CURRENT LABOUR CHALLENGES

Prepared & presented by

Elvis Mudzengerere
0773 613462
mudzelvis@gmail.com
 Introduction
• The underlying economic challenges which have
bedeviled the Zimbabwean economy in the past 20 years
are well-documented.

• These challenges will inevitably extend to the workplace

and influence the employer-employee relationship at
various levels.

• The following are some of the labour challenges which

characterize the labour market in Zimbabwe.
 1. Productivity Concerns

What is productivity?

• Generally productivity is a measure of the efficiency with which a company or country combines capital
and labour to produce more with the same level of factor inputs

• Labour Productivity refers to the value that each employed person creates per unit of his or her input.

• High productivity means that each worker can do more in the same amount of time and this can lead to
sustainable growth.

• If organisations are able to produce more with fewer resources, it translates to lower unit costs and
such cost savings are passed onto consumers at lower prices, encouraging higher demand, more output
and an increase in employment.
• When firms are able to produce goods at a low cost, they become competitive on
a global market. Research has shown that productivity growth and lower unit
costs are key determinants of the competitiveness of firms in global markets.

• Efficient organisations are able to gain large profits.

• By obtaining huge profits it means the organisation will be able to re-invest the
excess capital to support the long term growth of the business.

• Long term growth translates to more employment opportunities for citizens and
better economic growth.
• The topical issue on productivity measurement in Zimbabwe has been under discussion for close
to 30 years now but the social partners have not managed to agree on a concrete framework on
how to implement it.

• In the 2015 Labour Amendment Act No.5, Parliament made a half-backed attempt to incorporate
productivity in collective bargaining by amending section 74 of the Labour Act.

• The provision requires productivity, ability to pay, and the competitiveness of the economy to be
considered in collective bargaining and salary negotiations at industry/NEC level.

• However, according to Nguwi & Industrial Psychology Consultants (2019), the absence of reliable
productivity data for each industry and organisation has made it difficult to incorporate
productivity as a determinant in salary negotiations both at NEC and company levels.
• It has been repeatedly recommended that NECs should generate productivity
data which can be shared to all members in the sector, monthly or quarterly
depending with the cycle, to enable both employers and employees to plan for
collective bargaining.
• the Zimbabwean labour productivity issue, Memory Nguwi, in his book Human
Resources Perspectives (2019) at page 134 argues that–
• “On a national scale, there seems to be a trend of slowly building and rewarding
a culture of non- performance. For example salary negotiations are based on
inflation and the consumer price index with very little attention being paid to
productivity at both industry and company level”.

• His neo-liberal perspective seems to maintain that currently there is no

balancing of business performance with the need to cushion staff against
inflationary pressures during collective bargaining negotiations with the scales
tilted against business in favour of labour.
2. Decline in Employee Performance-Related Rewards

• In most organisations, it has almost become impossible to reward good

performance through a salary increase. The reason is that salaries are
negotiated at National Employment Council level and the organisations
cannot afford to top up these increases in the form of merit increases.
(Nguwi 2019)
• In the current environment employers find it worthless to implement
performance based salary increases.
• The popular approach is to give whatever the National Employment Council
would have agreed on as an across the board increase and nothing more
• On the part of workers the entitlement mentality has creeped in, thereby
replacing a productivity oriented culture.
• Organisations need to come up with incentive schemes to drive company
performance.
 3. Collective Bargaining Challenges
• The obtaining economic downturn has posed challenges to collective bargaining .
• To address economic challenges, the Govt. in February 2019 brought in Statutory
Instrument 33 which brought about a 1:1 rate between the USD and the local
currency.
• Later in June, S.I. 142 of 2019 allowed for a mono currency in the form of an RTGS
dollar. I
• A short while later Govt. disbanded the mono currency and reverted back to the
multi-currency system.
• However, the local ZWL currency continued to plummet against the USD the
prompting the RBZ to preside over a foreign exchange auction system.
• The RBZ auction system only brought temporary relief and stability as the
inflationary trend occasionally resurfaces.
 Currently, the official rate has stagnated around ZWL$84/85 per every US$ while the alternative
market rate has continued to soar.
 This has posed a problem to collective bargaining as unions have pushed for the US$ to be the
currency of remuneration.
 Employers have not acceded to the demands as they argue that they do not generate sufficient
forex to meet costs of both labour and raw materials.
 Where they cannot be paid in USD, workers have demanded at least part payment is USD with the
other part paid at the prevailing interbank exchange rates.
 A case in point is the Mining industry CBA which provides the option to pay in USD failing which
you pay at the prevailing interbank exchange rate.
 The result of this has been staff-cost-to revenue ratios of above the benchmark 30% thereby
threatening the survival of most industries.
 In addition, payment of salaries using the interbank exchange rate means that there is no stable
staff cost which is known from a month-to-month basis.
 With the constant changes occasioned by inflation of the local currency, workers have also
demanded negotiations to be done more frequently e.g., every month or every quarter.
• Regular negotiating cycles have at least ensured that employees ‘earnings maintain their buying power in the face

of inflation.

• However, in many negotiations, agreements have not been easy to come by as some NECs have had challenges in

reaching conclusive agreements.

• Most negotiations end up in deadlocks needing third party intervention (arbitration).

• However, most arbitrators are normally not alive to the realities in the industry and end up awarding salary

increases that are contestable because the awards will normally be very unreasonable.

• In Chamber of Mines Vs Associated Mine Workers Union of Zimbabwe LC/H/250/12, the Arbitrator awarded an
increase of 20% for the Mining Industry and the Employers Association, the Chamber of Mines sought for a review of
the decision on the basis that he had failed to give proper attention to the facts in a number of areas.

• The Labour Court found that the awarding an increase of 20%, meant that the figures were plucked out of the air and
could not be sustained. Using an inflation rate of 5% as a guide the Court reduced the award.
 4. Mass Retrenchments/Lay-offs
• According to John Grogan (2010:271), retrenchment is a process by which staff is reduced to cull redundant
employees and reduce the wage bill.
• The economic challenges that continue to impede business entities in Zimbabwe have resulted in some companies
shutting down while others have resorted to lay off some of their employees.(MPSLSW Labour Market Outlook
2016:18).

• The retrenchments are in most cases meant to leave the company with a sustainable workforce that is in line with
the reduced scale of operations as such entities would be operating below capacity.
• The economic meltdown of the last two decades has seen companies resorting to retrenchment as a last stop-gap
survival tactic.

• The introduction of the multi-currency regime in 2009 did not avert retrenchments as productivity and capacity
utilisation continued to be supressed.(Mucheche,2014)

• Companies end up invoking provisions of section 12C of the Labour Act which provides for termination pursuant to
retrenchment for operational reasons.
• Currently most job losses are Covid-19 induced but it has to be remembered that Zimbabwe already had
a socio-political and economic crisis prior to the pandemic, and the Covid scourge only increased cases
of mass job losses across many sectors of the economy.

• In the period 2019-2020 most companies scaled down operations while others resorted to embracing
technology-oriented work methods in place of human labour.

• There is a steady migration from more labour intensive systems to capital intensive systems. According
to MPSLSW Labour Market Outlook (2016:20) the industries that were most affected are sub-sectors of
the manufacturing sector whose nature tends to be more labour intensive than other sectors.

• Currently in Zimbabwe Banks culling their ranks for example, Standard Chartered, First Capital Bank and
Stanbic are on course to retrench workers. Branch closures have been witnessed in most towns
including the capital Harare.
 5. Non-Payments of Wages and Salaries Associated
with Lockdowns
• The emergence of Covid -19 as a global pandemic is unprecedented and just as it has affected many facets of
society, the pandemic has not spared the world of work, as several nations have successively introduced a cycle
of mandatory lockdowns.

• In Zimbabwe lockdowns have resulted in operations deemed non-essential service not allowed to operate.
• Wage and salary disputes between employers and employees under such conditions are inevitable and
unavoidable.

• There is the sticking question as to whether the employers should continue payment of wages during a lock down.

• This question has undoubtedly divided opinion and brought polarity among labour analysts and academics.

• It is a fundamental legal principle that an employee is remunerated for performance of duties assigned to them.
• According to J. GROGAN, “Workplace Law”, 10th Ed, at page 55:
• “The duty to pay, and the commensurate right to remuneration, arises …. From the tendering of service‖.”

• It thus follows that continued failure to provide service placed employees in a position of losing income.
• When most companies shut down in a lockdown they also tend to lose revenue meaning that they are disabled
from paying wages or salaries.

• The main defence by employers for not continuing to remunerate workers is that a lockdown represents a
supervening impossibility (casus fortuitous) (an unforeseen event or Act of God) of which none of the parties is at
fault and thus their failure provide work to the employees cannot be legally faulted.

• While the Government and NECs have attempted to introduce several measures which ensure that employees do
not completely lose income during the lockdown, these are only temporary and tend to lose validity as the
lockdown periods are extended.

• The common law principles of “no work, no pay” and ‘casus fortuitous’ or ‘vis major’ fully begins to command more
weight.

• This issue remains moot and awaits decisive precedent from superior courts.
 6. Unlawful Collective Job Actions/ Industrial Action
• Unlawful Collective Job Action- in particular Strikes have been on the rise as workers use power games to ensure employers accede to their demands for
increases in salary and other conditions.

• According to the Labour Act, CJA “means an industrial action calculated to persuade or cause a party to an employment relationship to accede to a demand
related to employment, and includes a strike, boycott, lock out, sit-in or other such concerted action”

• Unlawful CJA is that which is not within the contemplation of Section 104 of the Labour Act.

• Under Zimbabwean labour law the right to strike only applies in respect of disputes interest and not disputes of right.

• The right to strike is a constitutional one and is guaranteed in terms of Section 65 of the Constitution, however such right is not an absolute one.

• Most strikes in Zimbabwe are illegal as they do not follow the procedures in Section 104.

• The Zimbabwean health sector has been the hardest hit with a number of successive strikes by health workers in 2019 and 2020 crippled the national
health system.

• Some impasses have gone for several months much to the chagrin of the general public.

• During strikes a lot of man-hours are lost resulting in business losses and reduced productivity.
 7. The Labour Market Demand & Supply Disequilibrium
• Generally there is a sharp disequilibrium in the Zimbabwean labour market due to the high rates of unemployment with labour supply exceeding the demand
for labour.

• In economic terms, labour is a measure of the work done by human beings, and labour markets occur wherever workers supply labour services (the supply
side) in return for conditions of service provided by those who demand such services that is the employers (the demand side) (LEDRIZ, 2012).

• Labour markets function through the interaction of workers and employers, resulting in a pattern of wages, employment and income (Ashenfelter and Card,
1999).

• When labour demand falls relative to labour supply, the market wage falls as workers compete with each other for the smaller number of available jobs.

• This has been the case in Zimbabwe where there are more people who are scrambling for a few jobs available.

• Generally speaking this competition means that employers can set wages and salaries that are below the competitive market wage.

• Even though the majority of wages in Zimbabwe are negotiated at industry level, this imbalance has weakened the Trade Unions’ power to push for higher
wages as the employer can easily replace labour.

• An over-supply of labour generally weakens employee bargaining power as employers can afford to cherry pick for the cheapest labour service providers.

• This has pushed wages and salaries in Zimbabwe way below those of other countries in the region.
 8. Labour Migration and Brain Drain
• Zimbabwe has since the colonial era been both a sending and receiving country of Labour migrants.

• The trends in labour migration accelerated with the onset of the economic recession by the turn of the millennium.

• Since the year 2000 the country has been experiencing an upsurge in the outward migration of both skilled and unskilled
manpower in search of employment opportunities in the region and abroad. [Labour Market Outlook 2016].

• Statistics released by the Ministry of Finance and Economic Development indicate that diaspora remittances have become a
major source of liquidity in Zimbabwe after exports.

• In the case of Zimbabwe, the findings of the (Labour Force and Child Labour Survey) of 2014, show that most of the emigrants,
(97%) went into neighbouring South Africa, Botswana and Mozambique.

• The Zimbabwean Health sector has also continued to lose its skilled personnel to countries like the United Kingdom, Australia,
Canada and New Zealand with the government and even the private sector failing to retain such critical personnel.

• Brain drain has resulted in a critical skills shortage thereby creating a high labour demand in the affected occupations.
 The Zimbabwe Engineers Association indicated that the majority of experienced and skilled engineers were working outside the
country and the local market has been depending on expatriates, particularly in the mining sector. Labour Market Outlook, (2017)
 This scarcity in skills in these critical occupations make such jobs the most costly to remunerate and most difficult to retain on the
labour market.
 The Health Services Bipartite Negotiating Panel in 2017 offered a combination of financial and non-financial retention allowances
like motor vehicle loans and housing schemes and a 10% of basic pay for staff based in rural areas.
 However the quantum of incentives were still considered inferior to those offered in other competitive markets and as such they
failed to stop the massive migration of professionals in the sector even up to the present time.
 The plight of Zimbabwe is also compounded by the absence of Bilateral Labour Agreements to ensure the country derives
maximum benefits from labour migration.
 According to Bobeva and Garson, (2004) Bilateral Labour Agreements (BLAs) are the most common labour recruitment schemes
between sending and receiving countries.
 It is recommended that Zimbabwe enters into formal arrangements for the export of labour to these countries in areas where she
has comparative advantage. This entails the establishment of BLAs with each identified countries so as to derive optimum benefits
from Zimbabwean nationals working in the region and abroad, whom the country would have invested in their education.
 9. Informalization of the Economy (Informal Labour Market)
• According to LEDRIZ, (2012:118), with the collapse of the formal sector as the crisis deepened, the informal economy expanded. By 2004 four out of

every five jobs were informalized.

• Formal sector employment declined from the peak of 1.4 million in 1998 to an estimated 700 000 by 2007. The percentage of the population

employed in the formal sector declined from 14% in 1980 to around 6% by 2007.

• The 2008, CZI Manufacturing Sector Study identified constrained demand as the major cause of declining formal employment levels.

• The non-formal sector is the pre-capitalist part of the economy and accommodates alternative forms of production and labour.

• It relies on labour with very few inputs of capital and technology and most people in the sector work in ‘survivalist mode’.

• The abundance of labour and the shortage of capital means that production in this sector is directed mainly towards subsistence and is not aimed

at generating surplus or profit.

• It is also characterised by serious decent work deficits. Decent work is productive work where the workers’ rights are protected- their jobs and

incomes are protected and their social standards are maintained- but these do not apply in the informal sector. LEDRIZ (2012).
• Informalization of the economy also deprives the national fiscus of revenue as the taxman’s (ZIMRA) net is still not wide enough to
effectively collect taxes from players this sector.

• The Informalization of the economy is a cause of concern because informality is an undesirable form of employment since informal
workers;

 Generally lack productive employment opportunities,

 Cannot exercise their rights at work,
 Are not covered by adequate social protection (e.g. NSSA)
 No pension or medical aid benefits
 Have no strong collective representation to voice their concerns.
• Furthermore, the informalization of the labour market is detrimental to employees’ wellness due to the prevalence of low pay and
the precarious nature of the jobs.

• This is so because of the following:

 The unpredictability of earnings make it difficult to make long-term plans for the future.
 Lack of opportunities for skills development.
 Reduced work hours resulting in low pay
 Increased exposure to occupational health and safety hazards
 Low union representation
 10. An Uncertain Dispute Resolution System
• Since the Labour Act amendment in 2015 the dispute resolution landscape under Sections 93 and 63 has witnessed
a number of changes up to the recent time.

• The changes have brought a lot of confusion and uncertainty and lack of confidence in the dispute resolution.

• The Amendment gave Labour Officers and Designated Agents sweeping powers under the new section 93 (5) (c) of
the Labour Act to make draft rulings over disputes that they would have conciliated.

• One startling feature is that the labour officers & DAs are no longer supposed to refer disputes of right to
compulsory arbitration.

• They are now entitled to make rulings on disputes of right which ruling ought to be confirmed by the Labour Court,
at the instance of the labour officer within 30 days from the date of such ruling.

• The problem with the confirmation process is that the Labour officers appear to become a litigants in the matter as
they have to justify their decision before the LC against the losing party.
• The party against whom the ruling is made has a right to oppose its confirmation.
• Labour Officers are supposed to be neutral and independent. However the process exposes the
officer to corruption and collusion with a party.
• There is also no right of appeal against such a ruling, as the exercise of such right in terms of
section 93 (5) is not provided for elsewhere in the Act.
• The party against whom the ruling is made is therefore only entitled to challenge the
confirmation of such a ruling before the Labour Court.
• It also appears that the obligation to comply with the ruling only arises after confirmation.
• The compromised neutrality of the LO or DA associated with the system was challenged in Court
in the Greatermans case on the ground that it was in violation of the constitutional right to equal
protection of the law. The Con-court found nothing wrong with system in that regard
• Recent Court decisions by the Con-Court in Isoquant v Memory Darikwa CCZ 06/20 and the
Supreme Court in Sakarombe v Montana Carswell Meets have further introduced more changes
as powers of LOs and DAs were explained and differentiated.
• The cases have brought a different dimension to how disputes are resolved by Labour Officers
and Designated Agents of NECs in terms of Sections 93 and 63 of the Act.
• According to the Isoquant case supra, LOs only attempt to settle (Conciliation) cannot
make binding rulings. They only do draft rulings which have no legal force until
confirmation by LC.
• DAs have a choice to attempt to settle (conciliate) or redress (determine/adjudicate) a
dispute that comes to their attention.
• If a DA chooses to conciliate, they navigate the confirmation route in terms of section
93.
• If a DA chooses to redress, they make a binding determination that is subject to
appeal or review by the Labour Court.
• In Sakarombe supra, the Supreme Court held that section 8(6) of SI 15 of 2006 which
provides for an appeal to the LO of DA are plant level disciplinary proceedings was
ultra vires section 101, 92D and 93 of the parent Act, i.e. the Labour Act.
• Such appeals should go directly to the Labour Court as the LO or DA has no appeal or
review powers to hear matters that have been determined by a competent disciplinary
tribunal at plant level.
• This means that the long-used process of appealing matters dealt with under the
National Code (SI 15 of 2006) to the Ministry or the NEC is unlawful.
NB: A perusal of the cases will enlighten the reader on the complexities in the dispute
resolution system.
The End