A Zimbabwean Supreme Court ruling handed down on July 17 2015 has given companies the right to end workers’ contracts at any time, without availing terminal benefits and simply by giving them three months’ notice.
As a result of the judgment there has been a bloodbath of job losses across sectors as employers take advantage of the ruling in order to cut costs and shed unnecessary (dead) weight. Ostensibly, about 9000 workers in Zimbabwe have been laid off since July 17.
Labour activists and organizations have cried foul over the ruling, with some union leaders announcing that they were “shocked” at the ruling.
Semantically speaking, the use of the word “shocked” by the Zimbabwe Congress of Trade Unions (ZCTU) president, George Nkiwane, betrays a sense of self-centeredness on the part of employee bodies.
It seems as though workers feel that they should be protected from redundancy at all costs; even when their employer can no longer afford the wage bill.
This is a misconception that has been held by workers in Zimbabwe since independence in 1980.
The error emanates from the pseudo-socialist ideologies embraced by both trade unions and the government in 1980, and influenced by the cold war politics of the time.
However in 2015 the nation’s circumstances have changed somewhat, and therefore, economic policies should not be based upon the socialist grandstanding of yesteryear, especially not when we live in world that acknowledges that labour market flexibility is a precondition for economic growth.
Plainly put, Zimbabwe cannot continue to isolate itself from the rest of the world as continuing to do so is just impractical.
Notably, however, in his July mid-term fiscal policy review, Finance Minister Patrick Chinamasa acknowledged that Zimbabwe’s high labour costs encumber government’s operations.
In fact, the Zimbabwean government employs around 500 000 civil servants whose wages consume around 80 percent of the national budget. In light of this, the Finance minister has announced that he intends to reduce that wage-bill to below 40 percent of the national budget.
Essentially, this means that the government has acknowledged that labour market flexibility is the first step towards pulling the country out of its current economic quandary.
Even though there have been reports that some politicians are pushing for the country’s labour law regime to be urgently amended in order to shield workers from further job losses, it is my view that the government should let the labour market regulate itself, and ultimately take a largely laissez faire approach towards the economy in order to stimulate growth.
Zimbabwe needs to detach itself from its socialist nostalgia and holistically embrace neoliberalism.
Labour Market Flexibility and Globalization
Flexible Labour Markets have two general characteristics, namely:
● Employers can hire and fire workers straightforwardly and without complex legislative hindrances
● Limited Government intervention in the labour market
Now, since the July 17 ruling, some of my pro-worker colleagues have criticized me for lobbying on behalf of capitalist elites. Nevertheless, it’s important for them to remember that to an employer, labour is an asset akin to a car, a cellphone, or a laptop.
Once the asset becomes unsustainably costly, the pragmatic thing to do is to dispose of it completely and find a cheaper way to remain competitive.
The problem in Zimbabwe is that since independence politicians across the divide have often connived with labour leaders to use labour issues as voter bait.
Several instances have occurred where union leaders have advocated for worker rights and higher wages with the backing of politicians; even at times when it has been detrimental to the wider economy.
This has created a sense of entitlement among workers as a collective, and we are now in a situation where workers have a tendency of overstating their own worth
I mean look, as recently as 2013, Zimbabwean labour union leaders (supported by politicians) were advocating for a monthly minimum wage of around USD540 per month (excluding allowances) for both public servants and private sector workers.
That’s nothing short of costly when compared to an average monthly minimum of around USD300 per month in South Africa- a country with a Gross Domestic Product (GDP) of around USD 350 billion (around 25 times higher than Zimbabwe’s GDP).
Nevertheless, Zimbabwe has reached a crossroads, and it is clear to all that if government does not give businesses the flexibility to lay-off their workers, then businesses will continue to fold and eventually there will be no revenue base for the government to speak of.
I’d like to think that’s the reason behind the Finance minister’s bold declaration that “a flexible labour market is key to our economic recovery.”
After we achieve labour market flexibility, the next step is for the government to introduce incentives for businesses to invest and grow our economy.
Perhaps it would be helpful to take a look at our neighbors’ (Mozambique and Zambia’s) economic blueprints and deduce how they are growing their economies so rapidly.
As it stands, Zambia is growing at 6% per annum, with a GDP of USD27 billion. That’s twice the size of Zimbabwe’s GDP. On the other hand, Mozambique is growing at 7% per annum, with a GDP of 19 billion.
Ultimately, it’s no secret that Zimbabwe has the potential to surpass both Zambia and Mozambique economically. However it’s now up to the government leaders to politic less, and make more practical decisions.
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