27 April 2017

Zimbabwe: Wage Theft Fuels Economic Crisis

SOCIAL and economic analysts say social and economic degeneration experienced in the country may be in part a result of failure by companies to pay salaries and wages to their employees in time.

While many companies were failing to honour salary payments on time, others have not paid workers for up to three years, citing economic problems affecting the country.

Workers who go for months without being paid are still required to report for work daily, according to a recent research by a labour-linked institution.

The situation has been aggravated by rising unemployment in the country, estimated at over 90 percent.

This has been due to company closures over the last 15 or more years.

Analysts called on authorities to implement growth stimulating policies aimed at reversing the job losses by reviving failing industries.

The crisis in Zimbabwe's industries has been caused by high costs of doing business, diminishing demand for domestic goods due to high unemployment, an overflow of imports, economic mismanagement, corruption and government profligacy.

After the Financial Gazette reported three weeks ago that thousands of workers were now donating free labour to companies that were failing to honour salary payments, a poll of analysts revealed that non-payment of wages was one of many problems that were ruining the economy.

For instance, analysts said if the economy was functioning well, the majority of workers who were now battling to afford health care for their families would be assisted by their companies through subscription to medical aid.

About 10 percent of the country's population is estimated to be on medical aid, leaving over 90 percent without cover in case of ill health.

The analysts said where medical aid benefits were not available, regular payment of wages would guarantee workers incomes that help them pay for health and other social needs, such as education, entertainment and food.

But they pointed out that these basic requirements were now a luxury in most families as breadwinners, estimated at 120 000 by the Labour and Economic Development Research Institute of Zimbabwe (LEDRIZ), were either failing to get their salaries on time, or were not getting paid at all by companies.

Financial results for listed companies for the year ended December 31, 2016 indicated that industries were still suffering from high costs and declining demand.

The situation is particularly bad in the manufacturing sector, which has traditionally employed more workers in factories compared to other sectors.

Most firms operating in the manufacturing sector are struggling to breakeven due to the economic crisis.

"(People used to) visit the clinic with their medical aid cards at the slightest hint of a headache," said HerZimbabwe, a website that campaigns for women's rights.

It said this was now all history, as those affected by delayed salaries and job cuts were suffering in their homes when they fell sick.

"While a lot of attention has been focused on the continuous laying off of workers as a sign of Zimbabwe's economic turmoil, it is important to note that this will also affect people's health as those forced to live from hand to mouth will end up compromising their health in order to focus on other ways to sustain their livelihoods. A person affected by losing their jobs might tend to experience mood swings or acute stress if help is not given to them either through family support or counselling. This might then build up to a more serious mental disorder," it added.

The Ministry of Health and Child Care said at least 1,3 million Zimbabweans are suffering from mental disorders triggered by economic hardships.

Community Working Group on Health director, Itai Rusike, said workers who suddenly found themselves without incomes were highly likely to suffer depression.

This is bad news.

Only 350 000 people remain in formal employment in Zimbabwe, according to the Zimbabwe Congress of Trade Unions.

This figure was over four million during boom times in the mid 1990s.

Other repercussions of the wage crisis include the emergence of sexual exploitation of young girls who have been forced to drop out of school due to abject poverty.

Crime rates have increased, especially in areas where high unemployment rates are reported, such as border posts and closed mines.

A recent report by the Zimbabwe National Council for the Welfare of Children said at least 760 people were contracting the HIV virus every day last year due to poverty caused by the economic crisis, which has led companies to retrench workers.

This was almost double the rate of infections in the previous year, as reported by the Zimbabwe National Statistics agency.

The Zimbabwe National Council for the Welfare of Children's report gave evidence of sexual exploitation by sex predators, 10 percent of whom are transnational haulage truck drivers.

... Only 350 000 people remain in formal employment

... Over 120 000 employees work without regular pay

... Unemployment rate estimated at about 90 percent

Business tycoons constituted 4,1 percent of the people whose actions could cause a near demographic catastrophe in future, unless measures are put in place to stop the exploitation of girls through sex, according to the report.

In its report titled "Working Without Pay, Wage Theft in Zimbabwe" LEDRIZ said as many as 120 000 workers in Zimbabwe worked through 2014 and last year without pay, with local authorities among the worst culprits.

At the time of the research, a staggering 40 000 workers had gone for three years without pay, while a further 80 000 had not received wages on time.

The report said 22 778 workers in 20 urban local authorities had not received their salaries.

In the agricultural sector, 12 000 workers were not being paid, while 7 500 security sector employees and a further 7 500 in the automotive industry had suffered the same fate.

About 7 500 workers had gone for 14 months without pay at the State-controlled National Railways of Zimbabwe, 4 600 in the clothing sector, 3 720 in medical and pharmaceutical companies and 1 800 workers in the energy sector, among other industries.

Many council employees have been evicted from their lodgings due non-payment of rentals.

Many parents have ended up failing to pay school fees, as well as to undertake the general welfare of their families.

There has been a massive migration of people in urban areas from formal settlements to makeshift houses in places allocated by political parties.

These areas are generally cheaper because they do not have to pay for rent, or use services like piped water and electricity.

But many of them are bastions of sexually transmitted diseases, deadly epidemics, poverty and crime.

The situation is also dire in the private sector where perks for employees have been slashed to save companies.

Benefits for workers like newspapers, subsidised or free lunch, fuel, airtime, school fees and other allowances have been reviewed for those people who are still lucky to be in employment.

In cases where companies have asked for voluntary retrenchment schemes to cut costs and remain in business, packages have been taking long to come, placing affected workers in worse situations.

Thousands of the affected people had their savings wiped out by hyperinflation between 2007 and 2008.

Kipson Gundani, chief economist at Buy Zimbabwe Trust, said until the causes of the economic crisis were addressed, it would be difficult to deal with the problems now facing workers, as well as the companies that employ them.

"We have destroyed the pillars of survival," Gundani said, referring to the collapse of the manufacturing sector and agricultural sectors.

He said while good rains this year had seen the agriculture sector begin to recover, it would be difficult to match its performance of the 1990s in the coming few years.

"We had a robust agricultural sector. We had a robust manufacturing sector that processed agricultural produce. But most of the crops are not doing well. We are only producing maize and tobacco and we are only relying on mining. This economic crisis affects companies because they earn little. And what suffers first is the employee. Because there are no opportunities, people are clinging on without prospects for growth. People are just in survival mode," Gundani added.

Another economist blamed business executives for aggravating the crisis, which is now hitting hard on the working class.

"The economy is not performing but chief executive officers are getting very high salaries and perks. If they are paying for their children's school fees, sometimes up to US$6 000 per term at private schools, but fail to pay salaries, is it fair? We must all cut salaries and start afresh," said the analyst who refused to be named for professional reasons.

Urban councils had the highest number of employees who worked for nothing for an average period of nine months.

Local authorities have been the subject of complaints over maladministration and plummeting service delivery. While their workers have gone for months or years without pay, their executives have not missed their hefty monthly incomes.

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