Labour, Race Relations and Politics in Zimbabwe

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In view of the recent labour furore in Zimbabwe, I came across some interesting information. Consider this.

In 1991, a researcher from the Graduate School of Management at the University of Queensland named M. Shadur published a report on a Zimbabwean parastatal’s performance.

In this narrative, the researcher laments that after independence, the post 1980 period saw “the promotion of inexperienced personnel into important managerial positions,” and “cases where older or more experienced Whites felt passed over for promotion in favour of Blacks.”

Furthermore, “after independence, management’s power over labour relations outcomes was reduced [as] government intervened to attenuate management’s right to hire and fire.”

The government’s intervention in labour relations after 1980 resulted in a frigid labour market characterized by the pro-worker labour laws that existed in Zimbabwe until the July 17 2015 supreme court ruling (which gave employers the right to dismiss employees on 3 month’s notice without benefits) and the consequent Labour Amendment Act of 2015.

Race and Economic Performance

Now, according to the research, the “parastatal was the sole supplier to its private-sector competitors of the basic ingredients for…products,” and the “parastatal operated in deficit, funded by state subsidies.

“The annual trading account deficit increased dramatically after independence, rising from 7 per cent of sales in the year to June 1980 to over 50 per cent of sales in each year from 1983.”

Regrettably, the research did not disclose the name of the parastatal, and therefore I am unable to judge its performance up to 2015.

Nevertheless, the fact that the organization’s deficit rose from “7 per cent of sales in the year to June 1980 to over 50 per cent of sales in each year from 1983,” is telling, as it perhaps illuminates two (mis)steps taken by the government in the 1980s that contribute to Zimbabwe’s current currency quandary.

Firstly, we racialised our economy, and secondly we politicized our economy.

Yes, prior to independence in 1980 opportunities were limited to Black Zimbabweans on the basis that they were Black, and that was the reason for the war.

Yet, after 1980, it seems as though we ignored our own reconciliation and unity messages, and proceeded to limit opportunities to White Zimbabweans on the basis that they were White.

By allowing “the promotion of inexperienced personnel into important managerial positions,” on the basis of race, (without official affirmative action procedures) we further racialised the workplace at the expense of production and performance.

Some may argue that in 1980 Zimbabwe had recently emerged from a protracted civil war, and that there was a sense of urgency on the part of government to encourage black Zimbabweans to participate in the economy. This is noted.

However, the state of the economy today shows us that promotion and indeed policy itself should be merit based and free from racial nuances, corruption and nepotism. Zimbabwe needs a radical paradigm shift if we are to get the country back on its feet.

As it stands, the national fiscus is burdened by several non-performing and bloated parastatals; many of which have joined the retrenchment orgy currently taking place in the country.

Reports indicate that over 20 000 jobs have been shed since July 17 2015.

The job hemorrhage that the country is suffering from can be analogized as the advanced stage of an ailment that began in the 1980s.

Now, I am not trying to argue that deserving black workers should not be promoted to managerial positions.

What I am trying to say is that we need to aspire to become a constitutional meritocracy like Singapore, and abandon our discriminatory approach to economics in both policy and practice.

Ultimately, opportunities should be made available to all citizens irrespective of race.

Politicization of the economy

Now, since the price controls of the 1980s, the government has been directly involved in the country’s economic affairs, at times irrationally.

For example, where production prices increased by 126 per cent from the mid-1980 to 1985, the prices to consumers remained relatively static owing to the government’s socialist inspired price controls.

You see, government’s interference in both labour relations and the marketplace back then was the start of the politicization of the economy that we see today.

I experienced government interference in the market while managing a butchery in 2001.

During that time, the government reintroduced price controls, after spending the 1990s under the dispensation of the Economic Structural Adjustment Programme (ESAP).

In that year (2001), the state’s price and currency controls forced retailers to sell goods at a loss.

As a result, the nation experienced foreign currency shortages and shortages of commodities like meat. Eventually, the black market became the main market until we demonetized the Zimbabwe dollar in 2009.

The hyperinflation of 2008 was the consequent climax of our politicized economics. What we need today is for the government to take a laissez-faire approach to the economy, and perhaps the best way to begin is to repeal the indigenization laws.

Today, the Indigenization Act stands as another reflection of the interference of politics in what is supposed to be the free market. Frankly, it makes no sense that we insist on enforcing Indigenization at a time when the nation is desperate for Foreign Direct Investment (FDI).

We are literally asking people from the East and the West to come and do business here, and then after they arrive, we expect to tell them that they must give up 51% of their investment.

No one will pitch up to that party, because no one wants political interference in their business. The two should remain separate.

This is also true of Land Reform. That programme has been politicized.

If we can revisit the land programme and allow for merit-based land distribution irrespective of race, perhaps we can resuscitate our agriculture. As it stands, we have politicized land tenure at the expense of performance and productivity.

Constitutionalism

Section 56(3) of the Constitution of Zimbabwe reads, “Every Person has the right not to be treated in an unfairly discriminatory manner on such grounds as their nationality, colour, tribe, place of birth.

“Ethnic or social origin, language, class, religious belief, political affiliation, opinion, custom, culture, sex, gender, marital status, age, pregnancy, disability or economic and social status or whether they were born in or out of wedlock.”

I am a born-free (that is, born after 1980) Zimbabwean, who believes in implementing our constitutional values.

The thing is, the world perceives Zimbabwe’s political and racist rhetoric as a smoke screen for our reluctance to effect constitutionalism and good governance in the country.

Ultimately, we need to change our tone and revisit our policy. Period.

Tau Tawengwa

Executive Director

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Flexible Labour Laws can assist growth in Zimbabwe

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“I must study politics and war that my sons may have liberty to study mathematics and philosophy,” wrote America’s second president, John Adams who was arguably of the view that the blood and toil of older generations should result in the freedom and actualization of the younger.

 

However, Zimbabwe has seen better days. While the older generation fought a protracted war against colonialism that resulted in the country’s independence, the younger (born free) generation has not significantly experienced economic actualization, and as it stands, for various reasons, the Zimbabwean economy is struggling , and about 80% of the country’s adult population is currently unemployed.

 

While various analysts and commentators have pointed to the perceived reasons for the country’s economic quandary and the possible solutions thereof, of interest to me at this juncture is the proposition to make the country’s labour laws more flexible in order to accentuate economic growth.

 

As part of his December 2013 national budget statement, the finance minister Patrick Chinamasa stated that government would review the country’s labour laws in attempt to create a flexible labour market, which should see to an increase in productivity.

 

Put plainly, labour market flexibility makes it easier for companies to hire and fire employees and to alter work hours and wage rates. A labour market with low flexibility is characterized by rules and regulations such as minimum wage restrictions and requirements from trade unions as is the case in South Africa.

 

Now, it has emerged that cabinet recently agreed to amend the Labour Act in attempt to loosen constraints in terms of retrenchments, terminal benefits, working hours and the arbitral awards system. This has apparently incensed the Zimbabwe Congress of Trade Unions (ZCTU) which is threatening to “go back to the streets” if this position is not reconsidered.

 

However, given the prevailing economic environment, one wonders whether militancy will in anyway assist the workers. After all, whether or not the government relaxes labour laws, retrenchments are ongoing.

 

In this light, it is important for the ZCTU to consider the following factors:

 

●Firstly, labour market flexibility will allow firms to become more competitive. It should be acknowledged that Zimbabwe does not exist in a vacuum, but is part of a globalized world. As it stands, the country has become a market for international products particularly from China, India and South Africa, and this has contributed to company closures- why? Simply because our local products are too expensive and consequently uncompetitive.

 

In fact, research reveals that China has experienced massive manufacturing growth over the years because of (among other things) labour market flexibility. The fact is that frigid labour laws do not allow for large-scale employment in sectors that are labour intensive.

 

Interestingly, a Chinese labour bulletin commenting on the Indian economy recently reported that “manufacturing is necessary to give the large groups of people well paying jobs in the formal sector, as opposed to the informal sector, in which most Indians work today,” and that “Indian trade unions need to learn from China on labour law flexibility.” Zimbabwean Trade unions can learn something as well.

 

●Secondly, The ZCTU needs to understand that its threat to “go back to the streets” is laughable, given that at best, it represents 20% of the economically active population. Unions are potent in highly productive economies like South Africa. Currently in Zimbabwe, those who are working are outnumbered four to one by those who are not formally employed, meaning that threatening militancy will only put the jobs of those who are formally employed in jeopardy.

 

●Finally, while calls for a Poverty Datum Line (PDL) aligned minimum wage of $USD540/month are noble, they are also impractical. You cannot force employers to pay amounts that they cannot afford- this will only lead to more retrenchments.

 

A 2013 Reuters report on the global minimum wage pegged China’s minimum wage at an average of $USD264/month while Brazil had an average of $USD287/month. The fact is that we cannot afford to pay our labour almost double the amount that our competitors pay theirs.

 

Ultimately, while labour market flexibility is favourable, it should be accompanied by efficient service delivery and good economic governance.

 

If the workers agree to sideline their immediate demands in favour of increased productivity, global competitiveness and possible economic growth, then it becomes the state’s responsibility to ensure that the workers do not fall victim to predatory capitalism. After all the worker’s children will still need to go to school, and they will still need access to affordable housing and hospitals.

 

Tau Tawengwa

Executive Director

Zimbabwe: The Development Dilemma

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As the World Economic Forum commenced in Davos, it was surprising to observe the Iranian leader Hassan Rouhani relay his judicious address at the prestigious symposium. Rouhani used the opportunity to explain Iran’s energy programme, and to invite the world to invest in Iran. A first indeed.

 
In Zimbabwe, local commentators recently congregated at the Mandel/Gibs Economic Outlook symposium to discuss the Zimbabwean economy and to proffer possible solutions to the prevailing liquidity crisis.

 
While Zimbabweans have unanimously acknowledged the urgent need to mobilize funding for all sectors in order to arrest the economic stagnation that is currently gripping the nation, there seems to be a discrepancy in terms of how this will be achieved.

 
Zim Asset declares that  during the period 2013 –2018 the Zimbabwean government will see to:

improved revenue collection from key sectors of the economy such as mining;  increased investment in infrastructure (power development, roads, rail, aviation, telecommunications, water and sanitation) through acceleration in the implementation of Public Private Partnerships (PPPs) and other private sector driven initiatives; increased Foreign Direct Investment (FDI).

 
However it remains to be seen, if and how these goals will be achieved.

 
Nonetheless, while trying to understand the complexities around accessing multilateral funding, I came across some material that may be of interest to the Zimbabwean public.

 
Firstly, a work published by the World Bank entitled:  “Aid and reform in Africa: Lessons from ten case studies” is notable. In this work, the World Bank former director, James Wolfensohn, makes the argument that any development programme has to be country-owned and not owned by the donors.

 
In other words, in order to achieve sustained growth, development and poverty alleviation, the development programme of each country should be initiated and executed by that country. He argues that if reforms are imposed, they are sure to fail.

 
In the Zimbabwean context, Zim Asset is the government’s development programme, and its cornerstone is the indigenization policy.

 
Now, after decades of analyzing aid, development, and policy reform experiences in ten different countries in Africa (Ivory Coast, Democratic Republic Congo, Ethiopia, Ghana, Kenya, Tanzania, Uganda, Mali, Nigeria, and Zambia) Wolfensohn makes the following statement: “foreign aid has a strong positive effect on a country’s economic performance, if the country has undertaken certain policy reforms.

 

“Aid cannot buy reform; aid should be based on actual reforms, and not on promises of reform. Foreign aid can deliver critical support when the receivers are seeking reform, it cannot buy it. These lessons are of special importance to Africa, where most aid is received, and where policy reform is weakest. Further, the background studies indicated that financial aid is working in a good policy environment, there it leads to faster growth and poverty reduction.”

 

While I appreciate that the World Bank initiated Structural Adjustment Programmes (STPs) enacted in Zimbabwe in the 1990s had adverse economic effects and consequently made African states suspicious of Bretton Woods related institutions, I also appreciate that in this particular instance, James Wolfensohn makes the argument that any development program has to be “country-owned, not owned by the donors.”

 
In other words we have to create the environment that attracts foreign capital ourselves. As it stands, our indigenization policy framework seems too frigid; it must be relaxed. Looking at Iran, it seems that in recent months Iran’s relations with the international community are improving steadily, owing to a shift in policy and rhetoric towards the West.

 
Also, it is notable that Zambia, Zimbabwe’s northern neighbor, attracted foreign direct investment (FDI) worth US$10.1 billion in 2012; the highest ever recorded in the history of that country. This is owing to three main factors:

 
●The Zambia Development Agency Act offers a wide range of incentives in the form of allowances, exemptions and concessions to companies investing in Zambia
●General incentives to investors in various sectors are provided in an assortment of legislation that governs the Zambia Revenue Authority (ZRA)
●The Zambian Companies Act of 1994 attracts foreign investment. Although In 2012, proposed changes to the Companies Act invited the imposition of indigenization requirements ranging from zero to fifty-one percent on foreign-invested companies, those changes to the Act, remain in draft form.

Tau Tawengwa

Executive Director