly," Chapfika said.
He said the law had to be reviewed in a way that enhanced capacity for local firms, with most firms operating in tight liquidity conditions with unnecessarily huge work forces as the current laws make it more expensive to retrench employees than it is to keep them on board.
The country's wage bill, which has so far gobbled 82 percent of government revenue, has been a topic of constant discussion with Chinamasa in the past saying he was not going to cut jobs to contain government expenditure.
In his 2015 budget statement, Chinamasa warned that recurrent expenditure will go up to 92 percent — a Treasury nightmare.
In the past, government has promised to review the Labour Act, but never set specific timelines to the issue.
Charles Msipa, Confederation of Zimbabwe Industries (CZI), president is on record saying dragging the process was costing Zimbabwean companies as most had to retrench workers but could not do so as yet.
"The excuse that the law is still under review is getting old. In business, we put budgets and timelines to tasks and accomplish them.
"The current laws are so inflexible and do not even apply to the environment we are operating in as business," said Msipa.
The ongoing amendment to the Labour Act is meant for workers' salaries to correspond with real productivity levels at organisations.
The negotiations started in 2009 during the inclusive government, mainly as part of the implementation of the International Labour Organisation (ILO) Commission of Inquiry's recommendations and the parties had narrowed their differences on almost all the issues.
Msipa said the current economic conditions only worsened the plight of companies with most filling for liquidation due to the bleeding salary costs they have to endure.
In most cases, companies have been forced to apply for judicial management and liquidation as they cannot afford to retrench.
The last progress report on the review of the law was when Chinamasa told Cabinet in June that the consultations in the amendment process were almost done.
Chinamasa said Cabinet had agreed on amending the Labour Act Chapter 28:01 to deal with constraints in retrenchments, terminal benefits, downsizing, working hours and arbitral awards system.
This, he said, was after the realisation that the economy was operating on high costs and low productivity which had repercussions on its competitiveness.
Trade union organisations have, however, accused government of rushing to make a decision devoid of thorough consultations, and also without considering input from stakeholders.
"We never discussed any employment flexibility or productivity linked wages as part of the Labour Act review.
"We are surprised that Chinamasa has already tabled labour law reform before cabinet," said ZCTU secretary general Japhet Moyo is on record saying.
While economic analysts applauded Chinamasa's mass retrenchment decision, there were mixed views on how government was going to deal with the inflexible labour laws in mass civil servant retrenchment.
Cade Zvavanjanja, a local analyst with Greeyps Risk, Efficiency and Development Consultants, said it would be unfair for government to alter the current labour laws merely because they were anticipating a mass retrenchment.
"These laws have always been there. Industry has been asking for a review for a long time. Now because government is affected, they want to alter the law to suit them? They should not prejudice the country," Zvavanjanja said.
He also said that although it was likely that the retrenchment scheme was going to be very expensive, it was going to be a good decision in the long term for government expenditure.
However, independent analyst, John Robertson said government had to do all it could to contain government expenditure, even if it meant altering the law to enable the retrenchments to go smoothly.
"It would be prudent for Chinamasa to change labour laws with regards to retrenchment packages as industry has been asking for all along," said John Robertson, an independent economist.
Robertson also said government had to be cautious in the retrenchment exercise as there are fears that the retrenchment costs may prove more expensive than the current employment costs, thus necessitating the review.