LESS than 30% of people who have been retrenched this year have received their retrenchment packages as companies continue to face difficulties, a labour activist has revealed.
Zimbabwe Congress of Trade Unions national co-ordinator Elijah Mutemeri said most financially distressed companies were just sending people home without severance packages, adding that more retrenchments were looming in the coming year as the economy continues to shrink.
“The major challenge is retrenchments are taking place, but companies are failing to pay. So what we do is when a company indicates its intentions to retrench, we ask them for the payment plan. Approximately less than 30% of the people who have been retrenched have received their packages,” Mutemeri said.
He said other retrenchees received $50 per month which was just too little.
Mutemeri, however, said the financial services sector and the minerals sector had been paying retrenchment packages better than other sectors.
Since 2011, 4 160 companies have shut down, resulting in 55 443 job losses.
“Most of the companies are retrenching, but it’s a pity, they cannot pay their employees,” Mutemeri said.
Confederation of Zimbabwe Industries president Charles Msipa said most firms were in either financial or economic distress, while others were in arrears on statutory payments such as National Social Security Authority, Zimbabwe Development Fund and on salaries.
He said companies were in this state due to the environment which is characterised by reduced demand.
“If you are in such a state, you reduce costs and you do not need more head counts. Many companies are not able to pay packages due to the constraints that have made them to downsize. I think retrenchments are costly for companies as they have high payouts. There is need for reform of labour legislation to make it practical and feasible,” he said.
“Since January to date, an average of six to 10 companies were closing. If the economy continues in this sliding position, we think the same thing will happen at the beginning of next year. The view from the company owners is that the economy is not performing, so it’s either they will retrench or close.”
The manufacturing sector’s capacity utilisation levels have been declining since 2012 and this year it was operating at 36,3% owing to the unavailability of
working capital, high cost of doing business, antiquated equipment and stiff competition.
Most companies are failing to service loans that they secured from financial institutions, hence they are losing properties due to the defaults.