Retrenchments

Speaking at an interactive business meeting co-ordinated by CZI last week, Labour and Social Services Deputy Minister Tracy Mutinhiri said According to statistics about 3 000 people where retrenched. The banking sector, with 850 job losses, had the highest number of retrenchments, followed by the transport sector with 410 retrenches, while the clothing industry had 350 retrenchments. No retrenchments were recorded in soft drinks, edible oils, detergents, catering and tourism sectors.

Business capacity utilisation ranges from 30 to 40 percent. Deputy Minister Mutinhiri said costs of maintaining staff were high compared to the money creation in most sectors. Companies are producing at below capacity against high costs of raw materials as well as low demands for products. This has left companies to implement cost cutting measures like restructuring and retrenching for them to continue operating. The decline in the world market price of most mining products is a reason for retrenching and restructuring in the mining sector.

A number of wage disputes are pending before arbitrators and the Labour Court. The Ministry of Labour is urging employers and workers to find ways of resolving such disputes. She said there was a need to maintain understanding between employers and workers in resolving labour-related issues to sustain production and to keep afloat the few industries that were operating.

Retrenchments are a signal that all is not well in the economy and for the nation to achieve the 7,7 percent growth target, there should be capital injection in various economic sectors which will result in an increase in employment and production capacity in these sectors, she said.

Deputy Minister Mutinhiri said the major challenge that had led to the increase in retrenchments was financial problems that had negatively impacted on the performance of various players in industry. She said most companies were finding it difficult to recapitalise and the global financial crisis had spilled over to developing countries. There is limited access to money from multilateral institutions. Only if the financial sector, which is severely hit by problems, is resuscitated and credit lines are accessible, will there be significant growth and development of our economy, she said.

Deputy Minister Mutinhiri said although the introduction of multiple currencies brought macro-economic stability, it also had adverse effects on various sectors of the economy including the financial services sector. She said negative interest rates had deterred people from banking, which had resulted in most banks being distressed financially. It is because of these factors that banks are stopping to offer long term loans as well as retrenching staff to cut down on operating costs, she said.