Job losses to worsen

via Job losses to worsen – DailyNews Live 7 September 2015

HARARE – A leading United Kingdom think-tank, NKC African Economics (NKC), has said Zimbabwe’s government could not legally stop job losses or hold the industry to ransom if companies were losing money.

This comes as over 30 000 workers have been fired after a landmark ruling by the Supreme Court since July in a case between Zuva Petroleum and its former managers.

The effect of the ruling is that employers are now retrenching workers and not providing them with benefits.

President Robert Mugabe has subsequently inked a new law banning mass lay-offs. The new law compels employers to give notice to workers’ representatives and a government board before any redundancies are processed.

NKC, a unit of the world famous Oxford Economics, said even if the new amendments to the Labour Act are put in place, there are no prospects for job creation any time soon.

“What is different about the pressures building in Zimbabwe this time is that we are approaching the point where the moribund economy and regime excesses are putting more and more people on the street with no prospects of returning to employment any time soon, and then denying them even the opportunity to scrape out a meagre day-to-day subsistence existence.

“One of these straws, one of these days, and the camel’s back will break,” the UK think-tank warned.

It also warned of social and political upheaval in Zimbabwe because of the deepening economic crisis.

The stark warning comes as Zimbabwe’s 91-year-old president struggles to halt an unprecedented economic crisis underlined by structural meltdown, collapsed output, massive unemployment, de-industrialisation, lack of capital, deflation and structural distortions.

Although Mugabe remains respected in much of Africa for his empowerment policy and role in asserting the rights of indigenous people, he is vilified in much of Zimbabwe and widely blamed for the chaos that is causing the economy to collapse.

The report comes as local analysts have warned that the country has hit the depths of humanitarian and economic despair that were last experienced in 2008, when Harare’s seemingly unending political crisis precipitated an economic meltdown of monumental proportions which culminated in the death of the Zimbabwe dollar.

“In our view, political conditions in the country will deteriorate further over the coming six months, while a continued positive performance under the International Monetary Fund’s (IMF) Staff-Monitored Programme (SMP) – a key linchpin in securing external debt relief – is in jeopardy,” the report says.

This comes as analysts also noted that poverty has increased from 63 percent in 2003 to 76 percent in 2014, with most of Zimbabwe’s population living on less than $2 a day.

NKC said Mugabe has not yet pronounced any solutions to the deepening political and economic crises.

“President Robert Mugabe — with declining physical and mental capacities — is seeing a major economic take-off on the horizon that is simply not there,” the report says.

“The so-called State-of-the-Nation address was about everything but the nation’s actual state, with Mr Mugabe clearly in another place in several ways while there seems to be little the regime can do to reverse its economic fortunes.”

Mugabe delivered an extremely short State-of-the Nation address two weeks ago, claiming that the stuttering economy was readying itself for a “major economic take-off”.

His speech was drowned by jeers and heckling by members of the opposition Movement for Democratic Change, and cheers from ruling Zanu PF MPs.

Mugabe announced a 10-point economic plan, which included clamping down on corruption and encouraging private sector investment.

“Overall economic performance to date indicates modest growth,” said Mugabe, sparking howls of protests from the opposition.

The UK think-tank said: “The stark fact of the matter is that even if the Mugabe regime stands by its word this time — and there is no guarantee that is even likely — the removal of all the obstacles and hindrances to economic growth by tomorrow would only help Zimbabwe to recover over the next two decades.”

Analysts said the Zimbabwe economy was dying and with Mugabe in power, there was little hope of the economy reviving any time soon.