Unemployment levels in Zim a disaster in waiting

Source: Unemployment levels in Zim a disaster in waiting – The Zimbabwe Independent August 12, 2016

It is not a secret that high unemployment levels in Zimbabwe are quite undesirable and have reached a record high, which if unchecked, will be a disaster in waiting for the government. Although the issue of unemployment percentages is debatable, what is evident and undisputable is the continued collapse of the economy and shrinking of the labour market

Nhamo Kwaramba

The policies enunciated by the government to curtail the continued decline of the economy are yet to bear much fruit. These include: Statutory Instrument 64 gazetted by the government to regulate or ban the importation of selected goods, Labour Amendment Act of 2015 to align the Act with the Constitution of Zimbabwe and as a counter measure to the landmark Supreme Court ruling on Zuva Petroleum which allowed employers to terminate contracts of employment on three months’ notice and the announcement by the Reserve Bank of Zimbabwe to introduce bond notes among other raft of measures implemented and proposed by the government.

It is quite surprising how the general populace is surviving. Whether through grace, heritage, luck and belief, Zimbabweans have an exceptional ability, resilience and resolute tact to withstand pressures and infinite faith and hope for a better tomorrow.

They always look forward to a better tomorrow regardless of the circumstances. For how long this will remain is a big question in light of the recent demonstrations by cross border traders and commuter operators and the stay-away strike by civil servants after late payment of salaries.

The levels of unemployment are debatable because very little primary data that exists.

The last survey conducted four years ago by the country’s agency for national statistics, Zimstat, pegged unemployment at 11%. This has been criticised as a gross underestimate of the problem. This figure is based on the belief that the bulk of people in informal sector, mainly vendors, are considered employed.

However looking at the state of Zimbabwe’s economy, unemployment levels are much higher than the 11% proposed by Zimstat. Every year, Zimbabwe produces more than 6 000 graduates in Zimbabwe, from different universities, polytechnic colleges, nursing schools, teachers colleges, apprenticeships to name but a few, and all these people are expecting to be part of the employed.

It is not astounding that many are roaming the streets day and night in search of employment. They also find themselves competing for menial jobs with thousands of school leavers. This trend is leading to higher levels of unemployment as both qualified and unqualified workers compete for a few jobs.

Since 2006, companies have been downsizing and carrying out retrenchment exercises. Although the trend has somehow slowed after the introduction of the multi-currency in 2009, the figures started to shoot up, especially in 2015 following the 17 July 2015 Supreme Court landmark ruling of Zuva Petroleum which allowed companies to terminate employment contracts of employees on three months notice.

This opened up floodgates of terminations by companies.

According to Employers’ Confederation of Zimbabwe (EMCOZ) retrenchments have been due to underperformance of the economy. Local firms resorted to retrenchment for business sustainability and survival. This includes redundancy, restructuring and downsizing. Low capacity utilisation and product demand, obsolete machinery that are susceptible to frequent breakdowns, lack of working capital and raw materials are some of the factors triggering retrenchments.

The Employers’ Confederation of Zimbabwe also warned of increasing retrenchments across all sectors of the economy as companies hedge against increasing labour costs. This increase in retrenchments would see the unemployment figures rising.

Looking at the Health profession alone, a number of nurses are unemployed. The Ministry of Finance & Economic Development is also struggling to pay the current staff they have, hence the Public Service Commission is not taking as many employees as they would. As the largest employer, this is affecting those coming out of various learning and training institutions. Not only does it affect the health delivery system, it also affects the incumbents and families and individuals who sacrificed all they have for a better tomorrow.

The financial sector was not spared from the challenges and is still reeling under liquidity crunch, low deposits and low rate of loan repayments. Moreso, members of the public no longer have confidence in the financial sector due to inconsistent policies and unjustified high charges.

The recent announcement by the government through the Ministry of Finance & Economic Development and Reserve Bank of Zimbabwe Governor John Mangudya on the introduction of bond notes worsened the situation. No wonder most employees take all their dues the same week salaries are transferred into their accounts.

Even members of the public are also in hurry to withdraw whatever amounts are deposited into their accounts. As a result, the banks, which were also some of largest employers, are not taking any more staff.

If degreed, qualified and experienced people are failing to find work, what are the chances of someone coming straight out of school or college? What are their chances of getting something to do to fend for themselves and their families? This is an untenable situation that would require extraordinary strategic thinking and interventions.

As a matter of fact, a country with too many people who are unemployed faces a crisis situation. The unemployed can be easly manipulated. They can do anything for survival.

It does not matter whether it is legal or illegal, moral or immoral, fair or unfair, what matters is the reward. No wonder the crime rate in Zimbabwe is rising and corruption is becoming ubiquitous.

The manufacturing sector would under normal circumstances employ thousands if not million workers. The same number it should employ is what is now unemployment statistic.

Many companies in the sector have scaled down operations and are operating at less than 40% capacity utilisation.

Lack of innovative and creative thinking, coupled with lack of raw materials, finance and support are the major challenges faced by the sector. As a result, more than half of the workers in the sector have been sent home on unpaid leave or work two weeks a month until the situation improves.

The NGOs are not spared. The disadvantage with many who work for NGOs is that they are on fixed contracts. These contracts are terminated on expiry without paying terminal benefits which apply in the case of a contact without limit or permanent contract. On expiry of the contract, the organisation will simply terminate the contract. The worker cannot claim terminal benefits.

Others in the NGO sector are failing to secure adequate funding for programmes and to meet administrative costs. There are some NGOs that have gone for three or more months without salaries.

The consequences are more terminations in the sector.

With all the advantages ICT has brought in the business, work and personal environment, many workers have since been pushed out of work because tasks that ten or fifty people do can be done by one person using an automated machine.

Informed and right policies must be in place to create a conducive labour and business environment which promotes those with entrepreneurial skills to start their businesses and increase business confidence. More importantly is for government to decisively deal with corruption.

Kwaramba, is the principal executive consultant for Capacity Consultancy Group. He is a Leadership, Organisation Development, Management and Labour Relations expert. These New Perspectives articles are co-ordinated by Lovemore Kadnege, president of the Zimbabwe Economics Society e-mail: kadenge.zes@gmail.com, Cell +263 772 382 852.