The Zimbabwe National Chamber of Commerce (ZNCC) has warned of more job cuts due to low productivity coupled with high production costs that cannot sustain a huge labour force.
BY TATIRA ZWINOIRA /EVERSON MUSHAVA
ZNCC president Davison Norupiri told a Press briefing yesterday that capacity utilisation had plummeted and as such, companies could not maintain the same level of employees.
“Companies are actually struggling simply because they have got an excess in terms of their staff and also their productivity has gone down. Capacity utilisation is actually well below what we are expecting,” Norupiri said.
“This basically means that companies are realigning their cost structures and one of the ways to do so is to make sure your fixed overheads are catered for.”
The Supreme Court recently ruled that employers could terminate employees’ contracts unilaterally after giving three months’ notice.
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Thousands of workers have lost jobs in a space of two weeks.
But Norupiri said this was not addressing the broader problem of lack of productivity among businesses.
He described the proposed measures to amend the Labour Act as a piecemeal response to a much broader problem.
“It is a vicious cycle, if you look at it. If we maintain that as business, it means that we become uncompetitive in terms of our costs of production. Our products will actually go up in terms of the costs, and at the end of the day, it is us who have to walk into the supermarket and try to purchase exactly the same products,” Norupiri said.
He said companies had already scaled down on benefits such as bonuses as a way of cutting costs across the spectrum.
Norupiri said the dollarised environment had posed an unsustainable cost-income ratio for most corporates way above 75% with the greater chunk of the cost base emanating from wages and salaries.
“What is the rationale of forcing an employer to retain an employee who is no longer serving his or her contractual purpose?” he asked.