via Labour laws must change | The Zimbabwean 07.05.14 by Clemence Machadu
The arguments of the trades unions against labour market flexibility proposals by Finance Minister Patrick Chinamasa are quite interesting. For starters, they say that touching the Labour Act would mean a return to the draconian Master and Servant Act of 1901 which allowed employers to hire, fire and retrench at will.
In order to understand why labour market flexibility is necessary, let us consider the following scenario: an employee earns $300 per month and uses it to buy goods worth $300.
Suppose prices of goods have gone up to the extent that the employee now needs $500 to buy the same amount of goods he used to buy for $300. What does he do? You will all agree that he will have to cut out some of the goods he used to buy.
Jobless
This is exactly the situation facing the business sector right now. Organised Labour should not pretend that it doesn’t understand this. If a company when operating at 100 percent capacity employs 1,000 employees, should it maintain the same number of employees when capacity falls to 10 percent? Can a company survive without the flexibility to customise its resources in accordance with fluctuating business cycles?
If the company is to remain with 1,000 employees at 10 percent capacity it will go bust. High production costs will be dominated by labour costs, and then all the employees will be jobless. That is the alternative to labour flexibility.
We need labour laws that give business the ability to optimise operations. Jobs can only grow if the business sector is allowed to grow its companies. Section 13 of our people-driven constitution actually says that the state “must take measures to foster the development of industrial and commercial enterprises,” while Section 14 directs the state to “ensure that adequate measures are undertaken to create employment for all Zimbabweans.”
Basically these the two clauses are saying that jobs don’t come from closure of companies but rather from development of industries. Jobs are not created when there is no flexibility.
Locking the door
Making it difficult to rationalise human resources is making it difficult to hire. The government itself is a very good example of the impact of labour law rigidity on job creation. Government’s labour expenses account for more than 70 percent of its total income. Because of that it has been forced to freeze recruitment in the public service. It is now more than half a decade since government has frozen recruitment. So, by opposing labour market flexibility, Labour is actually not only threatening the existence of their very own jobs, but also locking the door on job creation.
Let’s not deter government when it is fighting to remove barriers that hinder companies from growing and being in a position to create more jobs. The current Labour Act has so many barriers to employment. This is against the dictates of our constitution, which says, in Section 24, that the State must foster “the removal of restrictions that unnecessarily inhibit or prevent people from working.” It is actually the current Labour Act that is holding jobseekers at ransom.
The current labour laws do not give figures for retrenchment, which means employers cannot budget for the exercise. They are ambushed eventually and that brings distress to their cash flow. Since the envisaged retrenchees remain employees of the company until the end of the negotiation process, even if it takes forever, it means the employer will have to continue paying them every month. This obviously has a negative effect on viability.
We need to link remuneration to productivity, and remodel the unrealistic awards. We need to bring flexibility in contracts, working hours, wages and dismissal laws – by aligning them to the performance of industry. That way we can ensure growth with decent jobs. Our people should not work like a roadrunner in Soweto.
The man selling airtime in First Street appears to be watching a tennis match, the way he moves his head checking for police. That is not a decent job.
COMMENTS
It is women who will topple this government….slowly, surely….INEVITABLY….nice.
it would be good to get business comment rather than imaginary expertise of the journalist.
A businessman asks appropriate questions.- Why does the vendor look sideways for police? Because what he is doing is both dangerous and correctly against the law for a number of valid reasons.
So the answer is not to say lets make it better for him, it is lets make it safer for all by taking him off the street at traffic lights.
There is a need to write a business article that is common sense and has reasoned points and situations to debate.
Does this person know what COMMON SENSE is – common sense says ” no employers – no workers”. Common sense says “no formal sector no tax revenue to (in theory, in this land) drive govt services”. I think apolitical is a pinko.
This article is common sense written in plain language.
For this reason it is sure to be rejected by most people who feel they have a right to be paid no matter what.
I know from my own discussions that employers avoid at all costs creating new jobs because it is so difficult to get rid of employees when things get tough. This means that many who could be employed are not. It is considered better to buy machinery to increase productivity than to take on new workers. This calculation will not change until the law changes.
The unions are guaranteeing their irrelevance by their current positions. Nobody want to engage with obdurate obstructionists.
Sorry, not the author of the article but the person called “Apolitical”
so are you saying the workforce has to pay by their jobs for an incompetent management which grounds a company and then fire ordinary workers?am sure cashbert wil support this 100%
Wankie : When I give you a job at my company, I am not saying you are here forever. You do not have to work for me if you think or later realize I am incompetent. Besides, how more incompetent could I be compared to you, who need me to create a job for you?
The time for armchair talk is over. If you are man enough, then create your own job! I said create YOUR OWN JOB. Don’t come to my company and then start looking smart, because I gave you a chance, a chance you failed to create for yourself. So, you can’t now start to be a burden on me.
I agree. There needs to be a more clear cut direction on labour laws. Leaving everything to negotiation is not acceptable. How does an employer pay employees when there is no money? If a business has closed due to current economics it is not the fault of the employer. He himself does not want to be out of a job and doesn’t normally shut down a business because they want too. There are normally financial reasons behind a closure and its time that all these issues are addressed so everyone knows what they can and can’t do.
It does not need a scientist to understand that so why are our doctors that are full in our government failing to understand that simple economic rule and cut down on the civil servants so as to hire more
The Doctors you refer to have fake PhDs. Anyone can have a doctorates. All one needs is a thesis written by a hired agent. These are the PhDs you find in this govt.
People who can’t even change laws and systems created by colonialism
Even if the employee is not prepared to pay for the mismanagement done ,they will have to go home if it is not today it will be tomorrow.
The slate has be cleaned properly of the Scum bags first!
As an employer, I have been stung badly by our labour laws.
It is another reason why invesvestors will be reluctant to put up shop here.