Economic struggle puts workers in a spin

Japhet Moyo

THE hyperinflationary economy in Zimbabwe has had its devastating effects on the labour market in 2022.

This comes despite that the labour market is still recovering from the effects of COVID-19 that was characterised by mass layoffs especially at the onset of the pandemic.

The biggest effect on the labour market has been the massive erosion of monthly wages owing to the depreciation of the local currency.

At the beginning of the year, the United States dollar was trading for $108,66 to the local currency it has since depreciated to $676,22.

Even with the little stability that returned to the parallel market exchange rates since September, monthly wages have seen values dropping drastically as the annual inflation rate remained in the triple digit range.

Zimbabwe Congress of Trade Unions (ZCTU) secretary-general Japhet Moyo told NewsDay Business that the labour market was still reeling from the effects of the COVID-19 pandemic.

“We have not yet recovered from the effects of the COVID-19 pandemic, therefore, 2022 was a year when workers were busy picking up the pieces after a disastrous 2020-21,” Moyo said.

He added that the greatest threat to the labour market in 2022 was the hyperinflationary environment, as well as an unstable currency.

“The economy completely dollarised while wages remained in local currency. The inflation rate remained high, probably the second highest in the world, causing havoc on the worker’s disposable income,” Moyo said.

While monthly salaries have been adjusted throughout the year, it has not been in line with the annual inflation rate thus negating any potential impact on a stabilising currency.

Cabinet, in October, did agree to the US$150 minimum wage recommended by the Tripartite Negotiating Forum which public and private sector workers said was too small.

“Of course, the indicative US$150 minimum was helpful, but we had hoped for a gazetted minimum so that this minimum wage is enjoyed by every worker,” Moyo added.

On the 2023 national budget, Moyo said while there were improvements in the allocation of votes to certain ministries in line with regional and continental protocols, the budget fell short of their expectations.

As 2022 comes to an end, workers are facing unprecedented power outages that has crippled all sectors of the economy.

This is because, power cuts are lasting up to 18 hours daily while in some areas the power remains off for days.

“The power outages are a significant threat to jobs because industries cannot operate without power. You now have a situation where workers come to work and just sit with nothing to do and go home,” former Employers’ Confederation of Zimbabwe executive director and labour market analyst, John Mufukare, told NewsDay Business.

In a recent interview, Association of Designated Agents of Zimbabwe chairperson Itai Bonda said since industry was anchored on the power supply the current power situation was likely to strain businesses.

Economist Prosper Chitambara said the labour market this year remained challenging as the proportion of people informally employed has risen significantly.

“At the second quarter of this year, we were looking at 88% of employment being informal. Informal employment is characterised by low levels of productivity, as well as high levels of poverty what we call the working poor,” he said.

“This year, we were estimating growth of about 4%, but this growth has generally not been employment intensive to have a significant impact on employment. We need to be incentivising employment creation through appropriate fiscal and monetary incentives.”

The permanent secretary for the Public Service, Labour and Social Welfare ministry, Simon Masanga, said fear of a possible resurgence of the pandemic at the beginning of the year and erosion of workers’ earnings was a major labour threat.

“Towards the end of the year the power/energy deficit presented challenges as they increased production costs through alternative energy sources but also increased hours lost and productivity,” Masanga said.

He said although inflationary pressures particularly during the first half of the year eroded the value of workers' incomes, national employment councils for various industries engaged in sector collective bargaining to ameliorate the situation.

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