ZNCC Press Release on labour Reforms in Zimbabwe-29/07/15 Address by the ZNCC President

Greetings Ladies and Gentleman, members of the fourth estate and all invited stakeholders to this press conference.

The bigger picture is not what transpired between Zuva Petroleum Pvt Ltd vs Don Nyamande and Kingstone Donga in the Supreme Court but rather how the process of managing labour costs can be implemented without leading to either company closures or heightened poverty levels induced by non voluntary unemployment. Which therefore means recent rulings by the Supreme Court involving both the Zuva and the NRZ cases were a mere interpretation of the existing current labour law with no new wheels of laws having been invented?

The status quo of labour disputes with their employers has been an accumulation of challenges which companies faced in failing to lay off their staff since the slowing down of the economy. They had accumulated costs linked to poor productivity which had seen their production costs skyrocketing as a result of maintaining a similar labour force whilst capacity utilisation has plummeted.

As a chamber, our relationship with the government of Zimbabwe continues to shift from strength to strength as evidenced by their desire to listen to the concerns of our business constituency. We therefore do not have any doubt that every opinion or advice we forward to them is held in high regard.

The ruling by the supreme court on the labour matter involving former employees of Zuva Petroleum and the company had stirred both emotions and relief within our market, on the surface, it does appear like a blatant violation of worker rights but once one factors in the business environment we are operating in at the moment, there is no doubt that most companies in Zimbabwe are in debt distress. Surprisingly the Zuva Petroleum vs. its staff is not the first ruling of this kind under the similar circumstances, if my memory serves me well in the 90s, we had the Nhamo vs Chirisa case even though the judgement went unnoticed to the public.

However our major concern is to call for the government to amend the labour act, what is being presented to us at the moment as the labour bill is a piece meal exercise to solve a much broader problem. As the voice of business, we strongly feel it was important to make a direct comparison of labour laws with countries whose FDI inflows have been quite significant of late.

We urge our members to exercise restraint as they make decisions relating to labour issues within their concerns or companies. What came out of the Supreme Court should not be used as an excuse for unjustified dismissal or retrenchment of employees. This will be tantamount to fighting the Zimasset objectives which validates need for job creation. As the voice of business, we certainly cannot afford to promote unfair dismissals.

However dismissing an employee was a mammoth task which could not be achieved in less than 2 years on average, in the process it could cost a company its market, its reputation and even in extreme cases its balance sheet given that a litany of writ of executions were issued in the courts of law as recompense for aggrieved employees. Information at our desk in the chamber indicates that labour productivity in Zimbabwe has reached the nadir whilst a dollarized environment has posed an unsustainable cost income ratio for most corporate way above75% with the greater chunk of the cost base emanating from wages and salaries.

In most of the emerging economies as well as OECD countries, once an employer feels one is excess to their needs, it certainly doesn’t take the employer a month of Sundays. Whenever a company experiences a slowdown as we witnessed in 2007 during the subprime mortgage crisis which hit the entire transatlantic zone, banks and insurance companies were laying off staff as a cost containment measure. What is the rationale of forcing an employer to retain an employee who is no longer serving his or her contractual purpose?

THANK YOU.

Tobacco sales surpass target

HARARE July 28 (Herald) Tobacco sales have surpassed the target set by industry with 192 million kilogrammes having been traded at the auction floors this season. This is despite a poor rainy season characterised by erratic rains and flooding. The country is a major tobacco grower, and agriculture is identified as one of the pillars of the economic turnaround programme. Stakeholders in the tobacco industry had set a target of 85 million kilogrammes, down from the 222 million kg Government had predicted. Zimbabwe produced 216 million kg in 2014 and 165 million kg in 2013. Latest Tobacco Industry and Marketing Board statistics show that by last Friday; 192, 4 million kg worth $566 million were sold by farmers since the opening of the tobacco selling season. This is a decline of 8, 5 percent from the 209 million kg worth $666 million sold during the same period last year.

ZCTU snubs crisis indaba on sackings

HARARE July 28 (Herald) The Zimbabwe Congress of Trade Unions has abandoned workers in their time of need, with the pro-opposition umbrella labour representative body yesterday snubbing a meeting convened by the Government to finalise amendments to the Labour Act. The amendments are expected to cushion workers from being fired on three months’ notice without explanation following a recent ruling by the Supreme Court in that regard. Workers yesterday questioned the sincerity of the MDC-T-linked union, saying it seemed the organisation was satisfied with the status quo which has seen thousands of workers being sent packing. The Ministry of Public Service, Labour and Social Welfare convened an emergency meeting with employers and workers yesterday to iron out outstanding issues on the amendment of the Labour Act.

Commission to probe demonetization of Zim Dollar pensions

HARARE, July 28 (Newsday) President Robert Mugabe has appointed Retired Justice George Smith to chair a commission of inquiry into the conversion of pensions and insurance benefits to the United States dollar from the defunct Zimbabwean dollar. The move is set to bring closure to the matter which has been pending since Zimbabwe embraced the multi-currency regime in 2009. It also dovetails with the decommissioning of the Zimbabwean dollar from the formal system. The process to retire the local unit runs up to September. It began on June 15.

Supreme Court in another Labour Judgement

HARARE July 28 (Herald) The Supreme Court yesterday ruled that payment of housing, educational and other allowances is not a right to workers and employers are not obliged to pay them unless there is an agreement binding on the parties to that effect. Justice Venanda Ziyambi, sitting with Justices Elizabeth Gwaunza and Antonia Guvava, delivered the unanimous decision in favour of the National Railways of Zimbabwe in a case where the company was contesting the Labour Court judgment compelling it to pay its workers outstanding housing and educational allowances. The workers had won their case both before an arbitrator and the Labour Court with an order compelling NRZ to pay them some outstanding allowances despite the fact that the company had not agreed. However, the Supreme Court allowed NRZ’s appeal and ruled that it was not the arbitrators or courts’ business to impose conditions not agreed or to craft employment contracts on behalf of the parties.

Govt to secure $3m for SMEDCO

HARARE July 24 (Herald) Government is still in the process of finalising the $3 million loan from an Arab financial institution for the recapitalisation of the Small and Medium Enterprises Development Corporation (SMEDCO). Small and Medium Enterprises Development Minister Sithembiso Nyoni yesterday told a Millennial Economic Forum that Government was in the process of securing funding from the Arab Bank for Economic Development (BADEA) for the recapitalisation of SMEDCO and it was still work in progress. SMEDCO is a leading development finance institution for the promotion and development of micro, small and medium enterprises in the country which was formed in 1983 through an Act of Parliament. SMEDCO last year disbursed loans to 200 micro and small enterprises and 60 members from four cooperatives at an interest rate of 15 percent per annum.

Italy eyes Zim energy sector

HARARE, July 24 (Newsday) Italy will invest in Zimbabwe’s solar energy sector as it can reach the lower base of society, a senior official from the European country said on Wednesday. Secretary of State for Renewable Energy Sector, Foreign Affairs and International Cooperation Mario Giro said that there was room to invest in the renewable energy sector. He said the Italian government was expected to help grow the solar energy sector in the country through a company specializing in renewable energy particularly in solar panels. Giro said this was a way the Italian government would help the country to address climate change and deal with ecological problems which will lessen the negative effects on crops.

Govt to urgently amend Labour Act

HARARE July 24 (Herald) Government yesterday resolved to amend the Labour Act expeditiously to stem inconsistencies in the labour market which have seen companies sacking employees willy-nilly and almost empty-handed on the basis of a recent Supreme Court judgment. Public Service, Labour and Social Services Minister Prisca Mupfumira said that while the Supreme Court judges were “correctly and appropriately” guided by the law, companies should exercise maximum restraint in terminating workers’ contracts. Mupfumira said Government had looked at the labour laws and concluded that they needed amendment in the shortest possible time.

Court ruling in line with economic trends

HARARE July 24 (Herald) A labour expert has said the Supreme Court ruling that allows firms to terminate contracts of employment upon issuing a three months’ notice addresses concerns that employers have had for a long time and an attempt to reverse this could be “catastrophic. Industrial Psychology Consultants managing consultant Memory Nguwi said it would not be ideal to have an immediate reversal of the court ruling as struggling firms need to streamline operations through headcount reduction. Already, over 1 000 people have lost their jobs since the court ruling last Friday. Zimbabwe’s labour laws have been viewed as particularly rigid, particularly in respect of retrenchments – which have become a necessary evil in view of the under-performing economy.

Zim to hold investment conference in London

HARARE, July 24 (Newsday) British ambassador to Zimbabwe Catriona Laing said Zimbabwe will hold an investment conference in London as it steps up efforts to lure foreign investors. Laing said an investment conference will be held in London at a date yet to be advised by the Office of the President and Cabinet. The proposed conference comes after the British Embassy in Harare urged British companies to consider investing in Zimbabwe as there were “encouraging signs that the government is softening its stance on indigenization and developing more investor-friendly policies”. Laing said there was also a £16 million pro-poor growth programme to tackle the critical shortage of credit facing Zimbabweans. She said the funds were dedicated to small, medium and large businesses and microfinance institutions with a focus on the agricultural sector.

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