In one of my previous instalments, I pointed out that our labour laws should be reviewed in order to promote economic recover. If labour is too expensive it will simply be replaced by machinery. Already companies like Hwange Colliery have indicated that labour is their biggest cost – and they have embarked on a computerisation programme to improve efficiency. This will result in 200 people losing their jobs. So much for a country battling 85% unemployment – arguably the highest in the world!
A 2010 study conducted by the Confederation of Zimbabwe Industries shows that the proportion of wages and salaries to total production costs for some companies is as high as 60%. Surely, therefore, those who are opposed to wage hikes should not be seen as unpatriotic or anti the poor; rather they have a good intention – if understood from a rational economic sense. Although wage increases might give low income earners a short term opportunity to increase their consumption levels, with the marginal surge in disposable incomes; the long term effects are harmful – not to just the workers but to the entire economy.
Wage increases create a higher labour cost for employers, and limit their power to hire more employees, resulting in less overall employment opportunities. This increases government spending on unemployment services; and in order to finance for that, the very employees are taxed higher, limiting their disposable incomes.
In addition, many companies no longer hire permanent employees. The CZI study shows that in 2010, an average 75% of employees were permanent, and 25% were casual. In 2011 this fell sharply to 59% permanent and 41% casual. Casual workers have fewer rights than permanent employees, and are often exploited.
Our laws of arbitration too seem to be fuelling the rise of the machines. It is important to grant special dispensation to companies made uncompetitive by high cost of labour, to lower their wage and salary bills and therefore restore competitiveness, while protecting jobs from the threat of machines. There is need for critical examination of the entire system of arbitration. Arbitrators must not award increases above the increase in the consumer price index without detailed and extraordinary justifications. Furthermore, they should not be allowed to award an increment where the majority of companies in a sector are making losses.
Many companies have been getting loans to acquire capital machinery to replace workers, citing labour cost unsustainability. Machines don’t go on strike, they don’t require maternity or annual leave and can work for long hours without grumbling – neither do they steal from their employers. But if nothing is done, machines will take all the jobs. This whole matter should receive special attention from government, as a matter of urgency.
Post published in: Business