Zimbabwe: Dilemma for Informal Sector Employees

For Sharon Muyambo (27) being at home during this lockdown has provided a rare chance to rest.

She works at a motor spares store in Harare's Central Business District (CBD) where employment terms are unconventional. She does not have a payslip, leave days or an employment contract. Her agreement with her employer is anchored on a handshake and a verbal agreement.

"When I finished college, I thought I was going to work in an air-conditioned office," she said. "After staying at home for more than a year, I got to a point where I was ready to accept anything that came my way, this is how I ended up at this job."

What was supposed to be a temporary engagement has kept Sharon afloat for four years.

"I had grown comfortable, the money we earn is not something to write home about, but it is better than nothing," she said. "In such times we have to appreciate it."

Although she is happy that for the first time since she got a job, she has spent more than a day resting, worries are growing.

"Am I earning anything this month end?" is one of the questions on her mind.

Sharon does not know if her employer will be able to pay her for April, since the shop has been closed following the announcement of the lockdown.

"The way I know my workplace, we get our salaries directly from the till," she said. "I do not think they even have a bank account."

President Mnangagwa, after touring Harare over the weekend, promised to review the impact of the lockdown. Sharon is hoping the resultant decision is not an extension as has been seen in other countries.

"Even if the lockdown is called off on the planned day, 10 days is not enough for us to recoup our losses," she said.

Sharon is one of thousands of Zimbabweans employed by quasi-professional companies.

This lockdown, which has created uncertainties even within stock exchange listed companies, has made it difficult for employers and employees to forecast what the future holds.

It is a classic case of size does not matter.

The Zimbabwe National Statistical Agency (ZIMSTAT) in its 2019 Labour Force and Child Labour Survey (LFCLS), states that Zimbabwe has 975 880 people in the informal sector. Only 24 percent of that number, amounting to 238 715, is employed within the sector, with the rest being own account workers, doing survivalist jobs. Sharon belongs to the 24 percent.

Within the whole sector, no one had foreseen this disruption and heads are cracking. With no contracts in place, trial and error is taking precedent.

John Mazhinye, who runs a small tailoring company in Harare, said he would like to continue paying his four workers, but is unable to do so. Without daily business, there is simply no money to operate.

"It has greatly affected my ability to pay my employees. I pay my workers on a weekly basis," he said. "When the lockdown was put into effect, I had to tell my workers to stay home. That means they are not able to come to work, which means they are not able to perform tasks from which we earn our money directly."

Even afterwards, there are no guarantees on how long it will take them to recover from Covid-19 induced losses.

"The business itself is not able to generate money because those people are home and there aren't walk-in clients, meetings or referrals," said Mazhinye. "Our business thrives when people are economically active."

A significant number of small entities operating in Zimbabwe are retailers. They say they have been hard hit and may have lost hundreds of millions of dollars since the shutdown.

In an interview, Confederation of Zimbabwe Retailers (CZR) president Denford Mutashu painted a gloomy picture.

"For small-scale retailers and wholesalers the Covid-19 lockdown has been impactful," he said. "They push huge transactional volumes and so far the estimated revenue loss runs into more than half a billion."

Even post-crisis, CZR suggests need for stimulation. "There is need to provide a resuscitation facility for the small retailers and wholesalers," said Mutashu.

Criticised for how they have not been part of the economic mainstream, Mutashu said this crisis was an eye opener for small retailers and wholesalers.

"We are really going to take advantage and formalise all informal businesses to ensure they contribute to the mainstream economy. Small businesses cannot continue being the source of fiscal revenue leakages which prejudice the country," said Mutashu.

The dilemma is that operations that had never seen the necessity of human resources departments have been forced by the crisis to take human resources decisions.

Human resources experts argue that those with fully fledged human resources departments are also struggling to meet their contractual obligations with their workers.

There is a real threat of bankruptcy.

Chief human resources advisor at Third Eye Africa Consulting Group, Emmanuel Zvada said unforeseen realities like a virus outbreak put to test all known conventions in HR.

"Covid-19 is an act of God and no one is to blame but it raises a number of questions and concerns for people -- especially in the employment space," Zvada said.

He listed the following as possible survival strategies which companies, large and small could pursue:

Reduce non-wage costs, and consider various measures to utilise and manage excess power.

Tap on Government support if any to offset business and wage costs, and press on with business and workforce transformation, if there is no support from government or shareholders they can make use of reserves (if available).

Trim wage costs

If necessary, retrench workers as a last resort, ensure it is done in a responsible manner or reduce unnecessary contract workers.

All these, regardless of which option is chosen, have adverse effects on the employee, but it is important that Government is working on packages to stimulate small businesses.

There may be need to widen the scope to include the 238 715 employed in the private sector.

Most of them do not know if they will be called back to work after the lockdown, or when they will get their next salary. They do not have savings as they do not earn enough to have bankable disposable income.

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