LESS than half of the companies will be able to pay annual bonuses this year while retrenchments exercises will escalate in 2015 due to the economic slowdown, a local human resources consultancy firm has warned.
BUSINESS REPORTER
In its latest survey, Annual Bonus Survey Research Report 2014, the Industrial Psychology Consultants (IPC) said 49,46% of companies would be paying a bonus in 2014. But said 26,88% would not be paying, while 23,66% were not sure.
“Our findings this year indicate that the number of companies that are likely to pay a bonus may have decreased by 17,96% when compared to 2013 (67,42%). The percentage of participants who are not sure if they are paying a bonus has increased by 16,92% when compared to 2013 (6,74%),” IPC said.
A total of 93 organisations responded to this year’s survey compared 89 in 2013.
“It is our prediction that we are likely to see even fewer companies paying bonuses this year because of poor performance by companies. Many companies that have paid a guaranteed 13th cheque will likely struggle to pay the bonuses due to the current performance of the economy,” IPC said.
“Further, we believe that the 13th cheque system perpetuates a culture of entitlement where employees simply expect a bonus without delivering results that help sustain the business.”
IPC warned that more retrenchment exercises would occur in 2015 as employers continue to rationalise staff in an effort to contain costs adding that companies would face challenges in funding the exercise.
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“As a result, more people will be retrenched in 2015, but they will go home empty-handed as most employers have resorted to negotiating payment terms after a retrenchment,” IPC said.
It said 2015 “is likely to be a very tough year for collective bargaining considering the projected economic difficulties”.
A recent report by the Confederation of Zimbabwe Industries showed that capacity utilisation in the manufacturing sector had declined to 36,3% from 39,6% as the sector takes a battering from the economic decline.
CZI said the Purchasing Managers Index (PMI) stood at 43,5%. PMI is a diffusion index that looks at new orders, inventory levels, production, supplier deliveries and employment conditions.
PMI above 50% means the manufacturing sector is growing and expanding. A PMI under 50% means the manufacturing sector is contracting.
The challenges facing companies have spawned retrenchments with the ZCTU saying that a total of 4 172 people lost jobs for the first nine months of this year. Last year, 9 617 jobs were lost, while 75 companies closed.
