Job cuts: Employers speak out

via Job cuts: Employers speak out – NewsDay Zimbabwe August 25, 2015

Last week, Parliament fast-tracked the Labour Amendment Bill to curb further job losses triggered by a Supreme Court ruling made on July 17 giving employers the go ahead to terminate workers’ contracts and paying them an equivalent of three salary as terminal benefits.


Legislators, however, clashed over some of the contentious clauses in the Bill which now awaits President Robert Mugabe’s assent.

The opposition MDCs failed to present their proposed amendments to the Bill after they were outnumbered by ruling Zanu PF legislators who endorsed it without further amendments to, according to Labour minister Priscah Mupfumira, urgently stop the job carnage.

Following its passage, NewsDay Business correspondent Tatira Zwinoira (ND) had a one-on-one interview with Employers’ Confederation of Zimbabwe (EMCOZ) president Jack Murehwa (JM) to get employers’ views of the Bill.

Below are some excerpts from the interview.

ND: What is the response and reaction of EMCOZ to the Labour Amendment Bill?

JM: Business maintains the position carried at the tripartite level a year ago to the effect that the current Labour Act needs to be revised in order to make it friendlier to investors.

The Bill reneges completely on this understanding and seeks to make the amended Labour Act less friendly to current and future investors and this is regrettable.

ND: Which areas do you think government failed to tackle fully?

JM: To a large extent, the Bill ignores business’ input into the process and seems to have been crafted to “fix” business.

It also perpetuates the misconception that business carries a delayed liability when keeping a permanent employee in service.

This is despite the fact that an employee is paid his or her monthly remuneration in full for services rendered and the employers also contribute towards the National Social Security Authority and private pension funds on behalf of the employee for later days.

It is this apparent prevailing philosophy embedded in the proposed amendments which scare potential investors away and perpetuate hardships for current investors.

In the end, businesses are being run into liquidation to avoid these additional liabilities and new investors are reluctant to operate under such conditions.

In the final analysis, everybody, including government, business and labour, loses out.

ND: Do you think the amendments will slow the job cuts?

JM: The amendments will encourage struggling businesses to trade into liquidation faster. More workers will lose jobs.

Investors will be uncomfortable to deploy their resources with the promised artificial liabilities. The government will continue to lose revenue from closing businesses and employees no longer at work.

In short, the Bill guarantees the perpetuation of the current sad situation of which the economy will inevitably continue to shrink.

ND: What is the impact in the short and long-term of the amendments?

JM: In the short-term, businesses will continue to trade into liquidation and new investors will continue to be reluctant to deploy their capital in this environment.

In the long-term, the perception of potential investors on the nation’s views on attracting investment will be tarnished and, therefore, keeping investment, both local and foreign, at bay.

ND: Where do you think government and EMCOZ can better work in tandem?

JM: As a tripartite, we started together on this journey and we were almost there. Then from the blue, the course changed from being a tripartite addressing a problem to business being viewed as an ailment to be fixed.

It is indeed very unfortunate for our country to fail to address issues to this extent.

ND: Why are government and EMCOZ missing each other?

JM: As business, we believe it is a real tragedy that from a point where there was a meeting of the minds at the tripartite level for the past five years and we were heading to positive closure, suddenly there is a divergence of views and business is being demonised.

We remain hopeful that the tripartite will be back on its rails to prepare the environment that will encourage new investors and protect current businesses from trading into liquidation.