Companies reduce working hours

Source: Companies reduce working hours | The Herald February 2, 2017

Business Reporter —
AS the foreign payments backlog grows, some local companies have started reducing workings hours due to shortage of raw materials, industrialists and employees have said.

Confederation of Zimbabwe Industries president Mr Busisa Moyo said raw material shortages have rendered some workers redundant, resulting in companies introducing short working weeks.

Foreign payments are normally done 30 to 90 days after the invoice date, but there are instances where they have taken more than five months to go through.

Mr Moyo said while the situation might improve as a result of improved forex inflows from tobacco sales and the firming of commodity prices, most firms were in dire straits.

“The situation is worsening and some of our members have negotiated with NECs for short working weeks,” said Mr Moyo.

“The foreign currency is scarce and in some instances, we now have situations where foreign payments backlog can be up to five months.

“This has affected production and we are cutting working hours because there is no work to do.”

Zimbabwe Congress of Trade Union secretary general Japhet Moyo confirmed the developments.

He said shortages of raw materials have rendered workers dormant and some employers have introduced short working weeks. “There (workers) contracts have not been terminated but they are earning for hours worked per week,” said Mr Moyo.

Dairibord chief executive Mr Anthony Mandiwanza said while the Reserve Bank of Zimbabwe should be commended for coming up with a priority list to guide banks in the distribution of foreign currency, there was need to further tighten forex management.

“There is significant amount of foreign currency being allocated to things which are not of a productive nature and I think there is room to improve and ensure that money is directed towards production so that the country can generate more forex,” he said.

His company had a payment backlog of $2,2 million for raw materials that need to be imported.

“We have a lot of product lines that we are failing to put on to the market due to raw material shortages.”

A senior official with a sugar producing company said the pressure was on the US dollar, which is the primary trading currency. “Sometimes it takes more than two months, if there is any (allocation approved), for payments to go through,” said the official.

Economist Mr Brains Muchemwa said in light of the worsening foreign currency challenges, the policy direction should be gravitating towards allowing the market forces to play a bigger and defining role in the allocation of resources. “Heavy handedness and excessive market controls have not worked before in this market and anywhere else in the world with regards to promoting efficient markets,” said Mr Muchemwa.

He suggested that monetary expansion supporting non-productive activities should be immediately curtailed in order to reduce secondary impact on the demand for forex.

And in considering of the significant impact of government deficit financing on the stability of the domestic financial markets, the most urgent steps should work towards streamlining government expenditure and confining it strictly to cash budgeting.